12th Feb 2008 07:00
Grainger PLC12 February 2008 12 February 2008 Grainger plc Interim Management Statement Grainger plc ("Grainger" or the "Company"), the UK's largest quoted residentialproperty owner, today presents its interim management statement covering itsactivities for the four months to 31 January 2008. Highlights • 207 residential properties sold for gross consideration of £38.8m • Values of UK sales achieved 4.5% in excess of September 2007 valuations • A total of £116m spent on new property acquisitions and developments • Planning permission granted at Newlands Common, West Waterlooville • Conditional acquisition of listed German residential property company, FranconoRheinMain AG, which will bring Grainger's total property assets in Germany to over 6,800 units with a total value of c€500m. Commenting on the four months results to January, Rupert Dickinson, ChiefExecutive of Grainger said:- "We have been active across all of our business divisions since our year end inSeptember 2007. Margins have held up and we are selling properties at abovelast September valuations, despite sales volumes being lower because of areduced number of vacancies and a slowing of the sales process. We continue torecycle our capital and purchase assets for our long term portfolios in the UKand Germany where we have identified good opportunities and we expect tocontinue this over the latter part of the year. "We are very encouraged that Government has announced a review of the PrivateRented Sector as we believe that an efficient, professionally managed sector isa vital component of the UK housing market and another method by whichGovernment can meet its targets for housing provision over the coming years. Welook forward to active participation in the debate." Market Review The continuing impact of the liquidity crisis has slowed down the level of houseprice growth that Grainger has experienced in recent times. Notwithstandingthis, the Halifax All Houses All Buyer Index for the twelve months to the end ofJanuary showed growth of 4.5% and, although the three month movement to thatdate showed a fall of 1.0%, the January index itself was unchanged fromDecember. Despite this, sale prices on our portfolio have held up and we are particularlypleased that across our whole UK portfolio we have achieved sales values 4.5% inexcess of September valuations. Within this there are some regional variationswith London and the South East (where the majority of our portfolio is located)performing most strongly. However, the overall result further demonstrates thereality of the strong defensive qualities of our UK residential portfolio:geographically diverse, low average value and generally in need of refurbishmentwhen they are marketed for sale. These assets continue to attract interest fromprospective home-owners and investors. Core Portfolio We have sold a total of 153 units for £30.1m since 30 September 2007 and ourestimated trading margin is 49.4%. The equivalent figures to the end of January2007 were 217 units sold for £37.6m at a margin of 47.6%. We have also completedor exchanged on the purchase of £61.0m worth of properties, including the £34.6macquisition of the Ranton Estate in Staffordshire in January 2008. Retirement Solutions Sales values in this division amounted to £8.7m and, although purchasingactivity was slower than expected in the relatively quiet months of December andJanuary, we have acquired £18.7m of reversionary assets in the period. We arepleased to report good performance from our two major recent acquisitions. Salesrealisations from the CHARM portfolio have exceeded expectations and we havereduced the vacancies on the CAT portfolio from 229 on acquisition to 79. G:res1 The fund was last valued on 31 December 2007. At that time it indicated anincrease in net asset value of 8% to £1.08 per share over the year to that date.Investors in the fund, in which Grainger has retained a 21.6% stake, alsoreceived a dividend of 0.2p per share. Development Division Our key achievement during the period under review was obtaining planningpermission for our major residential-led, mixed use 132 hectare developmentsite, Newlands Common, located near West Waterlooville in Hampshire. We willnow be able to progress with the infrastructure works with a view to commencingsales in 2008/09. Following the period end Grainger, in joint venture with Helical Bar plc, hasbeen selected as preferred partner by Hammersmith and Fulham Council as thedeveloper of a major mixed-use site in Hammersmith. Grainger and Helical Barwill be working with the Council with the aim of signing a formal developmentagreement in due course. As mentioned in our annual report, we have relatively few developments expectedto reach completion in this financial year so the overall financial result forthis division will be below that of last year. Europe We continue to be active in the German market where we continue to see goodacquisition opportunities. In the four months to 31 January we completed ornotarised the acquisition of a further 602 units for €49.6m, and we estimate thetotal value of our portfolio to be in the region of €348m. We have also recently announced our offer for FranconoRheinMain AG for a totalexpected consideration of approximately €45m. When complete, our German assetswill stand at approximately €500m, representing in excess of 6,800 units, andwill present us with the opportunity to put financing in place that is moreappropriate to a portfolio of this size. Debt At 31 January, group net debt was c. £1.46 billion and our estimated loan tovalue ratio was 56.6% (30 September 2007: £1.33 billion and loan to value53.0%). Our available headroom amounted to £219m. As reported to shareholders inour year-end results in November, as a result of acquisitions of long termreversionary assets which are not earnings accretive in the early period ofownership, our average debt levels over the four month period have been some£398m higher than last year and this is likely to continue to be the case to theend of September 2008. As anticipated this will result in profits after interestcosts and fair value adjustments for the full year being lower than in thepreceding year. Outlook We are pleased with our progress across all our divisions. We are continuing toacquire assets but we are doing so with caution and only acting on the rightopportunities. In the short term market conditions will continue to make tradingand growth from asset valuation increases more challenging. Over the long termwe remain confident that our strategy and performance will continue to delivershareholder value. For further information:Grainger plc Financial DynamicsRupert Dickinson Stephanie Highett Tel: +44 (0) 20 7795 4700/0191 261 1819 Dido LaurimoreAndrew Cunningham Jamie Robertson Tel: +44 (0) 191 261 1819 Tel: +44 (0) 20 7831 3113 Notes to Editors: Grainger plc is the UK's largest listed residential property owner, trader anddevelopment company. Listed on the FTSE-250, the Company aims to delivershareholder value through combining its core activities in the management andtrading of portfolios of regulated and assured tenancies and in the fields ofresidential development, fund management, equity release and asset management.In addition, Grainger is expanding its operations into continental Europe andowns a portfolio of properties in Germany, which at 30 September 2007, comprisedmore than 4,500 units with a market value in excess of £240 million. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Grainger plc