Private landlord Grainger Plc has soared into the black with pre-tax profits of £64.3m after a successful year of debt reduction and development.
The Newcastle-founded firm starts its second century in business with an 8.3% lift in its residential property values – a figure boosted by the fact that 60% of its estate lies in London and the South East.
The rise has sent the firm, the UK’s biggest private landlord, back into profit for the year ended September 30, having posted a loss of £1.7m for the same period last year.
Triple net asset value, the property sector’s key indicator, also rose 38p (24%) to 195p per share and the firm has recommended a final dividend of 1.46p per ordinary share, making a total dividend for the year 2.04p per ordinary share, an increase of 6.25%.
The business, founded in 1912, has also achieved its aim to reduce its debt, mindful that the housing bubble could burst significantly.
Chief executive Andrew Cunningham said the company’s target to drop net debt below £1bn was reached before the year end, reducing the figure by £235m to £959m.
With government incentives in place the firm is also looking to develop Build-to-Rent opportunities in the UK in the south of the UK and along the M62 corridor, and construction has begun on their first build-to-rent scheme in Barking, Essex.
Development work is also on-going in Hampshire, where Bloor Homes is building 194 new homes as part of Grainger’s Berewood development and Redrow just purchased Phase 2, which will comprise approximately 250 new homes. Total sales revenue from this site now amounts to £24.9m and the next phase is anticipated to come to market in December 2014.
Chief executive Andrew Cunningham said the strong results represent the fruition of much strategic planning in which the firm utilised its skills in trading, managing, developing, fund management and investing in residential property to great effect.
Cunningham said: “The general housing market is in a better position than it was and a lot of things we have been putting into place are starting to bear growth. Our triple net asset value has gone up, and one of the key things we wanted to do – reducing debt – we have also managed to deliver on.
“We wanted to reduce the level of debt by the end of the year and we achieved that ahead of schedule. We wanted to get below £1bn and we did that in August.”
With the firm showing it can outperform national indices with their market value during times of economic downturn as well as optimism Cunningham said there was no reason why the company’s positive performance can’t be sustained for some time to come.
He said: “Certainly all the key indicators in place are positive so with a tail wind behind us there is no reason to why we won’t see further growth over the next few years.
“There is increasing optimism in the housing market in the UK and we expect to see the benefit of this reflected in sales prices in the coming months.
“In addition, an increasing number of individuals in the UK are renting, which gives us confidence in the growth prospects for our rental business.
“Our ability to generate fees will continue to benefit from the growing value of assets under management and an increasing interest among potential partners, such as institutional investors in the UK residential sector, particularly the private rented sector.”
Chairman Robin Broadhurst added: “Our centenary year has been another period of huge achievement. My thanks go to our highly skilled, enthusiastic and committed staff whose efforts have allowed us to reach this position.
“We see 2014 as being a year of continuing strength in our markets and we anticipate another year of outperformance.”