Slide 1: An outstanding year of record delivery with an excellent outlook
An outstanding year of record delivery Change with an excellent photo outlook Full Year Financial Results September 2023 22 November 2023
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: Strong performance and outlook
Strong performance and outlook Originate Invest Operate Excellent operational Strong Confident performance balance sheet outlook 1,640 +12% +43 305 pps New homes in 2023, Net rental income NPS (+26%) NTA (-4%) £17m net rent once stabilised +8.0% 63.2% 36.8% £43m PRS L4L rental Retention LTV Future i
Slide 4: A strong performance and resilient valuations
A strong performance and resilient Originate Invest Operate valuations Net rental income Dividend a Rental growth Adjusted earnings EPRA NTA a +12% +11% +7.7% +4% -4% (L4L, including regs) £96.5m 6.65pps £97.6m 305pps Financial highlights: Strategic highlights: Passing net rental income surpasses £1
Slide 5: Proven track record of successful execution
Proven track record of successful execution Originate Invest Operate Grainger continues to deliver year in and year out Strong and consistent growth in recurring net rent Delivery of 2016 strategy to focus on PRS Net rental income Portfolio composition CAGR +13% £44m £40m £64m £74m £86m £97m £71m £3
Slide 6: A year of record delivery
A year of record delivery Originate Invest Operate EPRA earnings growth accelerating as pipeline converts OPERATIONAL PORTFOLIO* PRS (BTR) PIPELINE 5,634 homes, £1.6bn 10,208 homes, £3.3bn £760m £2,500m £721m £541m £316m Regulated Committed Planning/ PRS Portfolio** Secured*** Tenancies 2,609 homes
Slide 7: Recycling capital to drive continued growth
Recycling capital to drive continued Originate Invest Operate growth Flexibility to match investment with sales Highly cash generative Consistent cashflow from vacant sales Existing Headroom (£0.5bn) Increased asset recycling programme £150-200m of operational cashflow p.a. Strat Land (£0.1bn) Other
Slide 8: Needs-based real estate delivers
Needs-based real estate delivers Originate Invest Operate Residential rental sector has proven its resilience despite wider economic weakness Year on year growth* 7.7% 8.0% 5.7% 3.6% 0.6% GDP CBRE ONS ONS Grainger (UK) Commercial Private Resi Average Weekly PRS Rental Value Rental Growth Earnings Re
Slide 9: An outstanding year of record delivery and an excellent outlook
An outstanding year of record delivery Originate Invest Operate and an excellent outlook An excellent outlook with earnings growth accelerating Record delivery and strong operational performance £1.6bn pipeline to deliver scalability benefits in net rent and margin improvement Earnings growth accele
Slide 10: 2. FY23 Financial Results
2. FY23 Financial The Barnum, Nottingham Results Rob Hudson Chief Financial Officer
Slide 11: Financial highlights
Financial highlights Originate Invest Operate Like-for-like rental growth accelerates to 7.7% Income performance Income FY22 FY23 Change Excellent operational performance driven Rental growth (like-for-like) 4.7% 7.7% +302 bps by our platform and demand for our product Net rental income £86.3m £96.5
Slide 12: Income statement
Income statement Originate Invest Operate Excellent operational performance drives NRI growth Key highlights: FY22 FY23 Change Strong occupancy and rental growth Net rental income £86.3m £96.5m +12% momentum Profit from sales £65.3m £57.8m (11)% Record occupancy continues at 98.6% Mortgage income (C
Slide 13: Net rental income
Net rental income Originate Invest Operate Strong operational performance driven by new openings and 7.7% LfL rental growth, with lettings outlook positive for FY24 +12% +£10.2m £101m +£8.7m +£96.5m £86.3m £(2.8)m +£4.3m Total L4L +7.7% PRS L4L +8.0% - New lets +9.2% - Renewals +7.2% Regs L4L +5.9%
