Slide 1: Acceleration into a new phase of growth
Acceleration into a new phase of growth Full Year Financial Results for the year ended 30 September 2021 18 November 2021
Slide 2: Agenda
Agenda Originate Invest Operate 1. Overview 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 lettings momentum signals growth ahead
Strong lettings momentum signals Originate Invest Operate growth ahead 95% Apex Gardens, London Occupancy as at Oct 2021 The Filaments, Manchester £2.1bn Operational PRS portfolio 1,304 New PRS homes in FY21 8,373 Future homes in the pipeline 2.5x Windlass Apartments, London Potential NRI growth fro
Slide 4: Robust performance; a growing business
Robust performance; a growing Originate Invest Operate business Net rental Passing NRI Rental Adjusted EPRA NTA Dividend income growth (L4L) earnings a a £70.6m £81m +1.0% £83.5m 297pps 5.15pps (4)% +15% (195) bps +2% +4% (6)% Financial highlights: Strategic highlights: Passing net rental income up
Slide 5: Highlights for the year: A socially responsible business
A socially responsible business Originate Invest Operate Taking a leading industry role in driving responsible business practices 84% 85% 89/100 878 552 electricity supplies WalkScore operational community EPC A-C within our events, many purchased is within PRS Affordable homes renewable pipeline wi
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 One stabilised acquisition (1,386 homes) (283 homes) £108m from asset
Slide 7: Sector outperformance driven by our in-house operating platform
Sector outperformance driven by Originate Invest Operate our in-house operating platform Increased our direct lettings strategy Investment in employee training and development Further enhanced our digital leasing process Enhanced customer support initiatives Launched our new resident service desk Gr
Slide 8: 1,304 new homes delivered in the year, already 91% let
Lease-up of new homes ahead of expectations Originate Invest Operate 2021 marks increased pace in delivery of homes and rent 1,304 new homes delivered in the year, already 91% let FY21 Gatehouse Apts, East Street, Windlass Apts, Tottenham Hale, Southampton London 132 homes, GY c.6.5% 108 homes, GY c
Slide 9: Significant pipeline driving dynamic growth
Significant pipeline driving dynamic growth Originate Invest Operate Strategic transition accelerating, now two thirds PRS by value FY21 OPERATIONAL PORTFOLIO* PIPELINE 9,727 homes, £3.1bn 8,373 homes, £1.9bn £347m c.£600m £968m £2,098m £996m Planning/ TfL Regulated tenancies PRS Secured pipeline**
Slide 10: Summary: Strategy and platform deliver robust performance and growth momentum
Summary Originate Invest Operate Strategy and platform deliver robust performance and growth momentum Robust financial and operational performance Operational platform delivering competitive advantage PRS portfolio strengthened by 1,304 new homes during the year Growing PRS pipeline Leading industry
Slide 11: 2. FY21 Financial Results
2. FY21 Financial Results Rob Hudson Chief Financial Officer
Slide 12: Financial highlights
Financial highlights Originate Invest Operate Robust results and well positioned for strong rental growth in FY22 Income performance Income FY20 FY21 Change Robust results despite a challenging Rental growth (like-for-like) 3.0% 1.0% (195) bps backdrop Net rental income £73.6m £70.6m (4)% Net rent d
Slide 13: Income statement
Income statement Originate Invest Operate Continued earnings growth and strong sales performance Key highlights: FY201 FY21 Change Adjusted earnings up 2%, NRI robust with strong Net rental income £73.6m £70.6m (4)% growth expected in FY22 Profit from residential sales £59.4m £67.5m +14% Like-for-li
Slide 14: Net rental income
Net rental income Originate Invest Operate Occupancy recovery and delivery of new schemes in the year to drive strong FY22 NRI growth +15% +£5.5m £80.9m +£1.5m £(5.3)m £73.6m £(4.4)m +£5.2m +£6.2m £70.6m £(1.4)m Total L4L +1.0% PRS L4L +0.3% (exc incentives +1.6%) Regs L4L +3.6% FY20 Net Rental Disp
