Slide 1: Well positioned for continued growth
Well positioned for continued growth Half Year Financial Results for the six months ended 31 March 2021 13 May 2021
Slide 2: Agenda
Agenda Originate Invest Operate 1. Introduction Helen Gordon Chief Executive 2. Financial results Toby Austin Interim Group Finance Director 3. Market and business update Helen Gordon Chief Executive 4. Q&A 5. Appendix Grainger plc | www.graingerplc.co.uk 2
Slide 3: Good results in a challenging time
Originate Invest Operate Good results in a challenging time +11% Earnings growth +1.7% L4L rental growth 98% Average rent collection 2 New openings in H1 +86% Increase in enquiries since Jan21 Grainger plc | www.graingerplc.co.uk 3
Slide 4: A period of intense activity to capitalise on post pandemic momentum
A period of intense activity to capitalise Originate Invest Operate on post pandemic momentum Our Covid-19 Response 1. Innovate 2. Communicate 3. Improve ‘Emerge stronger’ Some of the actions we’ve taken: Support for customers Increased employee support Customer service desk creation Supplier suppor
Slide 5: Strong and socially responsible performance
Strong and socially responsible Originate Invest Operate performance Adjusted earnings Rental Net rental income Dividend EPRA NTA growth (L4L) £37.5m £34.7m 1.83pps 286pps +11% +1.7% (6)% +0% +0% (170) bps Financial highlights: ESG highlights: Adjusted earnings +11% Making a positive social impact –
Slide 6: A strategy and operational model that drives performance and growth
A strategy and operational model that Originate Invest Operate drives performance and growth Driving forward Investing for the construction and long term, through delivery of our cycles pipeline Six schemes in planning and legals Two schemes completed (1,558 homes) (508 homes) £52m from recycling La
Slide 7: A leading operating platform that delivers performance
A leading operating platform that Originate Invest Operate delivers performance Against the market our operating platform has delivered… 34 Higher Higher rent Better occupancy collection customer months 89% v 71%1 98% v 93%1 satisfaction Avg length of stay PRS customer …Stronger, more sustainable re
Slide 8: Significant pipeline delivery
Significant pipeline delivery Originate Invest Operate Over 500 new homes completed in H1, delivering £8m of gross rent HY21 OPERATIONAL PORTFOLIO PIPELINE 9,109 homes, £2.8bn 8,851 homes, £2.1bn £432m c.£600m £1,017m £1,820m £1,078m Planning/ TfL Regulated tenancies PRS Secured pipeline Legals c.3,
Slide 9: Anticipating post-Covid-19 market trends
Anticipating post-Covid-19 market trends Originate Invest Operate In-house research supporting business decisions Covid-19 has accelerated rental trends in our favour, e.g.: Flight to quality, amenitised buildings, professional management, walkability, technology and connectivity Customers want opti
Slide 10: Strong growth trajectory
Strong growth trajectory Originate Invest Operate Ready to capitalise on the summer momentum of growth Creating a high quality and regionally diverse portfolio Best in class operating platform Successful track record in sourcing and underwriting Significant income growth via our pipeline Strong occu
Slide 11: 2. HY21 Financial Results
2. HY21 Financial Results Toby Austin Interim Group Finance Director
Slide 12: Financial highlights
Financial highlights Originate Invest Operate Strong performance through lockdown period Income HY20 HY21 Change Rental growth (like-for-like) 3.4% 1.7% (170) bps Net rental income £37.0m £34.7m (6)% Adjusted earnings £33.7m £37.5m +11% Profit before tax £49.6m £50.3m +1% Dividend per share 1.83p 1.
