Slide 1: A platform delivering compounding growth
A platform delivering Change compounding photo growth Half Year Financial Results to the end of March 2024 16 May 2024
Slide 2: Agenda
Agenda Originate Invest Operate 1. Highlights Helen Gordon Chief Executive 2. Financial results Rob Hudson 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: A platform delivering compounding growth
A platform delivering compounding Originate Invest Operate growth Strong Resilience Compounding operational growth performance Strong L4L PRS rental growth 8.1% Operating cashflows pa c.£200m NRI growth (HY24) +11% Near term earnings growth High occupancy 97.7% Stable underlying values* (0.3)% EPRA
Slide 4: Excellent performance
Excellent performance Originate Invest Operate Net rental income Dividend a Rental growth Adjusted earnings EPRA NTA a +11% +11% +8.1% £44.4m 294pps £53.2m 2.54pps (L4L, PRS) (6)% (4)% (8)p due to tax change* Highlights: Operational excellence delivering Accelerated disposal programme double digit r
Slide 5: A substantial pipeline of growth
A substantial pipeline of growth Originate Invest Operate EPRA earnings growth accelerating as pipeline converts OPERATIONAL PORTFOLIO* PRS (BTR) PIPELINE 11,153 homes, £3.4bn 5,068 homes, £1.5bn £730m £2,674m £423m Regulated £523m £541m Planning/ PRS Portfolio** Committed Secured^ Tenancies Legals^
Slide 6: Strong track record of transacting
Strong track record of transacting Originate Invest Operate successfully, delivering growth £1.7bn of disposals £2.5bn of new since 2016 investment since 2016 PRS 23% of portfolio* PRS 80% of portfolio Successful disposals to reposition portfolio Acquired substantial pipeline in target locations UK
Slide 7: Grainger's growth strategy continues to deliver
Grainger’s growth strategy Originate Invest Operate continues to deliver Compounding growth Delivering for shareholders ▪ Substantial pipeline ▪ Strong, continuing rental growth ▪ An efficient platform able to ▪ Progressive dividend underpinned by accommodate significant growth income growth ▪ EPRA
Slide 8: A compelling investment case
A compelling investment case Originate Invest Operate Market leadership, largest portfolio and pipeline and clear path to greater scale Compounding EPRA Earnings growth Balance sheet strength and locked in, low cost of debt Best-in-class Operating Platform, powered by our CONNECT technology Visibili
Slide 9: 2. HY24 Financial Results
2. HY24 Financial Copper Works, Cardiff Results Rob Hudson Chief Financial Officer
Slide 10: Financial highlights
Financial highlights Originate Invest Operate Like-for-like rental growth accelerates to 8.0% Income performance Income HY23 HY24 Change Excellent operational performance driven by Rental growth (like-for-like) 6.8% 8.0% +122 bps our platform and demand for our product Net rental income £48.0m £53.2
Slide 11: Income statement
Income statement Originate Invest Operate Excellent operational performance drives NRI growth Key highlights: HY23 HY24 Change Strong occupancy and rental growth Net rental income £48.0m £53.2m +11% momentum Profit from sales £25.2m £19.9m (21)% Strong occupancy continues at 97.7% Mortgage income (C
Slide 12: Net rental income
Net rental income Originate Invest Operate Strong operational performance driven by lease up of new openings and 8.0% LfL rental growth +£3.4m £53.2m +£3.2m £48.0m £(1.4)m Total L4L +8.0% PRS L4L +8.1% - New lets +7.7% - Renewals +8.3% Regs L4L +7.1% +11% +£5.2m HY23 Net Disposals PRS Rental growth
Slide 13: Valuation Summary
Valuation Summary Originate Invest Operate Resilient underlying valuation performance down 0.3% despite wider macro uncertainty Total Valuation Total Valuation PRS grown to 80% of the total Capital Portfolio Homes movement movement operational portfolio, from 23% Value (pre-MDR) (post-MDR) in FY15 R
Slide 14: EPRA Net Asset Values