Slide 14: Valuation Summary
Valuation Summary Originate Invest Operate Resilient valuation performance down 2.4% despite wider macro uncertainty Capital Total Valuation PRS grown to 77% of the total Portfolio Homes Value movement operational portfolio, from 23% in 2016 £m £m % PRS portfolio valued on a rent / yield basis and R
Slide 15: EPRA Net Asset Values
EPRA Net Asset Values Originate Invest Operate EPRA NTA resilient £m pence per share Property assets (market value) 3,841 517 Net liabilities (1,482) (199) EPRA Net Reinstatement Value (NRV) 2,359 318 Tax – deferred & contingent – trading assets (91) (13) Exclude: Intangible assets (1) - EPRA Net Ta
Slide 16: EPRA Net Tangible Assets (NTA)
EPRA Net Tangible Assets (NTA) Originate Invest Operate Increasing net rent and resilient valuation results in NTA of 305p -4% 12 months +14p (5)p +X% (4)p (13)p 317p +1p +1p (6)p 305p Total -2.4% PRS -2.3% Regs -2.0% Dev -3.8% HY23: 310p Grainger plc | www.graingerplc.co.uk 16
Slide 17: Net debt
Net debt Originate Invest Operate Significant investment in pipeline delivery, with £191m of disposals in line with plan Operating cashflow £209m +£47m £1,416m +£312m +£4m £1,262m £(147)m +£55m £(191)m^ +£74m HY23 reported: £1,394m Net debt increased to £1.4bn during FY23, reflecting investment in r
Slide 18: 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 FY23 requirement until 95% hedged with a hedge Net debt £1,416m 2028 maturity of c.5 years £915m of facilities successfully Loan to value 36.8% extended Cost of deb
Slide 19: Liquidity and capex
Liquidity and capex Originate Invest Operate Capex to be funded by operational cashflows including recycling Strong liquidity Track record of strong and growing cashflow from operations Strong headroom of £519m from cash and available facilities £209m £204m +1.6x Growing operational cash inflows £19
Slide 20: Passing net rent and earnings progression
Passing net rent and earnings progression Originate Invest Operate Transformative growth in NRI and doubling of earnings Planning / Legals Committed pipeline £721m Secured ** £541m £316m £167m +£15m £182m +2.1x +£23m £144m +£8m +£5m +1.7x +£13m +£17m^ £96m £101m £86m FY22 FY22 FY22 reported reported
Slide 21: REIT conversion
REIT conversion Originate Invest Operate Anticipated in 2 years Drivers of REIT Conversion criteria & timing ▪ Corporation tax saving ▪ Balance of business tests, 75% of profits and assets from the ▪ Enhances returns by c.50bps p.a. property rental business (PRS/BTR) ▪ No conversion charge ▪ Changes
Slide 22: ESG reporting and financial integration
ESG reporting and financial integration Originate Invest Operate Data-driven approach to ESG 91% PRS portfolio Enhanced measurement and reporting Highlights from the year with EPC ratings A-C Scope 3 baseline measured and independently verified 90% -4% Renewable electricity Reduction in Grainger Lon
Slide 23: Financial summary
Financial summary Originate Invest Operate Transformative growth trajectory Net rental income growth of +12% driven by lease up of launches, strength of letting demand and rental growth Expect similar levels of total growth in net rents in FY24 Dividend per share up +11% as pipeline continues to del
Slide 24: 3. Market and business update
3. Market and business update Helen Gordon Chief Executive
Slide 25: Our competitive advantage
Our competitive advantage Originate Invest Operate Four key differentiators for Grainger Our places Our assets ✓ Proprietary cities strategy research ✓ High quality, purpose-built rental assets ✓ Locations with strongest fundamentals ✓ Customer-centric Grainger design and ✓ Nationwide coverage speci
Slide 26: Positive market outlook
