Grainger plc Regulatory News (GRI)

6 February 2019

Grainger plc

Trading Update 

Grainger’s resilient growth strategy delivers strong performance

Grainger plc, the UK's largest listed residential landlord, today provides an update on trading for the first four months of its financial year to the end of January 2019. The company will announce its half year financial results on 16 May 2019.

Helen Gordon, Chief Executive of Grainger, said:

"It has been a good start to the financial year. Following our acquisition of APG's stake in GRIP, our business model is now underpinned by a quality £1.3bn stabilised PRS (Private Rental Sector) portfolio. This is the largest stabilised PRS portfolio in the UK and is performing well. We achieved a 3.4% like-for-like rental growth on our PRS portfolio for the first four months of the year, which demonstrates the depth of customer demand, the quality of our offering, and the resilience of the sector.

"When we launched our new strategy in early 2016 we set a target to invest £850m into new PRS assets by 2020. Our completed portfolio is now over 150% of this target with a further £808m in our secured investment pipeline two years ahead of plans.

"Lettings progress at Clippers Quay in Salford, the largest PRS scheme outside of London, has been very encouraging with lease-up and rent levels ahead of expectations. This endorses our view that well located, quality accommodation at mid-market rents will attract strong demand. We have 12 schemes currently on site, with a number of completions due this year, and we look forward to replicating this success across our pipeline.

"Strong sales performance at the end of last year reduced our vacant ex regulated properties available for sale. Pricing is steady and volumes have slowed slightly, we remain confident that we will achieve our full year expectations.

"With the business now underpinned by a resilient rental income stream and a robust balance sheet we are in a great position to progress our next phase of growth."

Highlights

Resilient income and strong rental growth

Our £1.3bn stabilised PRS portfolio (c.4,750 units) is performing well, underpinning the resilience of our business model. Like-for-like rental growth across our portfolio is good with strong occupancy across our PRS business. Residential sales remain in line with historic levels.

▪ 3.7% overall like-for-like rental growth year to date:

- 3.4% like-for-like rental growth on our PRS homes; and

- Annualised rental growth of 4.3% on regulated tenancy rental reviews.

▪ Quality PRS portfolio demonstrating strong occupancy, excellent retention rates and an efficient gross to net:

- Occupancy within the PRS portfolio 97.5%.

- Retention rates amongst our PRS residents remains strong and the average length of stay has increased to 32 months.

- Gross to net across the PRS portfolio stands at 26%.

▪ Income from our residential sales underpinning valuations and delivering strong cashflows:

- Residential sales for the period performed in line with prior year and our expected H1:H2, 40:60 split. Sales prices were robust achieving 0.9% compared to latest valuations (at vacant possession value) and sales transactions velocity (i.e keys to cash) was stable at 112 days.

Pipeline delivering on all fronts

Our PRS development pipeline now stands at 17 schemes and represents £808m of new investment and we have further opportunities in planning and legal. On completion our total PRS portfolio will amount to c.£2.1bn (c.8,500 units).

Strong lettings progress

▪ Clippers Quay, Manchester (614 units) - Strong lease-up at our latest and largest PRS development, ahead of plan and expectations:

- Phase 1 of the scheme (135 units) completed in November 2018, with 54% pre-let at the point of completion and continued lettings momentum thereafter with 84% now let. Rents achieved were above under-writing levels.

- Phase 2 (271 units) will complete in the next month and leasing will begin shortly.

Forecast completions on track

▪ Finzels Reach, Bristol (194 units) - completion and lease-up is expected in spring 2019, with early indications of strong lettings interest.

▪ Gun Hill, Wellesley (107 units) - completions now starting to flow with marketing launch underway.

▪ Eccy Village, Sheffield (237 units) - construction proceeding to plan and on schedule with completion expected in autumn 2019.

Construction underway on 12 sites

▪ We are on course for the topping out of four developments this year, Apex House, London (163 units), Pontoon Dock, London (236 units) Gilders Yard, Birmingham (158 units) and Silbury Boulevard, Milton Keynes (139 units).

▪ The compulsory purchase order to enable site assembly at Seven Sisters has been granted.

Potential pipeline additions

▪ Over the period, we acquired Exchange Square in Birmingham, our second PRS development in the city, which will deliver c.375 new PRS homes, as previously announced.

▪ Over the period, Grainger was shortlisted for the final three by Transport for London for a partnership to deliver c.3,000 PRS homes across 10 sites in London, in and around tube stations.

GRIP integration well underway

▪ GRIP acquisition completed on 20th December 2018.

▪ Voluntary exit of REIT regime effective 1st January 2019.

▪ Delisted from The International Stock Exchange in Jersey on 14th January 2019.

▪ Operational optimisation initiatives underway.

▪ Value add and asset recycling strategies progressing well.

Outlook

With the business now underpinned by a resilient rental income stream and a robust balance sheet we are in a great position to progress our leadership in the sector. We remain confident on the outlook for the year ahead.

-ENDS-

For further information:

Grainger plc

Kurt Mueller

London Office Tel: +44 (0) 20 7940 9500

Camarco (Financial PR adviser)

Ginny Pulbrook / Geoffrey Pelham-Lane

+44 (0) 20 3757 4992/4985