EPRA Net Asset Values Originate Invest Operate EPRA NTA resilient £m pence per share Property assets (market value) 3,829 515 Net liabilities (1,559) (209) EPRA Net Reinstatement Value (NRV) 2,270 306 Tax – deferred & contingent – trading assets (86) (12) Exclude: Intangible assets (1) - EPRA Net Ta
Slide 15: EPRA Net Tangible Assets (NTA)
EPRA Net Tangible Assets (NTA) Originate Invest Operate Increasing net rent and resilient valuation results in NTA of 294p (2)p +X% (2)p (1)p (2)p +8p (4)p Total -0.3% PRS -0.6% Regs +0.8% (8)p Dev -0.1% 305p -1% 302p Pre-MDR -4% 294p Post-MDR FY23 Net rents, Overheads Finance costs Valuation Tax &
Slide 16: Net debt
Net debt Originate Invest Operate Significant investment in pipeline delivery, with accelerated disposals in line with plan Operating cashflow £84m +£32m £1,497m +£122m +£11m £1,416m £(82)m +£25m £(69)m^ +£42m FY23 Gross rents & GtN and Finance Disposals Investment Tax & other Dividend HY24 Net debt
Slide 17: Strong, secured and de-risked balance sheet
Strong, secured and de-risked Originate Invest Operate balance sheet No material Cost of debt fixed in refinancing mid 3% for c.5 years HY24 requirement until 100% hedged with a hedge Net debt £1,497m 2028 maturity of c.5 years £300m of facilities successfully Loan to value 39.1% extended Cost of de
Slide 18: Passing net rent and earnings progression
Passing net rent and earnings progression Originate Invest Operate Transformative growth in NRI and earnings Committed pipeline Secured ** Planning / Legals £523m £541m £423m +£18m^^ £188m +£23m £170m +£9m £147m +£9m +£15m ^ +£8m^ £106m £96m +2.0x FY23 FY23 FY23 +1.5x reported reported reported £144
Slide 19: Growth & scale to enhance earnings
Growth & scale to enhance earnings Originate Invest Operate Delivering exceptional homes into a strong rental market 1 £41m 53% to over 60% 2 Additional net rent from EBITDA margin committed pipeline as pipeline delivers over next 5 years Grow rents Simplify & Focus Build on our 3 4 £55m experience
Slide 20: REIT conversion
REIT conversion Originate Invest Operate Remain on target for October 2025 conversion (FY26) Rationale for REIT conversion Conversion criteria ▪ Corporation tax saving ▪ Balance of business tests, ▪ Enhances returns by c.50bps p.a. 75% of profits and assets from the property rental business (PRS/BTR
Slide 21: ESG reporting and targeting
ESG reporting and targeting Originate Invest Operate Data-driven approach to ESG 93% PRS portfolio Enhanced measurement and targeting Awards and benchmarks with EPC ratings A-C Net Zero Pathway expanded to include Scope 3 FTSE4Good Since 2010 emissions EPRA – Sustainability Gold Award Following comp
Slide 22: Financial summary
Financial summary Originate Invest Operate Continued compounding growth Net rental growth of +11% driven by lease up of new schemes and continued strong rental growth Dividend per share up +11% reflecting the strong performance of the business Strong balance sheet, fully funded pipeline and fixed, l
Slide 23: 3. Market and business update
3. Market and business update Helen Gordon Chief Executive
Slide 24: An ongoing structural undersupply of housing
An ongoing structural undersupply of Originate Invest Operate housing Government’s housing target has never been met UK has a fundamental lack of housing space Indicators of new supply, England Residential floorspace, sqm per person, various dates* 350,000 70 66 300,000 60 250,000 46 200,000 50 43 3
Slide 25: Focused on customer affordability
Focused on customer affordability Originate Invest Operate Grainger focused on young professional demographic Our customer affordability remains healthy Proportion of residents by age in Grainger’s PRS portfolio Proportion of household income spent on rent (%), England 38 35% 36 25% 28% 19% 34 Grain
Slide 26: Our growth opportunity is underpinned by strong underlying fundamentals