Positive market outlook Originate Invest Operate Strong demand continues with supply constrained Growing demand Reducing supply Growing number of renters PRS undersupply worsening with Economic migration small private landlords exiting and Delayed housing purchases the number of HMO’s reducing Stron
Slide 27: Strong structural supports
Strong structural supports Originate Invest Operate The Government’s annual housing target has never Vast opportunity to grow market share been met on any measure of new housing supply Build-to-rent units as a proportion of the 5.5m UK PRS households Indicators of new supply, England 350,000 1.7% 30
Slide 28: A market with strong momentum
A market with strong momentum Originate Invest Operate Wage growth continues to drive rents Net migration recovered post pandemic Annual rental growth Long-term net migration in the UK, between 2018 and 2022 14% ONS Regular Pay Growth 0.8m 12% Homelet UK Rental Growth (new lets) 0.6m ONS UK Rental G
Slide 29: Focused customer affordability
Focused customer affordability Originate Invest Operate Grainger focused on young professional demographic Grainger’s customers are paying affordable rents Proportion of residents by age in Grainger’s PRS portfolio Proportion of household income spent on rent (%), England 37 33% 36 28% 27% 35 Graing
Slide 30: Supportive political landscape
Supportive political landscape Originate Invest Operate Rent controls ruled out by both parties “I want to be clear: This “I don’t think under Keir’s Government does not leadership, rent control has support rent controls.” ever been our policy.” Conservative Housing Minister, Labour’s Shadow Chancel
Slide 31: 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 32: Established scale in key cities
Established scale in key cities Originate Invest Operate £721m committed pipeline Cluster Strategy ▪ Drives operational efficiencies and enables leveraging our brand nationally Investment (since 2016) ▪ Investment now delivering ▪ 22 operational BTR assets ▪ 11 cities & 3 towns ▪ 7 schemes deliverin
Slide 33: New openings
New openings Originate Invest Operate Completed The Mint, Guildford The Condor, Derby Completed and Completed and launched Jul ‘23, launched Aug ‘23, 98 BTR homes 259 BTR homes Nautilus Apartments, London Weavers Yard, Newbury (additional phases) Completed and Phased completions, launched Sep ‘23, 2
Slide 34: New openings continued
New openings continued Originate Invest Operate Launched Completing ‘23 The Tilt Works, Sheffield The Barnum, Nottingham Completed and Completed and launched Sep ‘23, launched Oct ‘23, 284 BTR homes 348 BTR homes Copper Works, Cardiff Completing late ‘23 307 BTR homes 7 new assets 1,640 new BTR home
Slide 35: 2024 Launches
2024 Launches Originate Invest Operate Millwrights Place, Bristol Sliver Yard, Exchange Square, Birmingham Forward Fund Forward Fund 231 homes 375 homes Launching H1 24 Launching H1 24 Hale Wharf 2, Tottenham Hale, London Forward Commit 65 homes Launching H2 24 3 new assets 671 new BTR homes £9m net
Slide 36: Public Sector Partners
Public Sector Partners Originate Invest Operate Working with public sector partners to unlock and bring forward well located sites for housing 3,246 Homes being delivered through existing partnership Our track record of successfully working in partnership Connected Living The Barnum, Hale Wharf, Wel
Slide 37: Customer insight
Customer insight Originate Invest Operate Optimising customer value and experience through insight delivered from our CONNECT platform Fully digitally enabled leasing journey Proportion of residents by age in Grainger’s PRS portfolio 33% Lead management system capturing data 35% upfront to enhance l
Slide 38: Focused on customer experience
Focused on customer experience Originate Invest Operate Driving value for our residents through service excellence 9 in 10 customers tell us that they “really like” their Grainger home In-house customer service teams across our sites Our Customer Experience Programme is focused on driving value to o
