Grainger Plc · LSE:GRI
Grainger — Investor Day (July 2022)
46 slides from Grainger's investor day presentation, Jul 5, 2022
Slide 1: Capital Markets Day
Capital Markets Day Leeds 5 July 2022
Slide 2: Agenda
Agenda Originate Invest Operate Accelerate Helen Gordon 1. Introduction Chief Executive Steven Clark 2. Insight driven investing Director of Investment – Acquisitions Eliza Pattinson Director of Investment – Asset Management Thomas Grounds 3. Knowing our customers drives Head of Research financial p
Slide 3: 1. Introduction
1. Introduction Helen Gordon CEO
Slide 4: 2. Insight driven investing
2. Insight driven investing Steven Clark Director of Investment – Acquisitions Greg Cornish Associate Director – Development John Wood Associate Director – Acquisitions Eliza Pattinson Director of Investment – Asset Management Sarah Norstrom Director of Asset Management
Slide 5: Our geographical strategy
Our geographical strategy Originate Invest Operate Accelerate Cities with robust fundamentals and strong growth potential High demand / supply High demand / supply Schemes secured fundamentals and fundamentals and low growth potential high growth potential Target locations Exeter Under review Southa
Slide 6: Cities will endure
Cities will endure Originate Invest Operate Accelerate Young professionals prize access to amenities, leisure and lifestyle opportunities Reason for city living Proportion of England’s Gross Value Added To be close to restaurants/leisure or Predominantly Rural cultural facilities 15% 39% Availabilit
Slide 7: Strong potential for growth
Strong potential for growth Originate Invest Operate Accelerate Dense, urban areas are hubs of innovation and networking Share of job creation*, 2013 to 2019 Working-age population with NVQ level 4+ qualifications* 55% 50% 45% 40% Other cities 35% 30% 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 8: Disciplined investment criteria
Disciplined investment criteria Originate Invest Operate Accelerate Ensuring we progress the most compelling investment opportunities Suite of screening filters to ensure that we only progress high quality opportunities Lot Size Alignment to our strategy and overall product vision Product ESG Design
Slide 9: Structured investment process
Structured investment process Originate Invest Operate Accelerate Optimising our transaction capability and market reputation Well-established approach to the full transaction life-cycle Dedicated Team Physical presence in the regions as well as London New Business Co – strategic New Pipeline Busine
Slide 10: Our regional clustering strategy
Our regional clustering strategy Originate Invest Operate Accelerate Building scale with management efficiencies MANCHESTER 1,612 NEWCASTLE 380 LEEDS & SHEFFIELD 1,087 homes homes homes Clippers Quay, Manchester 510 The Forge 283 The Headline, Leeds 242 The Filaments, Manchester 376 Other 97 Pin Yar
Slide 11: Why invest in Birmingham?
Why invest in Birmingham? Originate Invest Operate Accelerate UK’s centre of manufacturing excellence and growing services hub Birmingham population growth – 25-34 years Birmingham –overview Population of 2.56m people (primary urban area) Key part of UK manufacturing and logistics industry 165,200 1
Slide 12: Our Birmingham cluster
Our Birmingham cluster Originate Invest Operate Accelerate g Gilders Yard Jewellery Quarter Major employers Aston University ▪ Mondelēz ▪ National Express ▪ Rolls-Royce ▪ Deutsche Bank Birmingham City University Silver Yard Birmingham Snow Hill g 7.1x HS2 Curzon Street House price to Birmingham Moor
Slide 13: Our Birmingham cluster
Our Birmingham cluster Originate Invest Operate Accelerate Two high quality assets delivering 533 new rental homes Gilders Yard Silver Yard 158 BTR homes 375 BTR homes Located in the historic Jewellery Quarter Completing September 2023 Former home of jeweller J Ashford & Sons Short walk to new High
Slide 14: Clippers Quay, Manchester
Clippers Quay, Manchester Originate Invest Operate Accelerate 510 homes | Forward Fund | Salford Quays Exchange Quay Tram Stop Manchester United’s Old Trafford Grainger Plc | www.graingerplc.co.uk 14
Slide 15: The Condor, Derby
The Condor, Derby Originate Invest Operate Accelerate 259 homes | Forward Fund | City Centre Grainger Plc | www.graingerplc.co.uk 15
Slide 16: Our Midlands and Northern clusters
Our Midlands and Northern clusters Originate Invest Operate Accelerate Building scale and efficiencies in our target locations MANCHESTER 1,612 LEEDS & SHEFFIELD 1,087 homes homes Clippers Quay 510 The Headline, Leeds 242 The Filaments 376 Pin Yard, Leeds 216 The Rock 233 Indigo Blu, Leeds 46 Other
Slide 17: Why invest in Leeds?
