Grainger Plc · LSE:GRI
Grainger — Investor Day (March 2010)
39 slides from Grainger's investor day presentation, Mar 25, 2010
Slide 1: Analyst and Investor Day March 25 2010
Analyst and Investor Day March 25 2010
Slide 2: Today's agenda
Today s agenda 11.30 am Refreshments and registration 11.45 am Presentations Introduction and overview Andrew Cunningham Core UK Andrew Pratt Retirement Solutions Peter Couch Fund Management Alex Greaves Michael Lamyman Development Richard Shaw Germany Peter Brock Property Services Mark Robson 1.00
Slide 3: Group Overview
Group Overview UK s largest quoted specialist residential property owner Substantial liquid portfolio valued at £2.1bn at 30 September Gross asset value per portfolio 2009, mostly un-modernised properties of low average value at 30 September 2009 Diversified business including regulated properties,
Slide 4: Grainger structure
Grainger structure Grainger Board Corporate CEO Andrew Cunningham COO Peter Couch Core UK Development Fund Mgmt Retirement Germany Property Andrew Richard Shaw Andrew Solutions Peter Brock Services Pratt Cunningham Peter Couch Mark Robson Operations Board Support Services Finance / Tax Company Secre
Slide 5: Portfolio Overview
Portfolio Overview Portfolio Analysis - Wholly Owned Figures as at 30 September 2009 Gross Gross Vacant No of Market Possession Reversionary Units Value £m Value £m Surplus £m VP% Regulated 6,327 871 1,197 326 0.73 Assured 495 78 89 11 0.88 Vacant 286 51 51 - 1 Other 50 59 74 15 0.8 Core UK portfoli
Slide 6: Portfolio Analysis
Portfolio Analysis UK Portfolio Location as at 30 September 2009 Value Number Investment Value Vacant Possession Value reduction in year of units £m % £m % % 01 Central London 534 179 12% 242 11% 2.4% 01 Inner London 1,127 238 15% 309 15% (1.3%) 01 Outer London 1,200 167 11% 233 11% (3.3%) 02 South
Slide 7: Core UK Residential
Core UK Residential Portfolio 2010 Represents 48% of Gross Asset Value of Grainger as at 30 September 2009 Properties typically acquired at discount to vacant possession value, reversionary surplus £352m Primarily (90% by value) regulated properties or vacant ex-regulated Geographically diverse port
Slide 8: Core UK Residential: Property Assets
Core UK Residential Property Assets Page 8
Slide 9: Core UK Residential: Current Market Opportunities
Core UK Residential Current Market Opportunities Deal flow has recently improved for both single asset purchases as well as larger corporate/portfolio opportunities Regulated / Reversionary single assets: advantageous pricing, balance sheet replenishment (core business), arbitrage opportunities Larg
Slide 10: Retirement Solutions
Retirement Solutions Grainger is UK market leader in home reversion with 31% market share as at 30 September 2009 (source: SHIP) Bridgewater business winner of Best Home Reversions Provider in 2009 for the fourth consecutive year Established distribution network (Aviva and our Bridgewater business)
Slide 11: Retirement Solutions: Portfolio Summary
Retirement Solutions Portfolio Summary Vacant Average Possession Investment Investment Value Average Value Value Average Minimum Maximum No. £m £ £m £ Age Age Age Reversion 3,905 489 125,314 284 72,599 78 55 100 Equity Mortgages 1,145 122 198 109 95,242 77 48 96 Retirement 1,051 88 84,178 88 84,178
Slide 12: Retirement Solutions: Portfolio Analysis By Region
Retirement Solutions Portfolio Analysis By Region By Property Type Greater London South East South West Det House End Terrace Mid Terrace Bungalow Flat SD House Ret Flat Other East Anglia East Midlands West Midlands Yorkshire North West Other By Tenant Age <70 70-74 75-79 80-84 85-89 90+ Page 12
Slide 13: Fund Management
Fund Management Current Fund/JV Business Unit 3 Funds/JV G:res (market rented fund) Grainger GenInvest (joint venture with Genesis Housing Group) Schroders ResPUT Page 13
Slide 14: Fund Management: G:res Summary
Fund Management G:res Summary Valuation as at end of December 2009 was £353m Gross yield of 6.1% as at end of 2009. 2,085 units in 48 blocks of property located across the UK Total third party equity fully allocated is £199m with Grainger holding £43m (21.63%) 13 blue chip institutional investors (U
