Grainger raises divi as H1 net rental income hits £48m

Grainger CEO Helen Gordon

Newcastle-headquartered Grainger plc — the UK’s largest listed residential landlord and a leader in the build-to-rent sector — announced a 10% rise in its dividend as it revealed a “continuing strong performance” for the six months ended March 31, 2023.

Grainger said its £3.1 billion operational portfolio totals 10,000 homes with a further 6,000 homes in its £1.6 billion build to rent investment pipeline.

The company said its half-year dividend will be increased 10% to 2.28p per share.

Grainger’s first-half net rental income increased 12% to £48 million “driven by continued strong demand resulting in high levels of occupancy at 98.5%, continued strong lettings of new launches and strong rental growth.”

The firm said like for like rental growth across the portfolio was +6.8%, up from +3.5%.

“The £3.7bn market value of our overall portfolio proved resilient with a fall of only 1.3% (HY22: +2.3%) over the six-month period,” said Grainger .

“Our PRS portfolio saw strong ERV growth of 4.1% which offset c.25bps outward yield movement in the period.

“Our regional PRS portfolio outperformed London marginally with c.20bps outward yield movement compared with c.30bps in London. The regulated portfolio again proved its resilience at £767m and 0.5% fall in the six month period.”

Grainger CEO Helen Gordon said: “We continue to deliver strong consistent performance across the business.

“For the first half of our financial year, we have delivered an increase in net rental income of +12%, supporting a 10% increase in our dividend.

“Rental growth momentum has continued to accelerate which has broadly offset yield movements and the net asset value of our portfolio was resilient.

“Our balance sheet is in a strong position with a low cost of debt fixed for six years, enabling us to deliver on our committed investment pipeline with returns protected.

“These plans will see us deliver a doubling of EPRA earnings over the next four years, with our build to rent projects secured, financing in place, and both construction and debt costs fixed over that period.  

“Aligned to wage inflation we achieved a like-for-like rental growth of +6.8%, up from 3.5% this time last year.

“This has mostly offset valuation yield movements with EPRA NTA broadly stable at 310pps (2% down in the six months since FY22 of 317pps, but +2% up in the twelve months since HY22 of 305p). Strong investor appetite and robust transactional evidence from a number of completed deals in recent months provide us with further confidence in the relative low volatility of our sector.

“We are confident in the outlook for our business. With positive expectations for the occupational market and rental growth, resilience in valuations backed by strong active investor demand, and an institutional-landlord-friendly investment landscape, the outlook for Grainger remains strong as we continue to lead the sector.”