Grainger says rental income is on the up as wages rise

Grainger has said higher wages and prices have helped its finances, after seeing rental income rise in the last few months. 

The UK’s biggest listed landlord saw rental income increase by 12 per cent to £48million in the six months to the end of March.

The London-listed firm’s adjusted earnings rose by 2 per cent to £47.1million over the period.

Boost: Grainger has said rising wages and higher prices have helped its bottom line

The group’s underlying rental growth came in at 6.8 per cent. Occupancy as at the end of March was 98.5 per cent.

But pre-tax profits tumbled by 94 per cent to £5.7million following a 1.3 per cent valuation decline. In the first half of last year, the valuation rose 2.3 per cent. 

Helen Gordon, the group’s chief executive, said: ‘We continue to deliver strong consistent performance across the business.’

She added: ‘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.

‘Aligned to wage inflation we achieved a like-for-like rental growth of +6.8 per cent, up from 3.5 per cent this time last year.’

Gordon said the group was a ‘beneficiary’ of rising prices and higher wages. 

Grainger said: ‘Growing rental demand and constrained supply continue to move in our favour, particularly due to our mid-market pricing, energy efficient properties and value-add services to our customers.’

Grainger shares rose today and were up 1.18 per cent or 3.01p to 259.01p this morning, having fallen by around 7 per cent in the last year. 

The group upped its dividend by 10 per cent to 2.28p a share, up from 2.08p per share at the same point a year ago. 

Grainger has partnered with Transport for London to build 1,240 new homes around tube stations in the capital. 

Analysts at Peel Hunt said Grainger’s latest update was ‘one of the sector’s most optimistic outlook statements’.

Looking ahead, Gordon, said: ‘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.’