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Grainger updates on strong rental growth and resilient sales

By Paul Norman - Wednesday, February 07, 2018 9:40

Grainger has updated on trading for the four months to end of January ahead of today's AGM highlighting strong rental performance and resilient sales.

Helen Gordon, chief executive, said: "The start to our financial year has been a positive one. We have seen good demand for our rental homes and strong rental growth, ahead of last year. We launched our newest private rented sector “PRS” development in mid-January, Argo Apartments in Canning Town, London, and in three weeks we have successfully let nearly forty percent of the 134 apartments at c.3% above our forecast rental levels. Our focus on providing high quality, mid-market homes where there is deep and growing demand, is proving successful as evidenced by the initial lease-up at Argo Apartments.

“Since announcing our FY17 results in November, we have secured an exciting new PRS build to rent development in Sheffield, one of our target cities, that will deliver 237 new homes. Our total secured investment pipeline has increased to c.£690m for 4,300 high-quality rental homes, relative to our £850m target.

“We constantly monitor housing market indicators. Selling prices of our properties are proving resilient and our residential sales performance is in line with last year, although we have seen a small increase in the length of time to complete sales. We have good visibility on a robust sales pipeline and attractive investment opportunities. We are well positioned for future success.”

Grainger highlighted what it termed good lettings and further rental growth.

There was 4.1% overall like-for-like rental growth year to date (January 2017: 3.4%) and 3.0% like-for-like rental growth year to date on its PRS homes, where it has seen continued strong demand (January 2017: 2.8%).

Annualised rental growth was 5.4% on regulated tenancy rental reviews (January 2017: 4.2%).

Sales wise it completed residential sales for the four months ended January 2018 in line with the prior year at £29m (January 2017: £29m). Following a strong end to FY17, it has seen a greater contribution from tenanted and other sales relative to sales on vacancy.

Overall completed sales totalled £39m for the four months ended January 2018, £10m lower than the prior year due to the timing of development land sales (January 2017: £49m). Overall sales profit totalled £15m (January 2017: £15m).

It has continued to sell properties on vacancy ahead of the last valuation, with a 1.7% increase in prices relative to September 2017 values (January 2017: 1.5%).

The residential sales pipeline totalled £55m (January 2017: £55m).

Since the beginning of the financial year, it has secured four sizeable deals totalling £166m, bringing its secured pipeline to circa £690m. These acquisitions are expected to deliver gross yields of around 7%. It has also been selected as preferred bidder on a PRS scheme in London.

It flagged progress on a range of developments which it said "underpins our confidence in the future and further growth of our PRS offering, and we are continuing to be selective in our investment approach to optimise yields and long-term returns".

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