Residential landlord Grainger plc says record delivery of homes in the last 12 months has seen it top rental income of £100m.
The Newcastle-based firm has a portfolio of more than 10,000 homes, with another 5,600 in its build-to-rent pipeline. It has released full-year results for the period to the end of September in which its net rental income rose 12%, saying that it will deliver more than 1,600 new homes in 2024.
The company said its strategy to concentrate on the private rented sector (PRS) had seen its rental income more than triple. It said it was “very conscious of the affordability challenges facing many renters” and would aim to align rental increases with wage rises, insisting that its rent levels were relatively affordable.
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Speaking to BusinessLive after the results were published, chief executive Helen Gordon said Grainger remained resilient thanks to its mid-market properties which typically house young professionals under 34 years-old who may be at the point in their careers where their salaries are rising. She described "very low levels" of tenants in arrears, occupancy of 98% and a record 63% retention rate.
Grainger also announced a new partnership with Network Rail and developers Bloc, which will see the three organisations work together to deliver housing on former rail sites. It said that partnership would provide it with “a new route for growth”.
Ms Gordon said: “It is with great pleasure that I can report an outstanding year of record delivery and a strong performance for Grainger, growing net rental income strongly and enabling us to increase our dividend to our shareholders by 11%, while improving the rental experience for our growing number of customers. We are now delivering our pipeline at pace and are set to deliver market-leading earnings growth, a culmination of years of planning and implementation since setting out the company strategy in 2016. We have delivered c.1,200 new build-to-rent homes and are scheduled to deliver a further c.400 by the end of the calendar year.
“This year, we have exceeded more than £100m of annual net rental income on a passing basis, which is more than three times what it was at the start of the strategy. We now own and operate more than 10,000 rental homes nationally and this is set to grow significantly over the coming years. Our PRS portfolio now represents 77% of our operational portfolio by value.
“In the next three years, post-tax EPRA earnings will double compared to last year, as we deliver our fully-funded committed pipeline. Despite the macro-economic turbulence which marked the beginning of our financial year, the Grainger business has performed exceptionally well. This performance has been delivered by our market-leading operating platform, robust balance sheet and disciplined approach to capital allocation.
“Our property valuations held up well, underpinned by strong rental growth. Our capital discipline puts us in a strong position from a balance sheet perspective too, with our cost of debt fixed in the mid 3% for the next five years, enabling us to deliver on our committed pipeline and continue our growth trajectory.”
Grainger’s net rental income in the year rose from £86.3m to £96.5m. Its profit before tax fell substantially from £298.6m to £27.4m, though the previous year’s figure was significantly affected by a one-off change in property valuation.