Slide 39: Why Grainger
Why Grainger Originate Invest Operate Doubling earnings in the next 3 years 1 Post tax EPRA earnings to double from FY22 £43m of net rent growth from the fully-funded, committed pipeline locked-in 2 Strong balance sheet Finance costs fixed in the mid 3% for the next 5 years 3 Resilient valuations St
Slide 40: Thank you Q&A
Thank you Q&A The Barnum, Nottingham
Slide 41: Appendix
Originate Invest Operate Appendix Contents Portfolio overview Page 42 1. Property information Portfolio summary Page 43 Portfolio movements Page 44 Portfolio geographical breakdown Pages 45-47 PRS Portfolio Top 20 Assets Page 48 PRS Portfolio Rent Levels Analysis Page 49 Pipeline Pages 50-52 Routes
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 8,273 2,423 89 4.1% Residential – regulated tenancies 1,419 693* 12 1.9% Residential – mortgages (CHARM) 362 67 n/a n/a Forward Funded – PRS work in progress - 441 - - Development work in progre
Slide 44: Portfolio movements
Portfolio movements Originate Invest Operate Sep22 Additions Disposals Transfers Valuation Sep23 £m £m £m £m £m £m PRS London & SE 1,262 22 (28) 135 (67) 1,324 Regions 927 7 (21) 175 11 1,099 Total PRS 2,189 29 (49) 310 (56) 2,423 Regs London & SE 680 2 (81) - (11) 590 Regions 132 1 (27) - (3) 103 T
Slide 45: Portfolio geographical breakdown
Portfolio geographical breakdown Originate Invest Operate PRS & Regulated tenancies (FY23) PRS Regulated tenancies Region Units Market Change Net Units Market Change Net value vs FY22 yield^ value vs FY22 yield^ £m £m London & SE 3,711 1,324 (5.2)% 3.8% 957 590 (1.9)% 1.8% South West 514 216 +1.0% 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 17% 15% 14% 22% Outer London 13% South East 20% 22% South West 19% 17% East and Midlands 9% 10% 6% 3% 13% North West Other Regions Portfolio by value (£m) Post secured pipeline by
Slide 47: 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 deliver operational efficiencies NORTH EAST (Newcastle) 381 YORKSHIRE 1,043 NORTH WEST (Manchester & 1,789 Operational 381 (Leeds & Sheffield) (inc The Forge) Liverpool) Operati
Slide 48: 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 Enigma Square Milton Keynes MK9 2FU 261 195 54 12 148,
Slide 49: PRS portfolio – rent levels
PRS portfolio – rent levels Originate Invest Operate Rent per calendar month (% of units) £1,500+ 24.2% 5.9% £1,000-£1,500 13.6% 28.4% £750-£1,000 8.6% 13.0% Under £750 2.5% 3.8% 70% below £1,500 pcm London & South East Regions Grainger plc | www.graingerplc.co.uk 49
Slide 50: Pipeline projects
Pipeline projects Originate Invest Operate High quality build-to-rent schemes Completed post YE Committed Secured Secured in FY23 Forward funding The Barnum, The Copper Works Millwrights Place, The Sliver Yard, West Way Sq, Nottingham Capital Qtr, Bristol Exchange Sq, Oxford Cardiff Birmingham Compl
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 The Barnum, Queens Road, Nottingham 348 Launched Completed £56m £56m c.7% post YE The Copper Works, Capital
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% Exmouth Junction, Exeter 230 TBC Acquired £60m £10m c.6.25% Dire
Slide 53: Routes for future growth
Routes for future growth Originate Invest Operate Disciplined yet flexible approach to sourcing Continuing to track investment opportunities Creating optionality to enable us to Forward Fund continue our growth trajectory at the appropriate time De-risking delivery through careful Public Sector Land
Slide 54: Market value balance sheet
Market value balance sheet Originate Invest Operate FY22 FY23 Market value balance sheet (£m) Residential – PRS 2,189 2,423 Residential – regulated tenancies 812 693 Residential – mortgages (CHARM) 69 67 Forward Funded – PRS work in progress 466 441 Development work in progress 182 126 Investment in
