Slide 1: Continued growth and strong performance
Continued growth and strong performance Full Year Financial Results for the year ended 30 September 2020 19 November 2020
Slide 2: Agenda
Agenda Originate Invest Operate 1. Overview Helen Gordon Chief Executive 2. Financial Results Vanessa Simms Chief Financial Officer 3. Market and business update Helen Gordon Chief Executive 4. Summary and Q&A Helen Gordon Chief Executive 5. Appendix Grainger plc | www.graingerplc.co.uk 2
Slide 3: Continued growth despite a challenging market
Originate Invest Operate Continued growth despite a challenging market +16% NRI growth +3% L4L rental growth 97% Average rent collection Grainger plc | www.graingerplc.co.uk 3
Slide 4: Strong performance
Strong performance Originate Invest Operate Net rental income Rental Adjusted earnings Profit before tax Total property growth (L4L) return £73.6m £81.8m £110.8m +16% +3.0% (1)% (16)% 5.4% (69) bps +40 bps Key highlights: Covid response: ESG commitments: NRI growth of +16% Emerge stronger through Ne
Slide 5: Our Covid-19 strategy
Our Covid-19 strategy Originate Invest Operate 1. Innovate 2. Communicate 3. Improve Implemented Covid-secure “During these tough times Louise 3,100+ hours of employee sales and lettings processes has really shown commitment to training delivered her residents, even courtesy calls 67% of sales profi
Slide 6: Scalable inhouse model proven to outperform: a key competitive advantage
Scalable inhouse model proven to Originate Invest Operate outperform: a key competitive advantage Driving forward Investing for the construction and long term, through delivery of our cycles pipeline Six schemes secured in FY20 Two schemes (1,475 homes) completed (375 Large homes)market Enhanced cit
Slide 7: Operational excellence
Operational excellence Originate Invest Operate Building on 108 years of experience renting homes Our scalable in-house operating platform delivers… 34 Higher Higher rent Better occupancy collection customer months satisfaction PRS customer Avg length of stay …Stronger more sustainable rental income
Slide 8: Significant growth momentum
Significant growth momentum Originate Invest Operate £1,085m secured pipeline FY20 OPERATIONAL PORTFOLIO PIPELINE 8,941 homes, £2.7bn 8,950 homes, £2.1bn £429m c.£600m £1,041m £1,696m £1,085m Planning/ TfL Regulated tenancies PRS Secured pipeline Legals c.3,000 2,970 homes 5,971 homes 4,311 homes 1,
Slide 9: A proven strategy, platform and business model
A proven strategy, platform and Originate Invest Operate business model 2020 has tested our business and we have performed well In-house model: development, investment and operations in-house delivered outperformance in a challenging market Long term: our PRS strategy has proven its resilience Mid m
Slide 10: FY20 Financial Results
2. FY20 Financial Results Vanessa Simms Chief Financial Officer
Slide 11: Financial highlights
Financial highlights Originate Invest Operate Enhancing performance through our inhouse operating platform Income FY19 FY20 Change Rental growth (like-for-like) 3.6% 3.0% (69) bps Net rental income £63.5m £73.6m +16% Adjusted earnings £82.5m £81.8m (1)% Profit before tax £131.3m £110.8m (16)% Divide
Slide 12: Income statement
Income statement Originate Invest Operate Continued growth in net rental income Key highlights: FY19 FY20 Change NRI growth continues Net rental income £63.5m £73.6m +16% Profit from residential sales £60.4m £59.4m (2)% Stabilised gross to net = 25.0% Profit from development £7.4m £4.2m (43)% Overal
Slide 13: Net rental income growth
Net rental income growth Originate Invest Operate PRS investment delivering NRI and dividend growth +16% £73.6m +£1.5m £63.5m Total L4L +3.0% PRS L4L +2.5% £(3.4)m +£12.0m Regs L4L +4.6% FY19 Net Disposals PRS Rental FY20 Net Rental Income investment growth Rental Income Grainger plc | www.graingerp
Slide 14: Rental income resilience continues
Rental income resilience continues Originate Invest Operate Rental growth and cash collections have remained strong Rental Growth Rent Collection Strong rental growth at 3.0% Consistently high rent collection (H1: 3.4%, H2: 2.6%) In-house operations and customer PRS rental growth at 2.5% relationshi
Slide 15: EPRA Net Asset Values
EPRA Net Asset Values Originate Invest Operate EPRA NTA per share growth of 3% £m pence per share Property assets (market value) 3,085 457 Net liabilities (1,032) (153) EPRA Net Reinstatement Value (NRV) 2,053 304 Tax – deferred & contingent – trading assets (109) (16) Exclude: Intangible assets (23
