Grainger builds up £1.4bn BTR pipeline
Reporting its preliminary full year results, the Newcastle-headquartered build-to-rent specialist reported profit before tax of £40.6m, up 48% year-on-year as demand remained high.
Grainger reported occupancy across its BTR portfolio of 97.4%, and recorded a “strong sales performance” of £274m, driven by an increase in asset recycling. The firm’s financial year ran to the end of September 2024.
Two major acquisitions were completed in the year. In Sheffield, where Grainger already has 521 income-producing apartments at Brook Place and Tiltworks, an acquisition was completed with the potential to add a further 193 homes.
A buy in Cardiff has given Grainger the potential to add 405 BTR homes at the Copper Works, which already has 307 apartments.
Across four existing clusters in Birmingham, Bristol, London and Manchester, Grainger added 1,236 homes in the financial year.
Net rental income grew year-on-year by 14%, to £110.1m, leading Grainger to pay a dividend increased by the same amount, to 7.55 pence per share.
Chief executive Helen Gordon said: “Building on our national footprint of carefully selected locations, we now have meaningful scale in many cities across the country providing good quality rental homes into areas of high demand. We also opened our first scheme in Cardiff, The Copper Works.”
A change is coming for Grainger, as Gordon reported: “This coming year is the last financial year before Grainger converts to a REIT, a major milestone in our transformation to becoming the leader in the UK’s build-to-rent sector. Since setting out our strategy in 2016, we have invested £2.5bn into delivering new BTR homes, and at the same time delivered value by divesting £2bn from non-core businesses and assets.
“Over this period, we have more than tripled the net rental income for the business. In the last year alone, we have disposed of £274m of non-core assets, recycling £270m of this capital into higher yielding, new, high-quality, energy-efficient BTR homes.
“The delivery of our committed pipeline has the potential to increase EPRA Earnings by another 50% over the medium term, whilst in the near term we expect EPRA Earnings to reach £60m by FY26, a second upgrade from our previous guidance. In addition, we anticipate our EBITDA margin to increase substantially from 54% today to over 60% by FY29.”
Gordon added that Grainger has been “pleased to see the new Labour government’s public rejection of rent controls and the acknowledgement that such controls would hurt supply and investment” and welcomed the incoming regime’s focus on increasing housing supply.
As for Grainger’s pipeline, it has £481m of schemes committed, representing 1,330 homes; £541m of secured schemes (2,009 homes), and £379m of work in planning or legals, representing 1,391 homes. All this adds up to £1.4bn across a pipeline of 4,730 homes.
