Grainger says major build programme will see earnings double

Build-to-rent developer and landlord Grainger has said it is on course to double its earnings over the next four years by delivering its 5,400-home development pipeline.

The firm, reporting half year results to March 31 today, said its predicted earnings growth was being supported by strong increases in rents and an expected 1,640 new homes that will be completed across seven schemes before the end of the current financial year.

However, despite the growth in rental income, up 12% to £48m in the six month period, the firm said interim pre-tax profit collapsed to just £5.7m, down 94%, because of a £41m down-valuation of its £3.7bn property portfolio.

Chief executive Helen Gordon said: “Our balance sheet is in a strong position with a low cost of debt fixed for six years, enabling us to deliver on our committed investment pipeline with returns protected. These plans will see us deliver a doubling of EPRA earnings over the next four years, with our build to rent projects secured, financing in place, and both construction and debt costs fixed over that period.”

>> See also Could Build to Rent be the darling of housing delivery?

Grainger, which owns 10,000 homes across England, largely in London and the South east, said it saw like-for-like rental growth of 6.8%, up from the 3.5% growth experienced this time last year.

The firm said it had committed to building 3,397 of the homes in its development pipeline, at a cost of £890m, with costs and contracts agreed and funding in place. In addition the firm has secured plans for a further 2,009 homes at a cost of £541m, but has not yet committed funding.

Grainger’s pipeline includes five planning permissions totalling 1,240 homes secured through its joint venture with Transport for London, Connected Living London. It said the JV had now acquired four of the five sites and enabling works had started on the schemes.

Grainger’s half year results come following a period of sharply rising rents as the housing for sale market has stalled in the wake of post-mini-budget interest rate rises, leaving many would-be buyers with little choice but to continue renting. Fellow build-to-rent landlord Get Living yesterday reported pre-tax profit up £161% on rising rental revenues.

Gordon added: “We are confident in the outlook for our business. With positive expectations for the occupational market and rental growth, resilience in valuations backed by strong active investor demand, and an institutional-landlord-friendly investment landscape, the outlook for Grainger remains strong as we continue to lead the sector.”