Slide 13: Income statement
Income statement Originate Invest Operate Continued earnings growth supported by strong sales Key highlights: HY20 HY21 Change Net rental income & margins Net rental income £37.0m £34.7m (6)% Profit from sales £22.8m £29.6m +30% Stabilised gross to net = 24.7% (excluding voids) Mortgage income (CHAR
Slide 14: Net rental income
Net rental income Originate Invest Operate Further pipeline deliveries combined with the unwind of the temporary reduction in occupancy will drive strong near-term growth Key drivers in the period Continued asset recycling Timing of pipeline delivery Temporary occupancy change +£1.0m £(3.4)m £37.0m
Slide 15: EPRA Net Asset Values
EPRA Net Asset Values Originate Invest Operate EPRA NTA per share demonstrates resilience £m pence per share Property assets (market value) 3,178 471 Net liabilities (1,114) (165) EPRA Net Reinstatement Value (NRV) 2,064 306 Tax – deferred & contingent – trading assets (108) (16) Exclude: Intangible
Slide 16: EPRA Net Tangible Assets (NTA)
EPRA Net Tangible Assets (NTA) Originate Invest Operate Continued earnings and valuation growth the key drivers +5p +5p (3)p +7p (2)p (2)p (4)p 286p 285p Total * +1.3% PRS * +0.9% Regs +2.0% * Includes completed assets only Grainger plc | www.graingerplc.co.uk 16
Slide 17: Net debt
Net debt Originate Invest Operate Strong operational cashflow and asset recycling supports our growth plans Operating cashflow Net investment £(39)m +£72m +£25m £1,098m +£119m +£5m +£8m £1,032m £(89)m +£21m £(52)m +£29m 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 that supports growth HY21 Net debt £1,098m Cost of debt LTV 6.5% 60% Loan to value 34.5% 6.0% 55% Cost of debt (average) 3.1% 5.5% 50% 5.0% Incremental cost of debt 1.7% 4.5% 45% 4.0% 40% Fully drawn
Slide 19: Fully funded secured pipeline
Fully funded secured pipeline Originate Invest Operate Disciplined capital management underpinning growth Opening Headroom** Existing Committed Capex* Cash from operations*** Outer Pipeline Capacity £962m £962m £812m £812m £375m £442m £662m £662m £225m £292m £587m £587m £75m £142m £67m £587m £587m £
Slide 20: Net rent progression
Net rent progression Originate Invest Operate 80% increase in NRI already secured Planning / legals Secured pipeline: £1,078m TfL: £600m £432m +£24m £179m +2.4x +£20m +£26m £135m +1.8x +£16m +£13m +£5m £75m £5m* £70m * HY21 void passing net rent. ** TfL Partnership – indicative estimate of Grainger’
Slide 21: Financial summary
Financial summary Originate Invest Operate Ready to capitalise on the summer momentum of growth Strong financial performance Reliable rental income and cash collection Strong sales performance Successful asset recycling accelerating growth Robust valuations, underpinned by strong investment market A
Slide 22: 3. Market and business update
3. Market and business update Helen Gordon Chief Executive
Slide 23: Five years on, a robust strategy and a strong track record of delivery
Five years on, a robust strategy and a Originate Invest Operate strong track record of delivery We said… (January 2016) We delivered… Simplify the business PRS (73% of NRI) & Regulated (27%) • £450m of non-core businesses sold • Focus on PRS Strategy • Reduce overheads • £460m of asset-hierarchy led
Slide 24: Our investment case remains strong
Our investment case remains strong Originate Invest Operate Why PRS is strong as ever Why Grainger is poised to benefit Low risk, resilient returns First-mover and Market leader Huge undersupply, worsening Growing rapidly £2.1bn pipeline, doubling our size Growing demand 4.5m to 7.2m by 2025 Integra
Slide 25: Long term fundamentals remain strong
Long term fundamentals remain Originate Invest Operate strong Opportunity to grow market share Private landlords shrinking as a % of the market Only 3% of homes in UK PRS owned by institutional landlords Share of homes bought by small private landlords Institutional landlords 16% 16% 14% 12% 11% 11%
Slide 26: Long term fundamentals remain strong (continued)
Long term fundamentals remain Originate Invest Operate strong (continued) Strong growth among all ages over 25 Rents forecast to grow PRS households (‘000s) 1,600 +42% 2008/09 2019/20 “…BtR schemes also appear to be 1,200 +56% benefiting from a ‘flight to quality’ +86% as tenants seek high-quality h
Slide 27: Strong near term outlook
