Newcastle-headquartered build-to-rent (BTR) specialist Grainger plc, the UK’s largest residential REIT, said its IFRS profit before tax rose 153% to £102.6 million in the year to September 30.
Grainger said its dividend increased 10% to 8.31p per share as it reported 2% growth in Net Rental Income to £123.6 million.
Grainger plc CEO Helen Gordon said: “It is my pleasure to once again report that we have delivered an excellent performance and another year of strong earnings growth.
“Our focus on delivering great homes and great service to our customers and excellent risk-adjusted returns for shareholders has meant we have delivered an increase in earnings of +12%, an increase in net rental income of +12% and a +10% increase in dividend, our 20th consecutive period of increasing our dividend, which has seen us distribute c.£345m to shareholders over the past 10 years.
“In the last 7 years we have delivered like-for-like rental growth on average of 4.1% per annum. Customer affordability remains resilient and customer satisfaction levels remain sector-beating and put us on par with leading global consumer brands.
“Pre tax EPRA earnings will continue to grow. We continue to target £60m (8.1p per share) by FY26 and £72m (9.7pps) by FY29 in line with guidance, even after assuming we absorb higher interest rates over this period. This growth will come from the delivery of our £343m Committed Pipeline of which only c.£130m of capital expenditure is remaining.
“This year, after the successful transformation of Grainger into the UK’s leading listed build-to-rent business, we converted to a Real Estate Investment Trust (REIT), which will enhance shareholder returns and supports our enduring strategy.
“We have certainty and clarity over the regulatory landscape for our market with the Renters’ Rights Act, which aligns to our business model and rejects any form of rent control.
“Our asset class is characterised by strong fundamentals and is low-risk. Both residential rents and capital values have outperformed commercial real estate for the past twenty years. Residential rents, on average, outperform inflation. The net asset value of our portfolio has proven resilient again this period, backed up by disposals, and over the past five years despite increased interest rates the net asset value of our portfolio has increased +5.0%.
“We have a clear focus on delivering returns for shareholders. Our approach to capital allocation prioritises the delivery of our Committed Pipeline and delivery of our earnings growth guidance to FY29, whilst also focusing on driving cost efficiencies and deleveraging by between c.£300m-350m with a Net Debt to EBITDA target of c.8x and LTV of c.30%. We believe this is eminently deliverable when considering we generate c.£200m+ of cashflow each year from operating activities and sales proceeds.
“We are committed to continuing to deliver progressive dividend growth for years ahead.
“It has been another excellent performance for Grainger and the outlook for the business is bright as we continue to deliver sector-leading earnings growth despite macro-economic headwinds.”