Slide 15: Fund Management: GenInvest Summary
Fund Management GenInvest Summary Geninvest is a JV between Genesis Housing Association and Grainger Geninvest is split into 2 portfolios (GGI 1 & GGI 2) Vacant Possession No Value of £m units GG1 97.5 477 GG2 250.0 1,160 Walworth Estate, SE17 Tait and Benson House, Dibdin House, Maida Ufford Street
Slide 16: Value added case study: Walworth Estate
Fund Management Value added case study Walworth Estate, SE17 Strategy: To refurbish and re-let properties as they come vacant. Units on the perimeter of the estate to be considered for sale. Merrow Street, (Walworth) To refurbish the external and internal common parts and re-open the garden area Bef
Slide 17: Schroders ResPUT sales
Fund Management Schroders ResPUT sales Liquidation started Feb 2009 £12,000,000 £31.6m completed £10,000,000 £2.3m exchanged £8,000,000 £18.4m solicitors instructed £6,000,000 10.4% over target £15.8m still to sell £4,000,000 £2,000,000 completions £- IV Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May-
Slide 18: The Role of Development
Development The Role of Development Offers opportunity to access development level returns of circa 20% on total costs Legacy Recognition that the division is a small business unit within a sizeable residential investment business. We should contribute to returns whilst managing downside risk throug
Slide 19: Development: Hornsey Road
Development Hornsey Road Recognised as London s fastest selling residential scheme of 2009 (Molior Autumn 2009) Page 19
Slide 20: Development Portfolio Analysis
Development Portfolio Analysis September 2009 Grainger plc assets - £2.3bn Development assets - £89m (3.7% of Grainger group assets) 2008 Development Portfolio (by KF valuation) 2009 Development Portfolio (by KF Valuation) £13.3m 9% £11. 2m, 13% £34m 24% £18.5m 13% Strategic Land Local Authroity Str
Slide 21: Development: Rebalancing the portfolio
Development Following a period of change in the development business there is a requirement to rebalance the portfolio Promotion of joint venture partnerships on larger projects through new and existing contacts Investment - Long term income producing assets with future development potential Design
Slide 22: Germany: Business characteristics
Germany Business characteristics Portfolio acquired since 2005 as part of diversification strategy Asset management platform established in 2006 Predominantly a letting business Strategic focus on assets in economically and demographically strong areas of Germany Concentration in 2009 primarily on i
Slide 23: German Portfolio Overview
Germany German Portfolio Overview Portfolio Concentration and Assessment Key Portfolio Statistics Middle-quality multi-family housing Book value of assets: 516m (£472.1m) Gross rental income: 34.6m(1) (£30.3m) Total number of units: 7,180 - Residential units: 6,807 - Commercial units: 373 Total area
Slide 24: German Platform
Germany German Platform Organisation chart Grainger Deutschland GmbH is the German Peter Brock Asset Management arm of Grainger plc Managing Director Asset management services for all of Dirk Meißner Head of Asset Management Grainger's portfolios in Germany Co-ordination of all property management I
Slide 25: Germany: Strategy Property activities
Germany Strategy Property activities: To expand business without further significant input of Grainger equity A. Portfolio B. JV / co-investment C. Related activities Optimise portfolio through Acquire larger portfolios in Look for opportunities in increased sales and selective co-operation with ext
Slide 26: Germany: Strategy Service-related activities
Germany Strategy Service-related activities A. Property management B. Asset management Grow institutional management business Seek external mandates Develop commercial management business Advisory business for third parties: on selective basis investment strategies Seek mandates from closed-end fund
Slide 27: Property Services: Current structure and portfolio
