Grainger plc, the UK’s largest listed residential landlord and leader in the build-to-rent sector, today announces an excellent performance for the 12 months ended 30 September 2024. Grainger has a £3.4bn operational portfolio of 11,069 private rental homes and a £1.4bn build-to-rent pipeline comprising 4,730 new homes.

Helen Gordon, Chief Executive, said:

“It is my pleasure to report an excellent performance and another year of accelerated growth for Grainger.

“Building on last year’s record, we have delivered another strong year of growth, adding 1,236 new homes to our expanding nationwide portfolio. We added four new communities to our existing clusters in Birmingham, Bristol, London, and Manchester. 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.

“These new homes together with like-for-like rental growth of 6.3% have meant we have once again delivered double digit net rental income growth at 14% ahead of last year’s 12% growth whilst continuing to provide quality homes and communities.  For our shareholders this also means a 14% growth in our dividend. We increased EPRA Earnings 21% in the year.

“Customer affordability remains strong at 28%, below the national average of over 34%, and Grainger’s customer satisfaction is higher than ever. 9 in 10 customers tell us that they “really like” their Grainger home.

“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 (BTR) 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.

“We have 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. On the contrary, it has been pleasing to see the Government’s commitment to increase housing supply and investment. Plans to raise standards in the rental sector plays to Grainger’s strengths as a leading landlord with a best-in-class operating platform and a responsible approach to housing provision.

“The market opportunity for the UK build-to-rent sector is considerable with demand for renting growing and the shortage of rental supply worsening, and with its proven track record, Grainger is best placed to help alleviate this through continued investment and housing delivery, accelerating our growth for years to come.”

Leading the way on sustainability and responsibility

We continue to demonstrate our leadership in sustainability and responsibility.

94% of our properties are compliant with future energy efficiency standards expected to come into force in 2030 (BTR/PRS portfolio, EPC ratings A-C).

Outlook of compounding growth and market momentum

FY24 marked another year of very strong growth in net rental income and EPRA earnings as our operating platform and excellent pipeline continue to deliver compounding growth. With earnings guidance increased for the next two years and a sizable opportunity for further additional growth beyond, we are accelerating our growth and delivering on our strategy.

The market opportunity for the UK BTR sector is substantial and Grainger, as market leader with a proven track record of successfully launching and operating new BTR homes, is best placed to continue to accelerate and grow in this sector.

Rental growth for the year ahead is expected to remain above the long-term historical average of 3-3.5% as well as above our underwriting assumptions.

Our pipeline for growth is impressive at c.50% of our current BTR portfolio. This growth in our core cities will be delivered with our strengthening relations with partners including public sector landowners.

Our asset recycling programme will continue to support our growth ambitions whilst allowing us to maintain a strong balance sheet.

Structural undersupply combined with pipeline for growth, our expertise and leading operating platform means we are perfectly positioned to continue to grow rapidly.  The benefits of scale will enhance returns and deliver compound earnings growth for our Shareholders as well as providing a great experience for renters.

EPRA Earnings is a measure of recurring earnings from core operational activities which the Company uses in accordance with the Best Practices Recommendations of the European Public Real Estate Association (EPRA). For more details please see page 171-172 of the Annual Report and Accounts