Slide 15: Valuation Summary
Valuation Summary Originate Invest Operate Capital Valuation Movement Total Valuation Portfolio Homes Value ERV / HPI Growth Yield and other movement £m £m % £m % £m % PRS Portfolio ERV Growth Yield and other London & SE 3,440 1,228 12 1.0% 9 0.8% 21 1.8% Regions 3,580 796 15 2.0% 30 4.0% 45 6.0% PR
Slide 16: EPRA Net Asset Values
EPRA Net Asset Values Originate Invest Operate EPRA NTA per share growth of 4% £m pence per share Property assets (market value) 3,427 461 Net liabilities (1,077) (145) EPRA Net Reinstatement Value (NRV) 2,350 316 Tax – deferred & contingent – trading assets (142) (19) EPRA Net Tangible Assets (NTA)
Slide 17: EPRA Net Tangible Assets (NTA)
EPRA Net Tangible Assets (NTA) Originate Invest Operate Strong valuation growth the key driver of the increase in NAV +6.0% +2p (3)p +4.2% +19p (5)p +2p 302p (5)p 297p +11p (4)p (5)p 285p Total +4.5% PRS +3.4% Regs +3.7% Dev +12.8% Grainger plc | www.graingerplc.co.uk 17
Slide 18: Net debt
Net debt Originate Invest Operate Significant level of investment into our investment pipeline Operating cashflow Net investment £(128)m +£288m £1,032m £(204)m +£37m £1,042m +£348m +£4m +£17m £(230)m +£45m £(64)m +£57m Robust operating cashflow of £128m highlighting resilience of our business model
Slide 19: Robust and flexible capital structure
Robust and flexible capital structure Originate Invest Operate Low risk, flexible capital structure that supports growth FY21 Cost of debt LTV Net debt £1,042m 6.5% 60% 6.0% 55% Loan to value 30.4% 5.5% 50% 5.0% 45% Cost of debt (average) 3.1% 4.5% 40% 4.0% Fully drawn cost of debt 2.8% 3.5% 35% 3.0
Slide 20: Understanding inflationary impacts
Understanding inflationary impacts Originate Invest Operate What does inflation mean for Grainger? Rental growth vs inflation (Index, Jan-11=100) Operating income and cost 125 Rental growth historically has tracked general 120 cost inflation, benefiting the business 115 110 Staff costs grow in line
Slide 21: Passing net rent progression
Passing net rent progression Originate Invest Operate 90% increase in NRI already secured Planning / legals Secured pipeline** £996m £347m TfL: £600m +2.5x +£24m £178m +£17m +£18m £137m +1.9x +£13m +£15m +£10m £81m £71m Strong momentum going into FY22 with £81m of passing net rent. Pipeline and fund
Slide 22: Financial summary
Financial summary Originate Invest Operate Robust performance and momentum for growth in FY22 Robust financial performance Net rents to grow strongly in FY22 Strong sales performance set to continue into FY22 A strong balance sheet and capital structure to support growth Secured pipeline in place to
Slide 23: 3. Market and business update
3. Market and business update Helen Gordon Chief Executive
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 Significant growth potential Clear growth trajectory BTR potential to grow from 64k to 1.7m+ homes £1.9bn pipeline (Savill
Slide 25: A market underpinned by long-term structural drivers
A market underpinned by long-term Originate Invest Operate structural drivers Opportunity to grow market share Strong growth among all ages over 25 BTR Only 1.3% of homes in UK private-rented sector PRS households (‘000s) 1,600 +42% 2008/09 2019/20 1,200 +56% +86% Build-to-rent 800 -4% +61% +44% 400
Slide 26: Market now seeing significant growth momentum
Market now seeing significant growth Originate Invest Operate momentum Leasing market strengthening rapidly Cities are seeing a resurgence in demand Rightmove – time-to-let - days 40 “Sharp rise in demand for rental properties in recent months, 35 30 25 especially in central city markets, 20 signall
Slide 27: Our Operating Platform differentiates us