Our growth opportunity is underpinned Originate Invest Operate by strong underlying fundamentals Substantial undersupply 20% growth in rental demand predicted Zoopla rental demand and supply* vs the five-year average Cumulative increase in number of PRS households 1,400 15% 900 +1m Thousands -3% 400
Slide 27: Supportive political landscape
Supportive political landscape Originate Invest Operate Both main parties want to stimulate housing supply of all tenures “A rent freeze…, has the “I don’t think under Keir’s effect…of reducing the supply of leadership, rent control has rented homes.…” ever been our policy.” Conservative Government
Slide 28: UK's leading residential platform
UK’s leading residential platform Originate Invest Operate Continually improving our platform for growth Greater Scale Drives Further Value A Key Barrier to Entry and Source of Competitive Advantage Leasing Clustering Greater buying Asset benefits power Management Greater efficiencies Economies of s
Slide 29: Harnessing Data & AI
Harnessing Data & AI Originate Invest Operate Market leading platform drives data and AI opportunities Natural Language Processing | Generative AI | Predictive Modelling Leasing Case study Supply chain Case study ✓ Targeting Using our Data and AI, ✓ Ensuring delivery to a Rolling out digital live- w
Slide 30: Disciplined, research-led investment decisions
Disciplined, research-led investment Originate Invest Operate decisions High demand / supply High demand / supply fundamentals and low fundamentals and Analysed 329 local authorities growth potential high growth potential London Analysed 58 cities Manchester Oxford Bristol Birmingham Cardiff Targeti
Slide 31: Multiple routes for future growth
Multiple routes for future growth Originate Invest Operate Grainger has the ability to secure investment opportunities from a variety of sources and timeframes to delivery Timing of income Short term Medium term Longer term Immediate from acquisition c.24+ months c.36+ months Tenanted Acquisition La
Slide 32: Cluster Strategy driving performance
Cluster Strategy driving performance Originate Invest Operate Operational efficiencies improving further with gross to net down to 25.3% YORKSHIRE 1,043 NORTH EAST Newcastle 381 Leeds & Sheffield Operational 1,043 Operational 381 NORTH WEST 1,742 SOUTH EAST Incl. Milton Keynes 2,372 Manchester & Liv
Slide 33: 2024 Launches
2024 Launches Originate Invest Operate Delivering c.1,000 new homes this year The Copper Works, Cardiff Millwrights Place, Bristol Forward Fund Forward Fund 307 homes 231 homes Launched Feb’24 Launching imminently NRI: c.£3.5m NRI: c.£3.3m Cardiff cluster Bristol cluster The Silver Yard, Exchange Sq
Slide 34: Renting Homes, Enriching Lives
Renting Homes, Enriching Lives Originate Invest Operate Every home People at Exceeding Leading matters the heart expectations the way Investing in local Providing homes to a Welcoming everyone communities wide range of renters 25+ Community & Charity Partners Median salary £35k vs £35k UK avg Strong
Slide 35: A compelling investment case
A compelling investment case Originate Invest Operate 1 Compounding growth in earnings and dividend 2 Strong balance sheet and ability to asset recycle 3 Strong sustainable rental growth 4 Healthy customer affordability levels 5 Strong market fundamentals 6 Low risk regulatory landscape 7 Market lea
Slide 36: Thank you Q&A
Thank you Q&A Copper Works, Cardiff
Slide 37: Supplementary slides
Supplementary slides Change photo September 2024
Slide 38: New Labour Government
New Labour Government Originate Invest Operate What does it mean for Grainger? Confirmed: No rent controls Making it easier to do business “The Government Since winning the election, the new Government has does not support announced their key priorities: the introduction of rent controls.” Addressin
Slide 39: New launches in 2024
New launches in 2024 Originate Invest Operate Delivering c.1,000 new homes this year The Copper Works, Cardiff Millwrights Place, Bristol Forward Fund Forward Fund 307 homes 231 homes NRI: c.£3.5m Launched June Launched February NRI: c.£3.3m 74% let 74% let The Silver Yard, Exchange Square, Birmingh
