13th Aug 2015 11:33
LONDON (Alliance News) - Residential property company Grainger PLC on Thursday said it has hired advisers to sell its German residential property assets, as it said trading in the first ten months of its financial year had been strong and said its new chief executive will join earlier than expected, while its finance director is stepping down.
Grainger said it has appointed investment bank Lazard to advise on the sale of its residential property assets in Germany. The group said the sale will allow it to focus on its operations in the UK and take advantage of the currently robust residential property market in Germany.
Grainger directly owns over 3,000 units in Germany and owns a further 3,000 via a joint venture with Heitman, the German real estate investor. The properties are located in the country's Baden-Württemberg, Hesse, North Rhine-Westphalia and Bavaria regions.
The FTSE 250 company is currently the subject of attention from activist investor Crystal Amber Fund Ltd, which increased its stake in the company to 3.1% back in June. The Financial Times said Crystal Amber is pushing Grainger to sell itself to a private investor.
The fund, according to the FT, claims Grainger could make more money from its portfolio of homes which have been let at capped rents, which the company is in the process of selling off, and thinks the company is paying too much for its debt.
In the first half, Grainger said, it sold GBP213.8 million worth of the capped rent properties, down from GBP228.1 million a year earlier, and noted it last week signed a refinancing on its debt facility, which extended the deal to August 2020 from July 2016 and cut the margin on the facility to 170 basis points, down 50 basis points from the previous facility.
The company said its sales of vacant properties achieved prices an average of 8.3% above September 2014 possession values, at margins of 51.2%, in the ten months to the end of July. In the same period a year earlier, the group had achieved prices 12.7% higher but on margins of 48.6%.
The group said it saw continued strong levels of demand for its managed UK market rented properties in the private rented sector, with rentals up 6.0% on a like-for-like basis in the ten months to the end of July on new lets and 2.3% on renewals, compared respectively to 4.2% and 3.2% a year earlier.
Since the start of the financial year, the group has acquired 929 tenanted private rented sector units in the UK for GBP83.3 million.
Grainger also said it has seen strong sales in its Build to Rent pipeline, with robust demand for properties at its Abbeville Apartments projects in Barking in east London, while its joint venture with the Royal Borough of Kensington and Chelsea is progressing well.
"Our focus on accelerating the growth of our UK PRS business is going well, with recent acquisitions bringing our total managed PRS portfolio in the UK to over 3,400 units, and with a pipeline of over 2,000 units. And last week we were pleased to achieve a significant refinancing package for our syndicated bank debt, reducing our cost of debt and extending maturities," said Andrew Cunningham, Grainger's chief executive.
In addition, Grainger said that Helen Gordon, who was appointed chief executive designate in June, will now join the company no later than December 1, earlier than the January 2016 date the company has initially put on her arrival. Cunningham is due to retire in February.
Gordon moves from her role as the global head of real estate asset management at The Royal Bank of Scotland Group PLC and is the former property director of Legal & General Investment Management, the investment arm of FTSE 100-listed insurer Legal & General Group PLC.
Along with Gordon's earlier-than-expected start, Mark Greenwood will be retiring as the company's finance director in December. The company said the search for his replacement is well-advanced and it will announce a new appointment in due course.
Grainger shares were up 1.5% to 243.00 pence on Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Grainger plc