Our Operating Platform Originate Invest Operate differentiates us Continual improvement and investment in our platform, which is a key differentiator and bedrock for our market leading position Data insight Digital capability Grainger’s Customer Insight Programme Grainger’s CONNECT technology platfo
Slide 28: Data and insight driven investment decisions
Data and insight driven investment Originate Invest Operate decisions High demand / supply High demand / supply Schemes secured fundamentals and fundamentals and low growth potential high growth potential Target locations Under review Southampton London Cardiff Not under consideration Demand/Supply
Slide 29: Dynamic sourcing
Dynamic sourcing Originate Invest Operate Maximising the opportunity for growth More than Becketwell, Derby Merrick Place, London £3bn • Forward fund • Forward Fund sourced since • Part of wider regeneration • £141m, 401 homes 2015 • £38m, 259 homes Forward Fund The Forge, Newcastle Weavers Yard, Ne
Slide 30: Acquisitions and planning activity
Acquisitions and planning activity Originate Invest Operate £236m of opportunities funded from the recent equity placing 1,174 new acquisitions secured in the year Millwrights, The Forge, Becketwell, Merrick Place, Bristol Newcastle Derby Southall Forward Fund Stabilised Forward Fund Forward Fund £6
Slide 31: Acceleration into a new phase of growth
Originate Invest Operate Acceleration into a new phase of growth Strong operational performance and a robust Strategy delivering financial performance £0.2bn Transition to PRS FY15 Exceptional delivery of over 1,300 new homes £2.1bn Further pipeline expansion Now majority PRS Today Strong and suppor
Slide 32: Thank you Q&A
Thank you Q&A The Headline, Leeds
Slide 33: Appendix
Originate Invest Operate Appendix Contents Portfolio overview Page 34 1. Property information Operating platform Page 35 Fully funded secured pipeline Page 36 Liquidity and capex Page 37 Portfolio summary and movements Page 38-39 Portfolio geographical breakdown Page 40 PRS Portfolio Pages 41-44 Sec
Slide 34: Portfolio overview
Portfolio overview Originate Invest Operate Regulated tenancies PRS Customer has the right to live in the property for the Leases with typical duration of 1-3 years rest of their life Market rents Sub-market rent set by Valuation Office Agency Returns based on Upon vacancy Grainger sells the propert
Slide 35: Driving value through our Operating Platform
Driving value through our Originate Invest Operate Operating Platform In-house operational platform - Complete supply chain control - Direct customer relationship - Direct input into development - Greater customer insight - Technology enhanced efficiency - Greater responsiveness to new trends Perfor
Slide 36: 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 £1,091m £1,091m £941m £941m £450m £791m £791m £532m £300m £382m £150m £641m £641m £232m £82m £641m £6
Slide 37: Liquidity and capex
Liquidity and capex Originate Invest Operate £650m headroom to fund investment pipeline Strong liquidity Current liquidity position (£m) Strong headroom of £641m from cash and available facilities 379 £262m of cash 641 £379m available facilities 262 Committed capex funded Capital expenditure plans c
Slide 38: Portfolio summary
Portfolio summary Originate Invest Operate Market value Net Rent Units £m £m Net yield Residential – PRS 7,020 2,024 64 3.7% Residential – regulated tenancies 2,124 896* 17 2.0% Residential – mortgages (CHARM) 429 72 n/a n/a Forward Funded – PRS work in progress - 244 - - Development work in progres
Slide 39: Portfolio movements
Portfolio movements Originate Invest Operate Sep20 Additions Disposals Transfers Valuation Sep21 £m £m £m £m £m £m PRS London & SE 1,057 37 (19) 132 21 1,228 Regions 567 65 (21) 140 45 796 Total PRS 1,624 102 (40) 272 66 2,024 Regs London & SE 771 4 (68) - 19 726 Regions 197 1 (41) - 13 170 Total Re
Slide 40: Portfolio geographical breakdown
