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8 Apr 2009 07:00
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8Β April 2009Β
Grainger plc
MARKETΒ UPDATE
Grainger plc ("Grainger" or the "Company"), the UK's largest quoted residential property owner, today provides anΒ updateΒ to the market in advance of its interim results announcement for the half year to 31Β March 2009,Β which will be issued on 20 May 2009.Β
ForΒ the six month period toΒ 31 March 2009Β we expectΒ completedΒ sales from our core and retirementΒ solutions portfolio to amount to approximately Β£55m, which isΒ a decrease ofΒ 29% in comparison to the equivalent figure in 2008. Together withΒ grossΒ sales proceeds ofΒ circaΒ Β£28mΒ from our development division, this has meant that we have comfortably met our interest cover covenant test at 31 March 2009.Β
In addition to these completed sales we also have a furtherΒ Β£31mΒ of transactionsΒ inΒ our sales pipelineΒ (withΒ solicitors instructed and contracts exchanged),Β compared to Β£20m in 2008. Assuming the sales pipeline completes, weΒ shouldΒ achieveΒ some Β£114m of property sales in the current year which places the Company in a strong position for the next testing date onΒ 30 September 2009.Β TheΒ declineΒ inΒ the level ofΒ completed salesΒ was anticipated andΒ reflectsΒ bothΒ the decrease in general house prices and the difficult market conditions in the early part of this trading period. Although these difficult conditionsΒ are ongoing,Β the pipeline positionΒ clearly demonstratesΒ theΒ continuingΒ strong liquidity characteristics ofΒ Grainger'sΒ portfolio.Β
Sales made on vacancy and included in completed sales and the pipeline have been made at values approximately 8% below September 2008 valuations.Β
We continue to focus on cashΒ conservationΒ through reduced acquisitions. In our core and retirement solutions portfolios,Β we estimate a total spend of Β£9m in the six monthsΒ to 31Β March 2009 compared to Β£96m for the same period in 2008.Β
We areΒ alsoΒ pleased with progress in our development division.Β In addition to the gross receiptsΒ on sale of Β£19m for our Barnsbury development,Β as announced in DecemberΒ 2008,Β we have also recently sold two other sites inΒ LondonΒ for a total of Β£8.25m. Within the last fortnight,Β we have received planning consentΒ at appealΒ forΒ 252Β units at our site in Gateshead and successfullyΒ launchedΒ ourΒ residential development atΒ HornseyΒ Road,Β inΒ Islington,Β London,Β whereΒ weΒ have already securedΒ sales reservations onΒ 17Β unitsΒ out ofΒ 92Β since marketing commenced in the last week of March.Β
We also note thatΒ the directors ofΒ G:res1 Limited, the parent company of the G:res FundΒ (the "Fund")Β haveΒ todayΒ reportedΒ their decision to revise certain elements of the Fund's business plan. TheseΒ revisions are designedΒ to increase the headroomΒ inΒ the Fund'sΒ loan to value covenants and thereby reduce the likelihood of a potential future breachΒ by usingΒ cash from previous sales to reduce debt andΒ continuingΒ to dispose ofΒ non-core assets with a combined value of Β£32m. Since 31 December 2008,Β theΒ Fund has sold or exchanged contractsΒ onΒ Β£3.7mΒ of assetsΒ at values 8% above the valuation at that date.Β
The Fund is managed by Grainger, which also holds a 21.6% stake in G:res1 Limited. The debt in the Fund is wholly non-recourse to Grainger and the other investors and there is no other guarantor relationship.
TheΒ Company will comment in more detail on its progress at the time of its interim results announcement.Β
For further information:
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Grainger plc |
Financial Dynamics |
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Rupert DickinsonΒ Tel: +44 (0) 20 7795 4700 |
Stephanie Highett Tel: +44 (0) 20 7831 3113 |
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Andrew CunninghamΒ Tel: +44 (0) 191 261 1819 |
Dido Laurimore Tel: +44 (0) 20 7831 3113 |
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