Slide 40: Acquisition of a new stabilised asset & Asset recycling
Acquisition of a new stabilised asset Originate Invest Operate & Asset recycling Acquisition: The Astley, Manchester Disposal: Kimmerston House £31m stabilised acquisition from M&G Real Estate £27m gross sales proceeds Acquired in July 2024 Sold in line with book 135 high quality apartments Sold in
Slide 41: Appendix
Originate Invest Operate Appendix Contents Portfolio overview Page 38 1. Property information Portfolio summary Page 39 Portfolio movements Page 40 Portfolio geographical breakdown Pages 41-42 PRS Portfolio Top 20 Assets Page 43 PRS Portfolio Rent Levels Analysis Page 44 Pipeline Pages 45-48 Case St
Slide 42: Portfolio overview
Portfolio overview Originate Invest Operate Regulated tenancies PRS Customer has the right to live in the property for life Leases with typical duration of 1-3 years Sub-market rent set by Valuation Office Agency Market rents Upon vacancy Grainger sells the property Returns based on Returns comprise
Slide 43: Portfolio summary
Portfolio summary Originate Invest Operate Market value Net Rent Units £m £m Net yield^ Residential – PRS 9,321 2,601 95 4.3% Residential – regulated tenancies 1,332 666* 11 1.8% Residential – mortgages (CHARM) 346 64 n/a n/a Forward Funded – PRS work in progress - 288 - - Development work in progre
Slide 44: Portfolio movements
Portfolio movements Originate Invest Operate Sep 23 Additions Disposals Transfers Valuation Mar 24 £m £m £m £m £m £m PRS London & SE 1,324 19 (27) 9 (40) 1,285 Regions 1,099 2 (8) 246 (23) 1,316 Total PRS 2,423 21 (35) 255 (63) 2,601 Regs London & SE 590 2 (31) - 4 565 Regions 103 - (3) - 1 101 Tota
Slide 45: Portfolio geographical breakdown
Portfolio geographical breakdown Originate Invest Operate PRS & Regulated tenancies (HY24) PRS Regulated tenancies Region Units Market Change Net Units Market Change Net value vs FY23 yield^ value vs FY23 yield^ £m £m London & SE 3,780 1,285 (3.1)% 4.0% 885 565 0.8% 1.7% South West 512 214 (0.7)% 4.
Slide 46: PRS portfolio by geography
PRS portfolio by geography Originate Invest Operate Portfolio by units Portfolio by rent (£m) Key Central / Inner London 19% 13% 13% 18% Outer London 11% South East 18% 19% 19% South West 16% 10% East and Midlands 5% 9% 13% 17% North West Other Regions Portfolio by value (£m) Post secured pipeline b
Slide 47: PRS portfolio
PRS portfolio Originate Invest Operate Top 20 assets Unit mix Studio / Area # Asset City Postcode Units 1 bed 2 bed 3 bed Sq ft^ 1 Clippers Quay Manchester M50 3AF 510 162 290 58 371,622 2 The Filaments Manchester M3 5PF 376 98 235 43* 246,416 3 The Silver Yard Birmingham B4 6GF 375 184 191 - 225,27
Slide 48: PRS portfolio – rent levels
PRS portfolio – rent levels Originate Invest Operate Rent per calendar month (% of units) £1,500+ 20.1% 9.7% £1,000-£1,500 18.9% 26.3% £750-£1,000 8.0% 11.8% Under £750 2.4% 2.8% 70% below £1,500 pcm London & South East Regions Grainger plc | www.graingerplc.co.uk 44
Slide 49: Recycling capital to drive continued growth
Recycling capital to drive continued Originate Invest Operate growth Flexibility to match investment with sales Highly cash generative Existing Headroom Consistent cashflow from vacant sales (£0.4bn) Pipeline Increased asset recycling programme Strat Land (£0.1bn) c.£200m of operational cashflow p.a
Slide 50: Pipeline projects
Pipeline projects Originate Invest Operate High quality build-to-rent schemes Completed in H1 Committed Secured Forward funding The Barnum, The Copper Works Millwrights Place, The Silver Yard, Windlass Nottingham Capital Quarter, Bristol Exchange Square, Apartments Cardiff Birmingham Ph.2, London La
Slide 51: Committed pipeline schedule
