17 November 2022
Grainger plc
Full year financial results
for the twelve months ended 30 September 2022
Record performance
with four years of growth locked-in, funded and de-risked
§ Net Rental Income up +22%
§ Adjusted Earnings up +12%
§ Like-for-like rental growth up +4.7%
§ Record occupancy continues at 98% (PRS)
§ EPRA Net Tangible Asset (‘NTA’) up +7%
§ Total dividend per share up +16%
Grainger plc, the UK’s largest listed residential landlord with a £3.2bn operational portfolio of 9,669 rental homes and, £1.8bn build-to-rent pipeline of 6,838 homes, today announces record performance for its financial year to the end of September 2022.
Helen Gordon, Chief Executive, said:
“I am pleased to report a very successful year for Grainger, in which we delivered record net rental income growth of 22%, driven by record occupancy, rental growth and lease up of our new schemes. Adjusted earnings for the year up 12%, EPRA NTA up 7% and dividend up 16%.
“Our £953m committed pipeline of 3,658 new build-to-rent homes is locked-in, fully-funded and de-risked with fixed construction costs, providing visibility on earnings growth for the next four years. On top of this we have the option to proceed with a further £241m of 769 homes in our secured pipeline and we have £599m in our planning and legal pipeline, comprising 2,411 homes. In total, our build-to-rent pipeline stands at £1.8bn and 6,838 new homes.
“We have a strong financial footing with a robust balance sheet. Our debt is 97% hedged with average debt maturities of six and a half years and we have no significant refinancing requirements until 2027. All of this puts Grainger in a position of strength to take advantage of the increasing demand for renting homes in the UK.
“Whilst we are mindful of the wider macro-economic environment, we are well positioned for the challenges ahead and our market benefits from positive long-term structural trends. Demand for renting continues to grow, supply remains constrained as many small landlords exit the rental market, and we benefit from a resilient customer base. The inflation-linked characteristics of our asset class, coupled with our high-quality, energy-efficient and well-located properties, scalable operating platform and unrivalled data, insight and analytics gives us confidence for our continued strong operational performance.”
Highlights
§ +22% growth delivered in Net Rental Income1 to £86.3m (FY21: £70.6m)
§ +12% growth in Adjusted Earnings2 to £93.5m (FY21: £83.5m)
§ Total dividend up +16% to 5.97p per share
§ +4.7% like-for-like rental growth3 across our total portfolio (FY21: 1.0%), with +3.5% growth in H1 and +5.5% growth in H2
o +4.8% like-for-like rental growth in our PRS portfolio (FY21: 0.3%), with +3.5% in H1, +5.5% in H2 and maintained in October post year end
§ +5.6% like-for-like rental growth on new lets in our PRS portfolio
§ +4.1% like-for-like rental growth on renewals in our PRS portfolio
o +4.6% like-for-like rental growth in our regulated tenancy portfolio (FY21: 3.6%), with 3.7% in H1 and 5.7% in H2
§ Record occupancy of 98% in our PRS portfolio
§ Total Property Return for the year of 7.5% due to strong valuation growth of +£157m driven by strong performance on lettings and rental growth
§ EPRA NTA up +7% to 317pps (FY21: 297pps)
§ Debt 97% hedged with an average cost of debt 3.1% expected to rise marginally by +20bps in FY23, a weighted average debt maturity of six and a half years and no significant refinancing requirements until 2027
§ PRS Customer Net Promoter Score up +16pts to 34pts and 90% PRS customer satisfaction
§ 26% reduction in Scope 1 & 2 emissions per £m assets under management (market-based methodology)
§ 87% of PRS properties have EPC ratings A-C
Financial Highlights
| Income returns | FY21 | FY22 | Change |