Why invest in Leeds? Originate Invest Operate Accelerate UK’s 2nd largest financial services hub, and growing urban centre Leeds population growth (25-34 years) Leeds –overview +12% population growth since 2001 Largest legal and financial centre outside of London 124,100 New Channel 4 HQ 113,400 115
Slide 18: Our Leeds cluster
Our Leeds cluster Originate Invest Operate Accelerate Three high quality assets delivering 504 rental homes Indigo Blu Grainger Plc | www.graingerplc.co.uk 18
Slide 19: Enhancing returns through proactive Asset Management
Enhancing returns through proactive Originate Invest Operate Accelerate Asset Management Optimising our Investment Insight Driven Investment Decisions Customer demographic Design impact Net rental assumptions ongoing investment management Large Unit mix market and layouts review opportunity Efficien
Slide 20: Insight driven investment decisions
Insight driven investment decisions Originate Invest Operate Accelerate Asset dashboards informing decision making and driving performance Redacted for commercial sensitivity Grainger Plc | www.graingerplc.co.uk 20
Slide 21: 3. Knowing our customers drives financial performance
3. Knowing our customers drives financial performance Thomas Grounds Head of Research Leesa Ingham Head of Marketing
Slide 22: UK PRS – who rents?
UK PRS – who rents? Originate Invest Operate Accelerate Renter demographics are diverse Age of HRP –private rent vs mortgaged homeowners Household type –private renters 31% 26% 25% 24% 21% 16% 13% 13% 10% 11% 9% 2% 1% 23% 29% 29% 14% 4% One Person Couple, no Couple, Lone parent 2+ families Sharers 1
Slide 23: Renters in a cost-of-living crisis
Renters in a cost-of-living crisis Originate Invest Operate Accelerate Grainger's customers find renting more affordable Average proportion of household income spent on rent Age profile of customers 33% 33% 60.0% 29% 30% 29% 27% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Couple/sharer Single Families 16-24
Slide 24: Central Leeds PRS market
Central Leeds PRS market Originate Invest Operate Accelerate Young professionals renting flats Central Leeds –age profile –last 12 months Central Leeds –property types -last 12 months 5% 16% 77% 98% 18-29 years old Apartments 18-29 30-39 40-49 50-59 60+ Central Leeds –renter incomes distribution <£1
Slide 25: Customer Insight Programme
Customer Insight Programme Originate Invest Operate Accelerate Our Customer Insight Programme delivers meaningful insight across the business Acquisition Decisions Underwriting assumptions, including target demographics, lease-up assumptions, affordability Customer Building Design Experience Interio
Slide 26: Customer Insight Programme
Customer Insight Programme Originate Invest Operate Accelerate Ongoing feedback from quantitative research and surveys Annual Satisfaction Survey Regular ‘pulse surveys’ – at different stages of the tenancy period Automated surveys – repairs and events Customer reviews – monitor feedback and trends
Slide 27: Customer Insight Programme
Customer Insight Programme Originate Invest Operate Qualitative research 2020-2022 Foundation Research Customer Research Phase 1 Customer Research Phase 2 Getting to know our customers Assessing the scope and impact Exploring communication styles in detail of our customer experience and what custome
Slide 28: Customer Experience Programme
Customer Experience Programme Originate Invest Operate Accelerate Insight led – areas to amplify and improve 3 key stages of the customer journey Frictionless 5* Letting Process 1. Letting to Settling Living a Greener Life 2. Every Day Life The Grainger Service Style enhances my everyday 3. Moving O
Slide 29: Customer insights driving value
Customer insights driving value Originate Invest Operate Accelerate Informing the whole Customer Experience Grainger Customer Experience 1 2 3 4 5 Fulfilling Great homes Brilliant Service Customer Brand our purpose & to rent Basics Style Experience communication driving value Programme 82% of online
Slide 30: 4. Market-leading leasing capability
4. Market-leading leasing capability Jonathan Pitt Director of Lettings and Residential Marketing
Slide 31: The Customer