Strong near term outlook, Originate Invest Operate Indications of growing rental momentum Occupancy successfully maintained Despite lockdown, we undertook a significant at 89% despite ongoing lockdown volume of lettings activity over the six months… restrictions We have taken a number of key actions
Slide 28: Making a positive impact
Making a positive impact Originate Invest Operate We don’t just build houses, we build homes and communities Our ESG Strategy Key actions in HY21: and Commitments Communities Wellbeing Net Zero 3 Pillars: People, Assets, Environment Rolled out BTR Mental health first aid Carbon Net Zero in our c
Slide 29: 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 30: Multiple acquisition routes
Multiple acquisition routes Originate Invest Operate Maximising the opportunity for growth Forward Direct Stabilised funding development acquisitions Characteristics Characteristics Characteristics + Accelerates sourcing + Full delivery oversight + Immediate income + Enables scalability + Opportunit
Slide 31: Building our PRS portfolio across the UK
Building our PRS portfolio across the UK Originate Invest Operate Research led investment strategy and asset clustering to LEEDS & SHEFFIELD 1,087 deliver operational efficiencies Operational 345 MANCHESTER 1,635 (inc 237 at Brook Place) Pipeline Operational 1,635 (inc 376 at The Filaments) Yorkshir
Slide 32: Delivery of new homes
Delivery of new homes Originate Invest Operate Release of new homes as restrictions ease and lettings market peaks FY20 HY21 FY21 Covid19 Restrictions Restriction easing Peak Summer Lettings Market New openings in H1 Launching in H2 Gatehouse Apts, East Street, Windlass Apts, Tottenham Hale, Southam
Slide 33: Summary: Near term momentum and long term growth
Originate Invest Operate Summary Near term momentum and long term growth Positive demand drivers and strong investment fundamentals Our strong sales performance supports our growth Significant income growth via our secured pipeline Strong balance sheet and flexible funding structure High quality and
Slide 34: Thank you
Thank you Q&A The Filaments, Manchester
Slide 35: Appendix
Originate Invest Operate Appendix Contents Portfolio overview Page 36 1. Property information Operating platform Page 37 Portfolio summary Page 38 Portfolio geographical breakdown Page 39 Valuation movements by region Page 40 - 41 Liquidity and Capex Page 42 PRS Portfolio Pages 43-45 Secured pipelin
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: Driving value through our Operating Platform
Driving value through our Originate Invest Operate Operating Platform In-house operational platform - Direct customer relationship - Complete supply chain control - Greater customer insight - Direct input into development - Greater responsiveness to new - Technology enhanced efficiency trends Perfor
Slide 38: Portfolio summary
Portfolio summary Originate Invest Operate Vacant possession Reversionary Market value value surplus Units £m £m £m Net yield Residential – PRS 6,196 1,749 1,870 121 3.8% Residential – regulated tenancies 2,308 943 1,107 164 2.0% Residential – mortgages (CHARM) 451 74 74 - Forward Funded – PRS work
Slide 39: 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 1,291 577 874 587 2,165 1,164 Outer London 798 345 217
Slide 40: Valuation movements by region
Valuation movements by region Originate Invest Operate HY21 Units Market value Change since Avg house price Region £m FY20 Avg VP per unit £000s Central / Inner London 2,163 1,163 (0.3)% 606 Outer London 857 366 (0.7)% 473 South East 1,432 325 +5.8% 277 South West 717 236 +3.9% 337 East and Midlands
Slide 41: Portfolio geographical breakdown
Portfolio geographical breakdown Originate Invest Operate PRS & Regulated tenancies (HY21) PRS Regulated tenancies Market Change Market Change Units value since FY20 Net yield Units value since FY20 Net yield Region £m £m Central / Inner London 1,291 577 (1.5)% 3.4% 872 586 +0.8% 1.6% Outer London 6
Slide 42: Liquidity and capex
Liquidity and capex Originate Invest Operate £587m headroom to fund investment pipeline Strong liquidity Current liquidity position (£m) Strong headroom of £587m from cash and available facilities 379 587 208 Committed capex funded Cash Available facilities Total liquidity Capital expenditure plans
Slide 43: PRS portfolio by geography
