Grainger, a UK residential and build-to-rent sector company, has seen substantial growth in key performance indicators for the year ended 30 September 2024.
The company’s net rental income surged by 14% to £110.1m ($139m) in FY24, a notable increase from the previous year’s £96.5m. This growth is further underscored by a 21% rise in EPRA earnings, reaching £48.0m compared to £39.8m in the prior fiscal year.
Despite these positive trends, Grainger reported a 6% decline in adjusted earnings to £91.6m, which aligns with the company’s forecasts due to a shrinking regulated tenancy portfolio and the consequent reduction in sales profits.
The like-for-like rental growth within the portfolio was recorded at 6.3% in FY24, slightly lower than the previous year’s 7.7%.
This growth was consistent across the build-to-rent/private rented sector (BTR/PRS) and regulated tenancy portfolios, with new lets and renewals contributing to the performance.
The BTR/PRS portfolio boasted a high occupancy rate of 97.4%, and the company achieved a robust sales performance with proceeds of £274m, driven by strategic asset recycling.
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By GlobalDataGrainger’s EPRA Net Tangible Assets (NTA) remained strong at 298pps, marginally ahead of the previous year’s 305pps, when excluding the 8p impact from tax changes.
Grainger’s balance sheet and funding position are solid, with debt costs fixed in the mid-3% range for the next four years.
Looking forward, Grainger anticipates rental growth to remain above the long-term historical average of 3-3.5%, as well as above their underwriting assumptions.
The company is well-positioned to deliver a sustainable Total Accounting Return of 8%, reflecting conservative assumptions that include stable yields and the low-risk nature of their asset class.
Grainger chief executive Helen Gordon said: “This coming year is the last financial year before Grainger converts to a REIT, a major milestone in our transformation to becoming the leader in the UK’s build-to-rent (BTR) sector. Since setting out our strategy in 2016, we have invested £2.5bn into delivering new BTR homes, and at the same time delivered value by divesting £2bn from non-core businesses and assets. Over this period, we have more than tripled the net rental income for the business.
“The delivery of our committed pipeline has the potential to increase EPRA Earnings by another 50% over the medium term, whilst in the near term we expect EPRA Earnings to reach £60m by FY26, a second upgrade from our previous guidance. In addition, we anticipate our EBITDA margin to increase substantially from 54% today to over 60% by FY29.
“The market opportunity for the UK build-to-rent sector is considerable with demand for renting growing and the shortage of rental supply worsening, and with its proven track record, Grainger is best placed to help alleviate this through continued investment and housing delivery, accelerating our growth for years to come.”
