5th Feb 2015 10:01
LONDON (Alliance News) - Grainger PLC on Thursday said its average sale prices rose in the first four months of its financial year, but said the start date for its new chairman has been delayed and said it is considering its options regarding the money it is owed from the sale of its Equity Release (Increments) Ltd business last year.
The FTSE 250-listed residential property company said its average sales price in the fourth months to the end of January was up 3.9% against September 2014 vacant possession value. The rise is slower than for the same period last year, when its reported a 7.1% rise in its average sales value for the four months to the end of January 2014. The group said it completed GBP102.3 million in sales in the four months, again lower than the GBP104 million reported a year earlier.
The group said it saw strong levels of rental demand in its managed UK market-rented properties in the period, with year-to-date increases in rental value averaging 6.3% on a like-for-like basis on new lets and 2.6% on renewals.
The company also noted the start date of its incoming chairman, Ian Coull, has been delayed after Coull received medical advice which will prevent him from taking on the full responsibilities of the role. Senior Independent Director Margaret Ford has been appointed interim chairman. Grainger expects she will hold the role for three months before Coull then takes over.
But the group said it has taken a GBP14 million hit in the mark-to-market valuation of derivatives in the four months, compared with a GBP1 million gain a year earlier.
Grainger also provided an update on the deferred consideration it is owed from the sale of Equity Release to Clifden Holdings Ltd in January 2014. Under the deal, Clifden owes Grainger GBP35 million in deferred consideration from the GBP85 million deal, which had been due to be paid from the proceeds of a proposed securitisation of Equity Release. The final payment date for the consideration had been January 9.
But Clifden has not completed the securitisation and has not paid the remaining consideration it owes.
Grainger said it has security and other rights over assets of Equity Release and Clifden, including security over the entire issued share capital of equity release and the right to apply the monetary value of certain interest rate caps owned by Clifden towards the deferred consideration. Grainger said it estimates the net asset value of Equity Release to be around GBP20 million and said the recovery from the interest rate caps is uncertain.
The company said it is continuing to review the best course of action in relation to Clifden's failure to pay the deferred consideration and will make another announcement in due course.
"We have seen positive trading conditions in the new financial year, with robust sales, good rent increases achieved and fee levels in line with expectations," said Grainger Chief Executive Andrew Cunningham.
"While home buyers have become more sensitive to pricing in recent months, the price points of our properties continue to generate strong interest and sell at levels above their vacant possession value in London and the South East, as well as the other UK regions where we operate. Rental demand for new lets and renewals remains strong," Cunningham added.
Shares in Grainger were down 1.4% to 203.732 pence on Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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