Newcastle firm Grainger finalises £87m property portfolio sale

Grainger Plc has now exchanged contracts with buyer Clifden Holdings Limited on the portfolio of 1,203 dwellings.

Andrew Cunningham, chief executive of Grainger plc
Andrew Cunningham, chief executive of Grainger plc

Grainger Plc, the UK's largest quoted residential property owner and manager, has completed the £87.6m sale of its interest in a portfolio of properties.

The Newcastle-headquartered group has now exchanged contracts with buyer Clifden Holdings Limited on the portfolio of 1,203 dwellings.

The total group pre-tax profit from the sale after costs amounts to £9.9m, and at the completion of the deal, 60% of the total consideration, amounting to £52.6m, was paid in cash to Grainger, with the remaining 40% payable unconditionally over the subsequent 12 months. The outstanding consideration is subject to interest of 10% per annum.

Established in 1912, Grainger is involved in the sale of properties, the rental sector, the management of residential properties, expert services for third party clients, and equity release products. The interest in the latest properties being sold is held within Equity Release Increments Limited (ERIL), a wholly owned subsidiary of Grainger’s Retirement Solutions business.

All are residential units that are owned through home reversion plans, the majority of which were originated between 2004 and 2008.

As part of the transaction, which has received the necessary approval from the Financial Conduct Authority, Grainger will enter into a long-term agreement with Clifden to carry out asset and property management of the portfolio, for which it will receive a fee income in excess of £0.6m per year.

Following the sale, Grainger’s Retirement Solutions business comprises around 3,800 assets with a market value of £345m.

The proceeds will provide the company with additional headroom for future investments.

Chief executive Andrew Cunningham said: “This is a significant transaction for Grainger, crystallising substantial value from part of our Retirement Solutions portfolio while retaining long-term fee income. The sale, which is aligned to our current strategy, demonstrates the growing appetite among investors for assets in all segments of the residential property sector.

“The proceeds of the sale will allow the company to capitalise on attractive, value-accretive investment opportunities that it identifies going forward. The residential market, supported by recent Government initiatives, is currently showing strong dynamics, which we believe offer the potential for specialists, such as Grainger, to generate excellent returns on behalf of our shareholders and partners.”

For the sale, Grainger, which is a constituent of the FTSE 250 and the FTSE4Good index, was advised by Greenhill & Co. International LLP.

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