Slide 16: EPRA Net Tangible Assets (NTA)
EPRA Net Tangible Assets (NTA) Originate Invest Operate Earnings and valuation key drivers of growth +1p (5)p +10p +8p (4)p +12p (4)p (5)p +2p 285p 278p Total * +3.1% PRS * +2.5% Regs +4.0% * Includes stabalised assets only Grainger plc | www.graingerplc.co.uk 16
Slide 17: Net debt
Net debt Originate Invest Operate Strong operational cashflow supports our growth plans £1,097m £(183m) Net investment +£34m £1,032m Operating cashflow +£157m +£25m £(104)m +£12m +£6m +£212m £(196)m +£37m £(67)m +£55m Grainger plc | www.graingerplc.co.uk 17
Slide 18: Robust and flexible capital structure
Robust and flexible capital structure Originate Invest Operate Low risk, flexible capital structure to support growth FY20 Net debt £1,032m Cost of debt LTV Loan to value 33.4% 6.5% 60% 6.0% 55% Cost of debt (average) 3.1% 5.5% 50% 5.0% Incremental cost of debt 1.6% 4.5% 45% 4.0% 40% Fully drawn cos
Slide 19: Liquidity and capex
Liquidity and capex Originate Invest Operate £650m headroom to fund investment pipeline Strong liquidity Current liquidity position (£m) Strong headroom of £650m from cash and available facilities 332 £318m of cash 650 £332m available facilities 318 Committed capex funded Capital expenditure plans c
Slide 20: Net rent progression
Net rent progression Originate Invest Operate Dividend growth underpinned by NRI growth Planning / legals Secured pipeline: £1,085m TfL: £600m £429m +£24m £176m +2.4x +£20m +£22m £132m +1.8x +£16m +£12m +£8m £74m On site FY20>FY21 £1m timing changes FY21>FY22 £4m * FY20 Passing net rent includes new
Slide 21: Financial summary
Financial summary Originate Invest Operate Proven resilience & continued progress in our PRS strategy Strong performance: +16% NRI growth from the delivery of our PRS pipeline In-house model: proven to deliver operational outperformance Capital structure: strong balance sheet and liquidity, and our
Slide 22: Market and business update
3. Market and business update Helen Gordon Chief Executive
Slide 23: The market leader in a compelling sector
The market leader in a compelling sector Originate Invest Operate Why PRS Why Grainger Compelling long-term returns Market leader with the largest PRS portfolio of a PLC Underpinned by structural supply demand imbalance £2.1bn pipeline to come PRS demand growing 4.5m to 7.2m by 2025 Fully integrated
Slide 24: PRS fundamentals remain strong
PRS fundamentals remain strong Originate Invest Operate +124% growth in PRS since 2000 Private landlords shrinking as a % of the market PRS households Share of homes bought by landlords 5,000 17% +124% 16% 4,000 14% 13% 13% 12% (000s) 3,000 9% 2,000 1,000 0 2000 2002 2004 2006 2008 2010 2012 2014 20
Slide 25: PRS fundamentals remain strong (continued)
PRS fundamentals remain strong Originate Invest Operate (continued) Strong growth among all ages over 25 Ownership affordability stretched PRS households (‘000s) Years to save 20% deposit for typical first-time buyer* 1,600 15.0 +37% 2008/09 2018/19 +73% 11.2 1,200 9.8 9.8 8.7 8.4 7.7 7.4 +84% 6.7 6
Slide 26: Enhancing our cities strategy
Enhancing our cities strategy Originate Invest Operate Evolving our proprietary research to maintain our market leading position High demand / supply High demand / supply Schemes secured fundamentals and fundamentals and low growth potential high growth potential Target locations Under review Southa
Slide 27: Building our portfolio across the UK
Building our portfolio across the UK Originate Invest Operate Research led investment strategy and asset clustering to deliver operational efficiencies LEEDS & SHEFFIELD (PRS Homes) 1,488 Operational 398 (inc 237 at Brook Place) MANCHESTER (PRS Homes) 1,647 Pipeline Yorkshire Post, Leeds 242 Operati
Slide 28: Extensive political engagement, differentiating the professional, institutional landlord
Extensive political engagement, Originate Invest Operate differentiating the professional, institutional landlord Lending our support and ensuring our voice is heard Promoting the Leading by example Raising standards benefits we bring Self-governed customer Greater security for tenants Investing and
Slide 29: Safe and secure homes
