Grainger, Newcastle property giant, invests £300m

Grainger's Newcastle HQ

Grainger plc, the UK’s largest listed provider of private rental homes, published a trading update for its AGM at the firm’s head office in Newcastle upon Tyne.

Grainger reporting that 2023 “is a year of record investment and delivery for Grainger with c.£300m of capital expenditure on committed developments in 2023 and the delivery of 1,640 new, purpose-built, energy-efficient rental homes for the year.”

Grainger said it now has a £3.2 billion operational portfolio of 10,000 homes and a £1.8 billion pipeline of a further 7,000 build-to-rent homes.

It said that its £953 million committed pipeline of 3,658 homes “is fully funded, with finance and construction costs fixed, of which there is £479m remaining cost to complete as at 30 September 2022.”

Grainger CEO Helen Gordon, Chief Executive of Grainger, wrote: “Building on last year’s record performance, Grainger has continued to deliver strong performance against all key operational metrics as demand for private rented housing in the UK has continued to grow further, coupled with low levels of supply. We have delivered a strong operational performance during the first four months of our financial year since 1 October 2022.

“Whilst keeping a very close eye on overall customer affordability levels, like-for-like rental growth has accelerated to 6.1% (PRS: 6.1%; Regulated tenancies: 6.2%) from 5.5% in H2 2022, closely correlated to wage inflation, compared to 3.2% for the same period last year. Our PRS portfolio is effectively fully occupied at 98.7% (February 2022: 97%).

“Our programme of sales activity has proved resilient to date despite the uncertain outlook in the housing sales market, due to a lower reliance on mortgage purchases and first-time buyers.

“Sales of vacant homes from our regulated tenancy portfolio, as well as asset recycling across our PRS, regulated tenancy and development portfolios, have performed well, generating £48.1m of total proceeds, ahead of the same period last year (£21.1m proceeds).

“Sales prices achieved from vacant sales were on average 1.2% below September vacant possession values, outperforming the market and reflecting the more resilient nature of these sales due to our typical buyer profile.

“Our £1.8bn pipeline of new, purpose-built, energy-efficient rental homes will see us deliver 1,640 new build-to-rent homes across seven cities in England and Wales in 2023, a year of record delivery and investment for Grainger.

“Our build-to-rent partnership with Transport for London continues to progress exceptionally well. Through our joint venture, we are in the process of drawing down the land from TfL for four of the schemes, c.1,240 homes, all of which have full planning consent.”