Grainger plc Regulatory News (GRI)

13 October 2011

Grainger plc

TRADING UPDATE

Grainger plc ("Grainger" or the "Company" or the "Group"), the UK's largest quoted residential property owner, today provides a trading update in advance of its preliminary results announcement for the year to 30 September 2011.

For the twelve month period to 30 September 2011, we expect normal sales (i.e. sales on vacancy) from our UK residential and retirement solutions portfolios to amount to c.£116m (2010: £110m). Investment sales (i.e. sales with a tenant in place) and sales of other assets such as agricultural holdings will be c.£64m (2010: £40m).

Sales from our development division at c.£22m compare favourably to the equivalent figure last year of £19m. Including sales of c.£21m in Germany (2010: £4m), total Group property sales will therefore amount to c.£223m (2010: £173m). These sales will be at an overall margin over book value in excess of that achieved in 2010. We enter our new financial year with a sales pipeline (contracts exchanged and solicitors instructed) of £34m which is an increase on the pipeline of £29m twelve months ago.

Net rents will show a significant increase compared to last year's figure of £52.9m, assisted by underlying rental growth as well as the addition of net rent arising from the strategic portfolio acquisitions during the year of the Grainger GenInvest LLPs and HI Tricomm, which together added £394m of wholly owned assets to the Group. Otherwise we have had a limited buying programme during the year, acquiring some £22m of property compared to £63m in 2010.

Our sales performance continues to be strong with our ability to outperform the wider market driven by the active management of our portfolios, including pre-sale refurbishment where appropriate. Completed normal sales were some 6.6% above September 2010 vacant possession values (2010: 7.4% above). Excluding the positive impact of pre-sale refurbishment, the underlying excess to vacant possession value is c.3.7%.

The preliminary assessment of the Group's valuation for the year to 30 September 2011 suggests that the overall increase in the vacant possession values across our UK portfolios in the past twelve months is c.1.2%. This movement compares positively to the decreases of 2.3% and 0.3% in the Halifax and Nationwide indices respectively. Our assets in Germany show no material change.

Our Residential Asset Management Platform (RAMP), which we operate on behalf of insolvency practitioners appointed on loans owned by Lloyds Banking Group is proceeding to plan with 1,545 units now under our management. The Group continues to evaluate opportunities to leverage its management platform, with recent progress demonstrated by the Company reaching a framework agreement with Bouygues Development to co-invest in a residential Build-To-Let Fund which, on creation, would provide institutional investors with the opportunity to invest in scale into the private rented sector.

As recently announced, the Group has arranged substantial new debt facilities over the last eight months, extending maturities and further diversifying its sources of debt in line with its stated strategy.

The Company will comment in more detail on its progress at the time of its preliminary results announcement on 24 November 2011. 

-ENDS-

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