Property Services Current structure and portfolio Operating from 5 regional offices In excess of 100 staff Dedicated national property management; sales and valuation teams Trainee PMA s/PMA s/PM s/SPM s sales and lettings Geographically allocated portfolios for efficient, effective service delivery
Slide 28: Range of property services
Property Services Range of property services Includes:- Complete multi-tenure portfolio management Sales and valuations Lettings and AST management Estate and Block management services Retirement solutions management inspections Refurbishment/repairs management A dedicated property service throughou
Slide 29: The value added approach
Property Services The value added approach Owner mentality in-house experience Local experts market knowledge with National view Ownership of portfolio performance management Commercial and added value focus on expenditure Customer and service focussed Continued investment in new technology and inno
Slide 30: Tour Route
Tour Route: A FD offices B Macaulay Road (Development) Location map here C Tilt Estate (Grainger core) D Tait & Benson & Waterloo 2 (Grainger GenInvest) E Bethnal Green (G:res) F Ability Plaza (G:res) G Ability View (G:res) Page 30
Slide 31: Property Tour - Macaulay Road, Clapham
Property Tour - Macaulay Road, Clapham Nov 07 planning consent 97 resi units (65 private) & 30,000 sqft office Proposed new planning application to replace offices with flexible building to accommodate commercial and residential use. Determination June 2010. Housing mix new build and converted stock
Slide 32: Property Tour - The Tilt Estate, East Dulwich, SE22
Property Tour - The Tilt Estate, East Dulwich, SE22 Owned by Grainger Purchased October 2007 Current Book Average Tenancy Current Current Count Rent Value Current VP Type IV (£k) VP (£k) (£k) (£k) (£k) Regulated 38 177 5,303 5,303 7,315 193 Assured 8 53 1,132 1,132 1,415 177 AST 228 2,324 39,684 39,
Slide 33: Property Tour - Tait and Benson, Waterloo
Property Tour - Tait and Benson, Waterloo Owned by Grainger Geninvest (Grainger hold 50%) Purchased July 2005 as part 1 of 2 portfolios from the Church Commissioners. Number of VP (£) IV (£)* Potential Rental Income units (Current rent plus ERV for vacant units) AST 14 3,442,000 3,010,000 103,368 AS
Slide 34: Property Tour - Waterloo 2, Mitre, Ufford and Webber Street
Property Tour - Waterloo 2, Mitre, Ufford and Webber Street Owned by Grainger Geninvest (Grainger hold 50%) Purchased March 2006 as part 2 from the Church Commissioners. Number VP (£) IV (£)* Potential Rental of units Income (Current rent plus ERV for vacant units) AST 49 13,707,000 11,950,000 595,0
Slide 35: Property Tour - Bethnal Green
Property Tour - Bethnal Green Owned by G:res (Grainger hold 21.63%) Number of VP (£) IV (£)* Potential Rental Income units (Current rent plus ERV for vacant units) Livework 81 27,533,000 22,885,000 1,127,892 Commercial 57 5,620,000 5,620,000 692,022 TOTAL 138 33,153,000 28,505,000 1,756,915 Overview
Slide 36: Property Tour - Ability Plaza, 1a Arbutus Road, E8
Property Tour - Ability Plaza, 1a Arbutus Road, E8 Owned by G:res (Grainger hold 21.63%) Purchased March 2005 as part of Ability Portfolio Number of VP (£) IV (£)* Potential Rental Income units (Current rent plus ERV for vacant units) Livework 101 29,285,000 25,952,375 1,481,936 Commercial 10 1,780,
Slide 37: Property Tour - Ability View, 218 Kingsland Road, E8
Property Tour - Ability View, 218 Kingsland Road, E8 Owned by G:res (Grainger hold 21.63%) Purchased March 2005 as part of Ability Portfolio Number of VP (£) IV (£)* Potential Rental Income units (Current rent plus ERV for vacant units) Livework 28 9,552,204 8,528,516 468,944 Commercial 8 1,287,795
Slide 38: Grainger representatives
Grainger representatives • Andrew Cunningham CEO • Peter Couch COO and Managing Director, Retirement Solutions • Andrew Pratt Managing Director, UK Residential • Peter Brock Managing Director, Grainger Germany • Mark Robson Managing Director, Property Services • Richard Shaw Director of Development
Slide 39: For further information
For further information: Grainger plc Andrew Cunningham/Dave Butler Tel: +44 (0) 20 7795 4700 Te: +44 (0) 191 261 1819 Financial Dynamics Stephanie Highett/Dido Laurimore/Jamie Robertson Tel: +44 (0) 20 7831 3113