Residential landlord Grainger sees profits surge 120% with rental income growth boosted by surging investment property values
- Britain’s biggest listed residential landlord revealed profits climbed to £75.6m
- The Newcastle-based company benefited from strong demand for its homes
- Occupancy levels in its private rented sector portfolio grew to a record 98%
Earnings at Grainger have more than doubled thanks to a large rise in rental income and soaring growth in the valuation of its investment properties.
Britain’s biggest listed residential landlord revealed profits climbed to £75.6million in the six months to the end of March from £34.3million in the same period the previous year.
Profitability received its greatest boost from a massive uplift in net valuation on its investment assets, which skyrocketed by £49million year-on-year to £59.3million.
High demand: Occupancy levels within Grainger’s private rented sector (PRS) portfolio, worth about £2.2billion, above pre-pandemic volumes to a record 98 per cent
Yet the Newcastle-based company also benefited from strong demand for its homes across both London and regional areas, including new property developments.
This drove occupancy levels in its £2.2billion private rented sector holdings, which comprises over 70 per cent of the group’s portfolio value, above pre-pandemic volumes to a record 98 per cent.
Combined with a 3.5 per cent like-for-like hike in the average rent charged to its customers, this helped boost the FTSE 250 firm’s net rental income by 23 per cent to £42.8million.
Total revenue also soared by around a quarter to £126.6million even though sales of residential units plunged by about two-thirds to 187 properties due mainly to a fall in transactions of non-vacant properties.
But despite record-high housing costs in a UK property sector suffering from an acute shortage of new homes and a worsening cost-of-living crisis, Grainger said considerable interest exists among Britons for rental properties.
It added that it was in a better position to grab a larger market share from the exit of smaller landlords, many of whom are leaving the sector as a result of increasing regulation and fiscal issues.
Future: Grainger currently has a fully-funded secure pipeline of about 4,000 homes with an investment value exceeding £1billion that is forecasted to double its net rental income
Chief executive Helen Gordon: ‘Grainger is in a strong position as market leader with a scalable national operating platform, fully-funded secured pipeline and fully integrated business model.
‘We are well prepared for the economic challenges facing the UK today of inflation and cost of living rises.
‘With a resilient customer base, high-quality energy-efficient homes, fixed debt costs, fixed delivery costs across the majority of our secured pipeline and limited direct exposure to other inflationary pressures, we are confident in the outlook for our business.’
Grainger currently has a fully-funded secured pipeline of just over 4,000 homes with an investment value exceeding £1billion, which is expected to double the firm’s net rental income once they become fully operational.
Because this pipeline is wholly financed and almost all hedged, the group said it was not that vulnerable to any potential interest rate rises by the Bank of England.
It also claimed to be ‘well prepared’ to weather higher inflation as its customers tend to be better off on average, most of its secured pipeline schemes are on fixed-price contracts, and the share of Britons’ household income going towards paying rent has remained relatively stable.
However, Edison Group director Andy Murphy warned that Grainger ‘will face significant disruption caused by macroeconomic pressures such as the ongoing conflict in Ukraine and rising inflation, both of which are feeding into a cost-of-living crisis which will take its toll on the property sector.’
Grainger shares closed trading 3.1 per cent up at 289.8p on Thursday, meaning its value has fallen by over 10 per cent in the past six months.