The Customer Originate Invest Operate Accelerate Our focus on the customer journey and experience “The process of finding an apartment at the Headline was seamless from start to finish. Having registered my interest, Jack contacted me within minutes and provided floorplans/videos of a selection of f
Slide 32: The Headline, Leeds
The Headline, Leeds Originate Invest Operate Accelerate Leasing highlights 242 PRS Homes 100% let in 108 days 1,996 Leads 386 Viewings 27th Jul-2021 Launch Date 21st Aug-2021 First Tenancy 12th Nov-2021 Stabilisation Grainger Plc | www.graingerplc.co.uk 32
Slide 33: Leasing Performance: The Headline, Leeds
Leasing Performance Originate Invest Operate Accelerate Exceptional leasing performance, stabilising in 6 months The Headline, Leeds 50% Occupied 50% Reserved 300 Stabilised 250 1st Sept & 3rd Sept 200 13th Sept Cumulative Units 150 100 50 0 07-2021 08-2021 09-2021 10-2021 11-2021 12-2021 01-2022 02
Slide 34: Pin Yard, Leeds
Pin Yard, Leeds Originate Invest Operate Accelerate Leasing highlights 216 PRS Homes 90% Let 1,835 Leads 364 Viewings 27th Feb-22 Launch Date 7th Mar-22 First Tenancy Jul-22 Forecast Stabilisation As of 14 June 2022 Grainger Plc | www.graingerplc.co.uk 34
Slide 35: Leasing performance: Pin Yard, Leeds
Leasing performance Originate Invest Operate Accelerate Exceptional leasing performance, now 90% let Pin Yard, Leeds 250 50% Occupied 2nd Launch 1st Launch 80% Let 50% Let 200 1st Mar & 4th Mar Cumulative Units 150 10th May 25th Feb 100 50 0 01-2022 02-2022 03-2022 04-2022 05-2022 06-2022 07-2022 08
Slide 36: Integrating Salesforce & CONNECT
Integrating Salesforce & CONNECT Originate Invest Operate Accelerate Our market leading CRM and leasing platform Grainger Plc | www.graingerplc.co.uk 36
Slide 37: Salesforce leasing platform
Salesforce leasing platform Originate Invest Operate Accelerate Data and insight driven leasing strategy Dashboard visibility of all assets Live data and reporting Automated lead to lease customer journey Integration with Adode, Rightmove, Asperato and others Data and insight across whole of market
Slide 38: Lettings Insight and KPIs
Lettings Insight and KPIs Originate Invest Operate Accelerate National View: Jun-2021 → May-2022 Leads Viewings 33,203 4,200 4,500 500 4,000 450 3,500 400 350 3,000 300 2,500 250 2,000 200 1,500 150 1,000 100 500 50 0 0 New Lets 3,878 Renewals 4,170 1,200 700 600 73.3% 4.7% 1,000 +230 500 bps 800 40
Slide 39: Lettings and Marketing
Lettings and Marketing Originate Invest Operate Accelerate Capturing new customers through digital marketing Marketing channels: Partnership with Rightmove Multi channel lead generation Grainger Plc | www.graingerplc.co.uk 39
Slide 40: Scalable Lettings Platform
Scalable Lettings Platform Originate Invest Operate Accelerate Grainger Plc | www.graingerplc.co.uk 40
Slide 41: 5. Driving returns
5. Driving returns Rob Hudson CFO Grainger Plc | www.graingerplc.co.uk
Slide 42: The Headline: Key financial impact
The Headline: Key financial impact Originate Invest Operate Accelerate 242 homes | Forward Acquisition | Financial District Unlevered IRR of 11% Deal Agreed Construction Practical Stabilisation Prior Valuation Valuation March 2018 commenced Completion by Dec 2021 valuation uplift uplift October 2018
Slide 43: Pin Yard: Key financial impact
Pin Yard: Key financial impact Originate Invest Operate Accelerate 216 homes | Forward Fund | Holbeck Urban Village, Leeds Unlevered IRR of 9% Deal Agreed Land Construction Practical Launch in Valuation Oct 2018 payment of commenced Completion Mar 2022 uplift £3.8m in July July 2019 and final Expect
Slide 44: Delivering NRI growth
Delivering NRI growth Originate Invest Operate Accelerate OPERATIONAL PORTFOLIO PRS (Build to Rent) PIPELINE 9,793 homes, £3.1bn 9,962 homes, £2.4bn £934m £2,191m £1,022m £746m £669m Regulated Secured* Under Tenancies PRS Portfolio Planning/ 4,001 homes Legals** Consideration*** 2,376 homes 7,417 ho
Slide 45: Secured pipeline: Earnings and returns impact
Secured pipeline: Earnings and returns Originate Invest Operate Accelerate impact Fully funded secured pipeline drives growth in earnings and accelerates total returns Pro-forma Total Returns progression post secured pipeline delivery Strong operating leverage potential, supported by our CONNECT tec
Slide 46: Thank you Q&A
Thank you Q&A Gilders Yard, Birmingham Grainger Plc | www.graingerplc.co.uk