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Grainger raises £187m to fund PRS projects

The private rental specialist plans to accelerate its pipeline
February 14, 2020

Grainger (GRI) has raised £187m after completing a share placing to accelerate the purchase of sites for private rented sector (PRS) developments. Shares equivalent to 9.99 per cent of the group’s existing share capital will be admitted on 17 February and together with additional debt will give it the funding firepower of £312m.

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The new shares were issued at 305p each, representing a discount of 2 per cent to the closing price the day prior to the placing being announced. 

The group, which is the UK’s largest residential landlord, said it had plans to bring forward four forward-funded schemes in Birmingham, Cardiff, Nottingham and London. The group invested heavily in London last year, said chief executive Helen Gordon. “But since the general election there’s been strong growth in demand in the key regions,” she said.

A further £59m will be used to accelerate near-term schemes in the planning and legal pipeline, which currently stands at £528m. 

The schemes are expected to add £16m in annual net rental income once leased. Importantly for shareholders, the completion of a further 1,000 units via four schemes this year, in addition to inflation-linked underlying rental growth, means the group expects the dividend per share to rise once again this year, despite a greater number of shares being in issue. Half of net rental income is paid out to shareholders as dividends. 

Grainger has already put £56m of the money raised to use by agreeing to forward fund and acquire a 348-home PRS development from Blocwork, a 50:50 joint venture between Network Rail and Bloc Group.

The total secured pipeline of £978m in PRS projects is expected to increase net rental income from £70m at the end of September to £128m once let.