Slide 55: Segmental EPRA NTA balance sheet
Segmental EPRA NTA balance sheet Originate Invest Operate FY22 FY23 EPRA NTA market value PRS Reg* Other Group PRS Reg* Other Group balance sheet (£m) Investment property 2,753.5 22.4 - 2,775.9 2,928.9 20.0 - 2,948.9 Investment in joint ventures and 37.1 - 18.1 55.2 72.8 - 18.2 91.0 associates Finan
Slide 56: EPRA Earnings
EPRA Earnings Originate Invest Operate FY22 FY23 Adjusted EPRA Adjusted EPRA £m Adjustments Adjustments Earnings earnings Earnings earnings Net rental income 86.3 - 86.3 96.5 - 96.5 Profit from sales – trading property 63.6 (63.6) - 54.5 (54.5) - Profit from sales – investment property 1.7 (1.7) - 3
Slide 57: Segmental income statement
Segmental income statement Originate Invest Operate FY22 FY23 £m PRS Reg* Other Group PRS Reg* Other Group Net rental income 70.8 15.2 0.3 86.3 82.2 13.4 0.9 96.5 Profit from sales – trading property (0.1) 61.7 2.0 63.6 (0.5) 54.2 0.8 54.5 Profit from sales – investment 1.6 0.1 - 1.7 3.3 - - 3.3 pro
Slide 58: EPRA NTA
EPRA NTA Originate Invest Operate FY22 FY23 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 2,775.9 - 2,775.9 2,948.9 -
Slide 59: EPRA NRV, EPRA NTA and EPRA NDV
EPRA NRV, EPRA NTA and EPRA Originate Invest Operate NDV FY22 FY23 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV £m IFRS Equity attributable to shareholders 1,966.8 1,966.8 1,966.8 1,928.6 1,928.6 1,928.6 Diluted NAV 1,966.8 1,966.8 1,966.8 1,928.6 1,928.6 1,928.6 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: Weavers Yard
Weavers Yard Originate Invest Operate Newbury, Berkshire Asset Overview Socially responsible investment Direct Development, phased completions Walk 232 high quality apartments and townhouses score (1 x Studio, 78 x 1 beds; 129 x 2 beds, 24 x 3 beds) c.8,500 sq ft of commercial space 96 Over 1,500 sq
Slide 62: The Mint
The Mint Originate Invest Operate Guildford, Surrey Asset Overview Socially responsible investment Forward Funding, completed July 23 Walk 98 high quality apartments score (40 x 1 beds; 55 x 2 beds, 3 x 3 beds) c. 3,000 sq ft of internal residents amenity 96 Onsite resident services Residents lounge
Slide 63: The Condor
The Condor Originate Invest Operate Derby, East Midlands Asset Overview Socially responsible investment Forward fund, completed July 23 Walk 259 high quality apartments and townhouses score (30 x Studio, 136 x 1 beds; 93 x 2 beds) c.2,300 sq ft of commercial space 97 c.2,500 sq ft of internal reside
Slide 64: Nautilus Apartments, Fortunes Dock
Nautilus Apartments, Fortunes Dock Originate Invest Operate Canning Town, London Asset Overview Socially responsible investment Forward fund, completed July 23 Walk 146 high quality apartments score (44 x 1 beds; 102 x 2 beds) c.12,000 sq ft of commercial space 85 c.6,000 sq ft of internal residents
Slide 65: The Tilt Works
The Tilt Works Originate Invest Operate Sheffield, Yorkshire Asset Overview Socially responsible investment Forward fund, completed September 23 Walk 284 high quality apartments and townhouses score (12 x Studio, 139 x 1 beds; 133 x 2 beds) c.1,750 sq ft of commercial space 93 c.3,000 sq ft of inter
Slide 66: The Barnum
The Barnum Originate Invest Operate Nottingham, East Midlands Asset Overview Socially responsible investment Forward fund, completed October 23 Walk 348 high quality apartments and townhouses score (17 x Studio, 199 x 1 beds; 126 x 2 beds, 6 x 3 beds) c.1,800 sq ft of commercial space 95 c.4,000 sq
Slide 67: Future reporting dates
Future reporting dates Originate Invest Operate 2024 Half year results 16 May Capital Markets Day tbc Trading update September Full year results 21 November Grainger plc | www.graingerplc.co.uk 67