Safe and secure homes Originate Invest Operate Our commitment to our residents Evolving our in house H&S Live.Safe 2.0 programme Investment in people and training Technology enabled Rapid Covid-19 response Looking after our customers Covid-19 Communicating with our customers Response One way & booki
Slide 30: Delivering a positive social impact
Delivering a positive social impact Originate Invest Operate 1 2 3 Resident support Workforce wellbeing Contributing to our Regular communications Started an employee led communities during Covid-19 Diversity and Inclusion network Developed blueprint for Initiated a buddy system best practice commun
Slide 31: Net zero carbon by 2030 for operational buildings
Net zero carbon by 2030 for Originate Invest Operate operational buildings World Green Building Council’s Net Zero Carbon Buildings Commitment Signatory committing to only owning assets operating at net zero carbon within areas of direct control by 2030 Our approach Key activities in FY20 Be Lean En
Slide 32: Five new openings in FY21
Five new openings in FY21 Originate Invest Operate Delivering in H1 Delivering in H2 Apex Gardens, Tottenham, Gatehouse Apts, East Street, London Southampton 163 PRS homes 132 PRS homes £60m investment £28m investment c.6.5% gross yield c.6.5% gross yield targeted targeted The Filaments, Gore Street
Slide 33: Summary: Continued growth despite a challenging market
Summary Originate Invest Operate Continued growth despite a challenging market Our strategy, platform and business model have delivered significant value Strong performance despite Covid-19 Growth momentum maintained Commitment to operational excellence a proven success Looking ahead: more significa
Slide 34: Thank you Q&A
Thank you Q&A Solstice Apartments, Milton Keynes
Slide 35: Appendix
Originate Invest Operate Appendix Contents Portfolio overview Page 36 1. Property information Portfolio summary Page 37 Portfolio geographical breakdown Page 38 Valuation movements by region Page 39-40 PRS Portfolio Pages 41-43 Secured pipeline schedule Pages 44-45 Cumulative funding capacity Page 4
Slide 36: Portfolio overview
Portfolio overview Originate Invest Operate Regulated tenancies PRS Tenant has the right to live in the property for the rest Leases with typical duration of 1-3 years of their life Market rents Sub-market rent set by Valuation Office Agency Returns based on Upon vacancy Grainger sells the property
Slide 37: Portfolio summary
Portfolio summary Originate Invest Operate Vacant possession Reversionary Market value value surplus Units £m £m £m Net yield Residential – PRS 5,817 1,624 1,745 121 4.0% Residential – regulated tenancies 2,494 968 1,147 179 2.0% Residential – mortgages (CHARM) 476 73 73 - Forward Funded – PRS work
Slide 38: Portfolio geographical breakdown
Portfolio geographical breakdown Originate Invest Operate PRS & Reversionary* (wholly owned and Vesta) PRS Reversionary Total PRS market value Reversionary market value Total market value Region units £m units £m units £m Central / Inner London 1,294 584 891 592 2,185 1,176 Outer London 805 368 231
Slide 39: Valuation movements by region
Valuation movements by region Originate Invest Operate FY20 Units Market value Change since Avg house price Region £m FY19 Avg VP per unit £000s Central / Inner London 2,183 1,176 +2.3% 608 Outer London 877 391 +5.3% 507 South East 1,241 261 +5.6% 257 South West 720 228 +3.8% 329 East and Midlands 7
Slide 40: Portfolio geographical breakdown
Portfolio geographical breakdown Originate Invest Operate PRS & Regulated tenancies (FY20) PRS Regulated tenancies Market Change Market Change Units value since FY19 Net yield Units value since FY19 Net yield Region £m £m Central / Inner London 1,294 584 +1.4% 3.4% 889 592 +3.1% 1.6% Outer London 65
Slide 41: PRS portfolio by geography
PRS portfolio by geography Originate Invest Operate Geographic breakdown by units Geographic breakdown by Rent (£m) Key Central / Inner London 9% 5% 23% Outer London 21% 31% South East 28% 11% 4% South West 14% East and Midlands 15% 4% 16% 9% 10% North West Other Regions Post secured pipeline geogra
Slide 42: PRS portfolio
PRS portfolio Originate Invest Operate Top assets by annual ERV (>£1m) Unit mix Asset City Postcode Units Studio/1 bed 2 bed 3 bed Area Sq feet Annual ERV Clippers Quay Manchester M50 3AF 614 178 370 66 444,178 £8.2m Hawkins & George Bristol BS1 6WQ 194 109 85 - 116,486 £3.4m The Gardens London SE22
Slide 43: PRS portfolio
