Grainger (GRI) has been busy refocusing its strategy over the last two years, and is concentrating on building a presence in the private rented sector (PRS). So, in the year to September 2017, the PRS investment pipeline grew from £389m a year earlier to £651m, with a further £243m in the planning stage and £373m under consideration.
Restructuring the business model has also brought cost savings, with overheads down from £31.8m a year earlier to £27.2m. Grainger's funding has also been given a makeover, with refinancing driving down the cost of debt from 3.9 per cent to 3.4 per cent.
Net rental income grew by 8 per cent to £40.4m, thanks to an outperformance on the PRS portfolio where rental growth of 3.3 per cent was more than double the average market growth rate. And developing the current pipeline could double net rental income to around £80m a year.
Regulated tenancies provided regular cash flow as assets were sold when becoming vacant, and this generated profits from sales of £60.4m. And, on average, these were sold at a 2.7 per cent premium to vacant possession values as at September 2016.
Analysts at Peel Hunt are forecasting triple adjusted net asset value (NAV) at the September 2018 year-end of 314p.
| GRAINGER (GRI) | ||||
| ORD PRICE: | 283p | MARKET VALUE: | £1.18bn | |
| TOUCH: | 282.7-283.3p | 12-MONTH HIGH | 294p | LOW: 215p |
| DIVIDEND YIELD: | 1.7% | TRADING STOCK: | £841m** | |
| DISCOUNT TO NAV: | 7% | NET DEBT: | 103% | |
| INVESTMENT PROPERTIES: | £589m* | |||
| Year to 30 Sep | Net asset value (p)** | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 195 | 64.3 | 13.1 | 2.04 |
| 2014 | 242 | 81.1 | 18.1 | 2.5 |
| 2015 | 263 | 51.4 | 10.7 | 2.75 |
| 2016 | 287 | 84.2 | 18.0 | 4.5 |
| 2017 | 303 | 86.3 | 17.7 | 4.86 |
| % change | +6 | +2 | -2 | +8 |
| Ex-div | 28 Dec | |||
| Payment: | 9 Feb | |||
| *Includes investments held in associates and joint ventures **Trading properties marked to market (triple NAV) | ||||