PRS portfolio by geography Originate Invest Operate Geographic breakdown by units Geographic breakdown by Rent (£m) Key Central / Inner 7% 5% London 21% 22% 29% Outer London 32% South East 10% 2% South West 14% 16% 3% 8% 19% East and Midlands 12% North West Post secured pipeline geographic Other Reg
Slide 44: 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 £8.3m The Filaments Manchester M3 5PF 376 98 235 43* 246,416 £5.7m Hawkins & George Brist
Slide 45: PRS portfolio – rent levels
PRS portfolio – rent levels Originate Invest Operate Rent per calendar month (% of units) 7.5% £1500+ 19.6% 22.0% £1000-1500 7.0% 19.5% £750-£1000 3.5% 19.8% Under £750 1.1% Regions London +2.8% 5-year Avg Annual Rental Growth Grainger plc | www.graingerplc.co.uk 45
Slide 46: 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 Headline, Yorkshire Post, Leeds 242 Late FY21 On site £42m £5m c.7% Windlass Apts, Tottenham Hale, Londo
Slide 47: Secured pipeline schedule
Secured pipeline schedule Originate Invest Operate (Continued from previous page) Est. Gross Targeted Grainger Spend to yield Name No. units launch Status investment date target Direct development Apex Gardens, London 163 Mid FY21 Approaching £60m £58m c.6.5% completion Newbury, West Berks 232 Late
Slide 48: Secured pipeline projects
Secured pipeline projects Originate Invest Operate 19 high quality PRS schemes Secured Secured in HY21 Forward funding / Acquisitions Windlass Apts, The Headline, The Pin Yard, Enigma Square, Canning Town 2, Hale Wharf, Yorkshire Post, Fabrik, Milton Keynes London Tottenham Leeds Leeds The Copper Wo
Slide 49: 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 50: Segmental income statement
Segmental income statement Originate Invest Operate HY20 HY21 £m PRS Reg* Other Group PRS Reg* Other Group Net rental income 27.1 9.8 0.1 37.0 25.3 9.3 0.1 34.7 Profit from sales – trading property - 18.0 4.1 22.1 (0.1) 29.6 0.2 29.7 Profit from sales – investment 0.7 - - 0.7 (0.1) - - (0.1) propert
Slide 51: Balance sheet
Balance sheet Originate Invest Operate FY20 HY21 Market value balance sheet (£m) Residential – PRS 1,624 1,749 Residential – regulated tenancies 968 943 Residential – mortgages (CHARM) 73 74 Forward Funded – PRS work in progress 231 193 Development work in progress 147 176 Investment in JVs/associat
Slide 52: Segmental balance sheet
Segmental balance sheet Originate Invest Operate FY20 HY21 EPRA NTA market value PRS Reg* Other Group PRS Reg* Other Group balance sheet (£m) Investment property 1,755.9 23.0 - 1,778.9 1,867.4 23.9 - 1,891.3 Investment in joint ventures and 25.0 - 17.0 42.0 25.9 - 17.1 43.0 associates Financial inte
Slide 53: EPRA Earnings
EPRA Earnings Originate Invest Operate HY20 HY21 Adjusted Adjusted Adjusted Adjusted £m Adjustments EPRA Adjustments EPRA Earnings Earnings earnings earnings Net rental income 37.0 - 37.0 34.7 - 34.7 Profit from sales – trading property 22.1 (17.0) 5.1 29.7 (28.2) 1.5 Profit from sales – investment
Slide 54: EPRA NRV, EPRA NTA and EPRA NDV
EPRA NRV, EPRA NTA and EPRA Originate Invest Operate NDV FY20 HY21 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV £m IFRS Equity attributable to shareholders 1,463.0 1,463.0 1,463.0 1.488.3 1,488.3 1,488.3 Diluted NAV 1,463.0 1,463.0 1,463.0 1,488.3 1,488.3 1,488.3 Include: Revaluation of oth
Slide 55: 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 £1m Aug 2024 Term Debt HSBC, NatWest, Barclays, AIB £170m £170m
Slide 56: 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 Innovate our customers. • Virtual viewings • Remote working • Direct customer sales • Sales process re- engineered Continual communi
Slide 57: Future reporting dates
Future reporting dates Originate Invest Operate 2021 Trading update September Full year results 18 November Grainger plc | www.graingerplc.co.uk 57
Slide 58: Gatehouse Apartments
Gatehouse Apartments Originate Invest Operate At East Street, Southampton Launched March 2021 Mix of 46 one bed and 86 two bed apartments Residents lounge and co-working space Residents gym Residents roof terraces 132 new homes Grainger plc | www.graingerplc.co.uk 58
Slide 59: The Filaments
The Filaments Originate Invest Operate At Gore Street, Manchester Launched March 2021 Mix of 98 one bed, 228 two bed, 39 three bed apartments and 11 townhouses Residents lounge and co-working space Residents gym Residents roof terraces 376 new homes Grainger plc | www.graingerplc.co.uk 59