| Rental growth (like-for-like) | 1.0% | 4.7% | +372 bps |
| PRS rental growth (like-for-like) | 0.3% | 4.8% | +450 bps |
| Regulated tenancy rental growth (like-for-like, annualised) | 3.6% | 4.6% | +102 bps |
| Net rental income (Note 5) | £70.6m | £86.3m | +22% |
| Adjusted earnings (Note 2) | £83.5m | £93.5m | +12% |
| Profit before tax (Note 2)4 | £152.1m | £298.6m | +96% |
| Earnings per share (diluted, after tax) (Note 9)4 | 16.1p | 30.9p | +92% |
| Dividend per share (Note 10)5 | 5.15p | 5.97p | +16% |
| Capital returns | FY21 | FY22 | Change |
| Total Property Return6 | 7.5% | 7.5% | +2 bps |
| Total Accounting Return (Note 3) | 5.5% | 8.8% | +330 bps |
| EPRA NTA per share (Note 3) | 297p | 317p | +7% |
| Net debt | £1,042m | £1,262m | +21% |
| Group LTV | 30.4% | 33.4% | +304 bps |
| Cost of debt (average) | 3.1% | 3.1% | +1 bps |
| Reversionary surplus | £265m | £248m | (6)% |
| Secured build-to-rent pipeline | Investment | Homes | ||
| Secured & committed | £953m | 3,658 | ||
| Secured but not yet committed | £241m | 769 | ||
| Total investment value | £1,194m | 4,427 | ||
| ESG benchmark performance | ||||
| FTSE4Good | since 2010 | |||
| ISS ESG | Prime Rating | |||
| MSCI ESG | ‘AA’ | |||
| Sustainalytics ESG Risk Rating | Low Risk | |||
| EPRA Sustainability Best Practice Reporting | Gold Award | |||
| CDP (formerly the Carbon Disclosure Project) | ‘B’ Rating | |||
| Workforce Disclosure Initiative | 85% | |||
| GRESB Public Disclosure | ‘A’ Rating | |||
| Future reporting dates | |
| 2023 | |
| AGM & Trading update | 8 February |
| Half year results | 11 May |
| Trading update | September |
| Full year results | 22 November |
1 Refer to Note 5 for net rental income calculation.
2 Refer to Note 2 for profit before tax and adjusted earnings reconciliation.
3 Rental growth is the average increase in rent charged across our portfolio on a like-for-like basis.
4 Profit before tax includes an £81.2m valuation uplift from one-off transfers from trading property to investment property in FY22. The transfer does not impact the market value of properties reflected in EPRA measures, but does increase EPRA NTA by 3pps following the reclassification of £20.3m deferred and contingent tax.
5 Dividends – Subject to approval at the AGM, the final dividend of 3.89p per share (gross) amounting to £28.8m will be paid on 14 February 2023 to Shareholders on the register at the close of business on 31 December 2022. Shareholders will again be offered the option to participate in a dividend reinvestment plan and the last day for election is 24 January 2023. An interim dividend of 2.08p per share amounting to a total of £15.4m was paid to Shareholders on 1 July 2022 – refer also to Note 10.
6 Total Property Return (TPR) represents the change in gross asset value, net of capital expenditure incurred, plus net income, expressed as a percentage of gross asset value.
Results presentation
Grainger plc will be holding a presentation of the results at 08:30am (UK time) today, 17 November 2022, which can be accessed via webcast and a telephone dial-in facility (details below), which will be followed by a live Q&A session for sell side analysts and shareholders.
Webcast details:
To view the webcast, please go to the following URL link. Registration is required.
The webcast will be available for six months from the date of the presentation.
Conference call details:
Call: +44 (0) 330 551 0200
Confirmation Code: Quote Grainger when prompted by the operator
A copy of the presentation slides will also be available to download on Grainger’s website ( http://corporate.graingerplc.co.uk/ ) from 08:00am (UK time).
For further information, please contact:
Investor relations
Kurt Mueller, Grainger plc: +44 (0) 20 7940 9500
Media
Ginny Pulbrook / Geoffrey Pelham-Lane, Camarco: +44 (0) 20 3757 4992 / 4985