PRS portfolio Originate Invest Operate Rent per calendar month (% of units) 7.8% £1500+ 20.8% 15.7% £1000-1500 7.6% 18.9% £750-£1000 3.8% 24.1% Under £750 1.3% Regions London +3.2% 95% 5-year Avg Annual Rental Growth Average occupancy Grainger plc | www.graingerplc.co.uk 43
Slide 44: Secured pipeline schedule
Secured pipeline schedule Originate Invest Operate (1 of 2 pages) Gross No. Targeted Est. Grainger Spend yield Name units launch Status investment to date target Forward funding / acquisition The Filaments, Gore Street, Manchester 376 Early FY21 Approaching £80m £77m c.7% completion Gatehouse Apts,
Slide 45: Secured pipeline schedule
Secured pipeline schedule Originate Invest Operate (Continued from previous page) Gross Targeted Est. Grainger Spend to yield Name No. units launch Status investment date target Direct development Apex Gardens, London 163 Early FY21 Approaching £60m £56m c.6.5% completion Newbury, West Berks 232 Lat
Slide 46: Cumulative funding capacity
Cumulative funding capacity Originate Invest Operate Disciplined capital management Opening Headroom** Existing Committed Capex* Cash from operations*** Outer Pipeline Capacity £1,100m £1,100m £950m £950m £450m £800m £800m £550m £300m £400m £150m FY20 £650m £650m £250m Headroom £100m £650m £650m £65
Slide 47: Secured pipeline projects
Secured pipeline projects Originate Invest Operate 19 high quality PRS schemes Secured Secured in FY20 Forward funding / Acquisitions The Filaments, Gatehouse Apts The Headline, Windlass Apts, The Pin Yard, Gore Street, East Street, Yorkshire Post, Hale Wharf, Fabrik, Manchester Southampton Leeds To
Slide 48: ESG: Securing our long-term future
ESG: Securing our long-term future Originate Invest Operate 4 long-term ESG Environment: 1 Net zero carbon of our operational buildings (aspiring to 2030) commitments Enhance investment decisions further by Assets: 2 integrating ESG considerations People: 3 Measure and deliver positive social value
Slide 49: Segmental income statement
Segmental income statement Originate Invest Operate FY19 FY20 £m PRS Reg* Other Group PRS Reg* Other Group Net rental income 42.6 20.6 0.3 63.5 53.8 19.6 0.2 73.6 Profit from sales – trading property 1.6 56.9 7.4 65.9 (0.1) 57.2 4.2 61.3 Profit from sales – investment property 1.9 - - 1.9 2.0 0.3 -
Slide 50: Balance sheet
Balance sheet Originate Invest Operate FY19 FY20 Market value balance sheet (£m) Residential – PRS 1,526 1,624 Residential – regulated tenancies 1,017 968 Residential – mortgages (CHARM) 76 73 Forward Funded – PRS work in progress 160 231 Development work in progress 120 147 Investment in JVs/associ
Slide 51: Segmental balance sheet
Segmental balance sheet Originate Invest Operate FY19 FY20 EPRA NTA market value PRS Reg* Other Group PRS Reg* Other Group balance sheet (£m) Investment property 1,550.7 23.9 - 1,574.6 1,755.9 23.0 - 1,778.9 Investment in joint ventures and 16.3 - 17.0 33.3 25.0 - 17.0 42.0 associates Financial inte
Slide 52: EPRA Earnings
EPRA Earnings Originate Invest Operate FY19 FY20 Adjusted Adjusted Adjusted Adjusted £m Adjustments EPRA Adjustments EPRA Earnings Earnings earnings earnings Net rental income 63.5 - 63.5 73.6 - 73.6 Profit from sales – trading property 65.9 (51.8) 14.1 61.3 (53.4) 7.9 Profit from sales – investment
Slide 53: EPRA NRV, EPRA NTA and EPRA NDV
EPRA NRV, EPRA NTA and EPRA Originate Invest Operate NDV FY19 FY20 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV £m IFRS Equity attributable to shareholders 1,223.5 1,223.5 1,223.5 1,463.0 1,463.0 1,463.0 Diluted NAV 1,223.5 1,223.5 1,223.5 1,463.0 1,463.0 1,463.0 Include: Revaluation of oth
Slide 54: Debt facilities
Debt facilities Originate Invest Operate Facility Lender Size Drawn Maturity Core Facilities: Corporate Bond Listed £350m £350m Apr 2028 Corporate Bond Listed £350m £350m Jul 2030 Revolving Credit Facility HSBC, NatWest, Barclays £330m £48m Aug 2024 Term Debt HSBC, NatWest, Barclays, AIB £170m £170m
Slide 55: Our approach to Covid-19
Our approach to Covid-19 Originate Invest Operate Maintaining business continuity and strategic momentum Innovating to maintain business as usual and continue to serve our Innovate customers. • Virtual viewings • Remote working • Direct customer sales • Sales process re- engineered Continual communi
Slide 56: Future reporting dates
Future reporting dates Originate Invest Operate 2021 AGM / Trading update 10 February Half year results 13 May 9am Trading update September Full year results 18 November 9am Grainger plc | www.graingerplc.co.uk 56