Portfolio geographical breakdown Originate Invest Operate PRS & Regulated tenancies (FY21) PRS Regulated tenancies Region Units Market Change Net Units Market Change Net value vs FY20 yield value vs FY20 yield £m £m London & SE 3,440 1,228 +1.8% 3.3% 1,243 726 2.7% 1.8% South West 511 201 +6.2% 4.2%
Slide 41: PRS portfolio by geography
PRS portfolio by geography Originate Invest Operate Geographic breakdown by units Geographic breakdown by Rent (£m) Key Central / Inner London 14% 18% 11% Outer London 25% 21% South East 13% 28% South West 2% 17% East and Midlands 18% 12% 2% 7% 12% North West Other Regions Post secured pipeline geog
Slide 42: 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 NEWCASTLE 380 Operational 587 MANCHESTER 1,627 Operational 380 (inc 237 at Brook Place and 242 at (inc 283 at The Forge)
Slide 43: PRS portfolio
PRS portfolio Originate Invest Operate Top assets by annual ERV (>£1.5m) Unit mix Asset City Postcode Units Studio/1 bed 2 bed 3 bed Area Sq feet Annual ERV Clippers Quay Manchester M50 3AF 510 162 290 58 371,622 £6.9m The Filaments Manchester M3 5PF 376 98 235 43* 246,416 £5.8m The Forge Newcastle
Slide 44: PRS portfolio – rent levels
PRS portfolio – rent levels Originate Invest Operate Rent per calendar month (% of units) £1500+ 20.7% 6.9% £1000-1500 10.5% 18.9% £750-£1000 8.7% 15.6% Under £750 9.1% 9.7% London & South East Regions Grainger plc | www.graingerplc.co.uk 44
Slide 45: 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 Pin Yard, Fabrik, Leeds 216 Mid FY22 On site £34m £31m c.6.5% The Copper Works, Capital Quarter, Cardiff
Slide 46: Secured pipeline schedule
Secured pipeline schedule Originate Invest Operate (Continued from previous page) Gross Targeted Est. Grainger Spend to yield Name No. units launch Status investment date target Direct development** Gilders Yard, Birmingham 158 Mid FY22 On site £28m £26m c.7% Weavers Yard, Newbury, West Berks 232 La
Slide 47: Secured pipeline projects
Secured pipeline projects Originate Invest Operate 16 high quality PRS schemes Secured Secured in FY21 Forward funding / Acquisitions The Pin Yard, Enigma Square, Canning Town 2, The Copper Works The Barnum, Fabrik, Milton Keynes London Capital Qtr, Queens Rd, Leeds Cardiff Nottingham The Tilt Works
Slide 48: 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 49: Delivering our ESG & Responsible Business ambitions
Delivering our ESG & Responsible Business Originate Invest Operate ambitions Net carbon Sustainable Making a positive A diverse and reduction investing social impact inclusive business Net zero carbon for our Integrate ESG into all Deliver a positive social Ensure our workforce is commitments operat
Slide 50: Market value balance sheet
Market value balance sheet Originate Invest Operate FY201 FY21 Market value balance sheet (£m) Residential – PRS 1,624 2,024 Residential – regulated tenancies 968 896 Residential – mortgages (CHARM) 73 72 Forward Funded – PRS work in progress 231 244 Development work in progress 147 146 Investment i
Slide 51: Segmental EPRA NTA balance sheet
Segmental EPRA NTA balance sheet Originate Invest Operate FY201 FY21 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 2,156.2 23.0 - 2,179.2 Investment in joint ventures and 25.0 - 17.0 42.0 26.9 - 18.0 44.9 associates Fina
Slide 52: EPRA Earnings
EPRA Earnings Originate Invest Operate FY20 FY21 Adjusted Adjusted Adjusted Adjusted £m Adjustments EPRA Adjustments EPRA Earnings Earnings earnings earnings Net rental income 73.6 - 73.6 70.6 - 70.6 Profit from sales – trading property 61.3 (53.4) 7.9 67.8 (56.0) 11.8 Profit from sales – investment
Slide 53: Segmental income statement
Segmental income statement Originate Invest Operate FY20 FY21 £m PRS Reg* Other Group PRS Reg* Other Group Net rental income 53.8 19.6 0.2 73.6 51.9 18.4 0.3 70.6 Profit from sales – trading property (0.1) 57.2 4.2 61.3 (0.1) 66.1 1.8 67.8 Profit from sales – investment property 2.0 0.3 - 2.3 1.3 0.
