Grainger’s (GRI) acquisition of GRIP real estate investment trust in 2018 meant recurring rental income exceeded proceeds from residential sales for the first time during the year to September. Like-for-like rental income grew by 3.6 per cent, with the rate of private rental sector (PRS) rental growth accelerating ahead of the prior year at 3.4 per cent.
Given fears of a more pronounced downturn in the residential housing market, reduced reliance on lumpier sales proceeds should be welcomed by investors. Profits from property disposals were down 17 per cent on the prior year, but that was due to a lower vacancy rate, according to chief executive Helen Gordon, while the “keys to cash” sale length remained at 111 days.
That cash is being ploughed back into PRS developments, and after delivering 1,152 homes last year, another 1,000 are expected in 2020. The group also revealed that it had this month agreed to forward fund a 132-home PRS development in the Hallsville Quarter development at Canning Town for around £56m.
Broker Panmure Gordon forecasts adjusted net asset value (NAV) of 311p at the September 2020 year-end, rising to 326p in FY2021.
| GRAINGER (GRI) | ||||
| ORD PRICE: | 281p | MARKET VALUE: | £1.72bn | |
| TOUCH: | 281-281.4p | 12-MONTH HIGH: | 283p | LOW: 204p |
| DIVIDEND YIELD: | 1.8% | TRADING PROPERTIES: | £700m | |
| DISCOUNT TO NAV: | 5% | NET DEBT: | 90% | |
| INVESTMENT PROPERTIES: | £1.59bn * | |||
| Year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 263 | 51 | 9.9 ** | 2.53 ** |
| 2016 | 287 | 84 | 17 ** | 4.14 ** |
| 2017 | 343 | 86 | 17 ** | 4.48 ** |
| 2018 | 292 | 101 | 19 | 4.75 |
| 2019 | 297 | 131 | 20 | 5.19 |
| % change | +2 | +30 | +5 | +9 |
| Ex-div: | 2 Jan | |||
| Payment: | 10 Feb | |||
| *Includes investments in joint ventures | ||||
| **Adjusted for seven-for-15 rights issue | ||||
