The UK housing market "hasn't felt like this for some time", says Andrew Cunningham, chief executive of Grainger (GRI) - noting that the number of days it takes for the residential landlord to sell property is edging down. A recovery in housing transactions would help Grainger on its mission to reduce net debt below the £1bn mark, which involves offloading assets.
Net debt was £1.15bn at the year-end, but has fallen to £1.08bn this month following the sale of a 50 per cent stake in an £111m period social-housing estate in south London to Dorrington, a private property company. Mr Cunningham says he tries to avoid "cluster risk" and was happy to crystallise a 36 per cent gain on an acquisition only made in March 2011.
This is one of three strategic tie-ups announced over the past half year. Grainger also sold a 75 per cent stake in about half its German housing assets to an institutional investor last November, and this year signed a deal with APG, a Dutch pension fund manager, to manage a jointly-owned private-rented housing fund. These will boost asset management fees - another key plank of the company's strategic reinvention.
Once again the company's portfolio outperformed the national housing market, posting a 3 per cent increase over the six months, and boosting so-called 'triple' net asset value (marking both trading properties and derivatives to market). Broker Peel Hunt expects triple NAV of 166p a share at the year-end.
GRAINGER (GRI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 150p | MARKET VALUE: | £622m | |
| TOUCH: | 150-151p | 12-MONTH HIGH: | 155p | LOW: 81p |
| DIVIDEND YIELD: | 1.3% | TRADING PROPERTIES: | £996m | |
| DISCOUNT TO NAV: | 10% | |||
| INVESTMENT PROPERTIES: | £633m* | NET DEBT: | 264%* | |
| Half-year to 31 Mar | Net asset value** (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 157 | 15.1 | 3.05 | 0.55 |
| 2012 | 167 | 11.0 | 2.64 | 0.58 |
| % change | +6 | -27 | -13 | +5 |
Ex-div: 5 Jun Payment: 5 Jul *Includes £101m within joint ventures and associates **Gearing is 165 per cent after marking trading assets to market value | ||||