Slide 54: EPRA NRV, EPRA NTA and EPRA NDV
EPRA NRV, EPRA NTA and EPRA Originate Invest Operate NDV FY201 FY21 EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV £m IFRS Equity attributable to shareholders 1,443.0 1,443.0 1,443.0 1,739.0 1,739.0 1,739.0 Diluted NAV 1,443.0 1,443.0 1,443.0 1,739.0 1,739.0 1,739.0 Include: Revaluation of ot
Slide 55: Restatement
Restatement Originate Invest Operate Impact of accounting policy change following IFRIC interpretation of IAS38 relating to development costs on Software as a Service 2020 2020 (previously Restatement Restated reported) £m £m £m Income statement impact Administration expenses (28.7) (11.7) (40.4) Pr
Slide 56: 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 57: Future reporting dates
Future reporting dates Originate Invest Operate 2022 AGM / Trading update 9 February Half year results 12 May Trading update September Full year results 17 November Grainger plc | www.graingerplc.co.uk 57
Slide 58: The Forge
The Forge Originate Invest Operate Forth Banks, Newcastle Asset Overview Socially responsible investment Stabilised acquisition, completed Jun21 Walk 283 high quality apartments score (78 x 1 beds; 179 x 2 beds, 26 x 3 beds) c.3,000 sq ft of commercial space 91 Over 3,500 sq ft of internal residents
Slide 59: Gatehouse Apartments
Gatehouse Apartments Originate Invest Operate East Street, Southampton Asset Overview Socially responsible investment Forward fund, launched Mar21 Walk 132 high quality apartments score (46x 1 beds; 86 x 2 beds) Over 2,000 sq ft of commercial space 94 Over 3,000 sq ft of internal residents amenity O
Slide 60: The Filaments
The Filaments Originate Invest Operate Gore Street, Greater Manchester Asset Overview Socially responsible investment Forward fund, launched Mar21 Walk 365 apartments and 11 townhouses score (98x 1 beds; 235 x 2 beds, 43 x 3 and 4 beds) Over 7,500 sq ft of commercial space 93 Over 5,500 sq ft of int
Slide 61: Apex Gardens
Apex Gardens Originate Invest Operate Seven Sisters, London Asset Overview Socially responsible investment Direct development, launched Jul21 Walk 104 PRS homes and 59 affordable homes score (72x 1 beds; 59 x 2 beds, 28 x 3 beds, 4 x 4 beds) Over 9,000 sq ft of commercial space 84 Over 3,500 sq ft o
Slide 62: Windlass Apartments
Windlass Apartments Originate Invest Operate Tottenham Hale, London Asset Overview Socially responsible investment Forward fund, launched Jul21 Walk 108 high quality apartments score (50x 1 beds; 51 x 2 beds; 7 x 3 beds) Over 2,000 sq ft of internal residents amenity 77 Onsite resident services Resi
Slide 63: The Headline
The Headline Originate Invest Operate Yorkshire Post, Leeds Asset Overview Socially responsible investment Forward acquisition, launched Jul21 Walk 242 high quality apartments score (111x 1 beds; 131 x 2 beds) Over 3,500 sq ft of commercial space 100 Over 3,500 sq ft of internal residents amenity On