Committed pipeline schedule Originate Invest Operate Gross No. Targeted Est. Grainger Spend yield Committed Projects units launch Status investment to date target Forward funding / acquisition Millwrights Place, Bristol 231 Mid FY24 On site £63m £63m c.6.0% Windlass Apartments Ph.2, Tottenham Hale,
Slide 52: Secured pipeline schedule
Secured pipeline schedule Originate Invest Operate Est. Gross No. Targeted Grainger Spend to yield Secured Projects units launch Status investment date target Direct Development Waterloo, London 215 TBC Consent granted £130m* £13m c.5.0% Exmouth Junction, Exeter 230 TBC Acquired £60m £10m c.6.25% Di
Slide 53: Case Study: Hawkins & George
Case Study: Hawkins & George Originate Invest Operate 194 apartments in Bristol; launched in mid-FY19 We targeted: We delivered: 12 months to stabilisation Fully let up in 3.5 months c.7.0% gross yield on cost 7.7% gross yield on cost (FY23) c.£2.25m net rent on stabilisation £2.5m net rent on stabi
Slide 54: Market value balance sheet
Market value balance sheet Originate Invest Operate FY23 HY24 Market value balance sheet (£m) Residential – PRS 2,423 2,601 Residential – regulated tenancies 693 666 Residential – mortgages (CHARM) 67 64 Forward Funded – PRS work in progress 441 288 Development work in progress 126 119 Investment in
Slide 55: Segmental EPRA NTA balance sheet
Segmental EPRA NTA balance sheet Originate Invest Operate FY23 HY24 EPRA NTA market value PRS Reg* Other Group PRS Reg* Other Group balance sheet (£m) Investment property 2,928.9 20.0 - 2,948.9 2,943.6 19.1 - 2,962.7 Investment in joint ventures and 72.8 - 18.2 91.0 73.0 - 18.0 91.0 associates Finan
Slide 56: EPRA Earnings
EPRA Earnings Originate Invest Operate HY23 HY24 Adjusted EPRA Adjusted EPRA £m Adjustments Adjustments Earnings earnings Earnings earnings Net rental income 48.0 - 48.0 53.2 - 53.2 Profit from sales – trading property 21.2 (21.2) - 19.0 (19.0) - Profit from sales – investment property 4.0 (4.0) - 0
Slide 57: Segmental income statement
Segmental income statement Originate Invest Operate HY23 HY24 £m PRS Reg* Other Group PRS Reg* Other Group Net rental income 40.7 6.9 0.4 48.0 46.8 5.8 0.6 53.2 Profit from sales – trading property (0.4) 21.6 - 21.2 0.1 18.9 0.9 19.9 Profit from sales – investment property 4.1 (0.1) - 4.0 - - - - Mo
Slide 58: EPRA NTA
EPRA NTA Originate Invest Operate FY23 HY24 Adj to Adj to IFRS EPRA IFRS EPRA market market statutory NTA statutory NTA £m value, tax, value, tax, balance balance balance balance derivatives, derivatives, sheet sheet sheet sheet intangibles intangibles Investment property 2,948.9 - 2,948.9 2,962.7 -
Slide 59: EPRA NRV, EPRA NTA and EPRA NDV
EPRA NRV, EPRA NTA and EPRA Originate Invest Operate NDV FY23 HY24 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV £m IFRS Equity attributable to shareholders 1,928.6 1,928.6 1,928.6 1,862.4 1,862.4 1,862.4 Diluted NAV 1,928.6 1,928.6 1,928.6 1,862.4 1,862.4 1,862.4 Include: Revaluation of oth
Slide 60: Debt facilities
Debt facilities Originate Invest Operate Balance sheet, funding and hedging: strong, secured and de-risked 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 £392
Slide 61: Multiple Dwellings Relief on Stamp Duty Land Tax
Multiple Dwellings Relief on Stamp Originate Invest Operate Duty Land Tax MDR was specifically introduced to encourage investment into PRS and allowed investors to pay the same SDLT when buying multiple properties as would be due when buying each property individually In the Spring Budget, the Chanc
Slide 62: Renters (Reform) Bill
Renters (Reform) Bill Originate Invest Operate Headline changes Grainger comment • Abolition of Section 21 no-fault evictions, once courts Grainger supports the abolition of Section 21 evictions have been improved alongside sufficient improvement in the courts • Strengthen landlords’ ability to rega
Slide 63: Future reporting dates
Future reporting dates Originate Invest Operate 2024 Capital Markets Day (TBC) Autumn Trading update September Full year results 21 November Grainger plc | www.graingerplc.co.uk 59