PROFITS at Newcastle-based property company Grainger are up by nearly a quarter after a year which has seen them strike deals with Lloyds Bank and the Ministry of Defence.
The UK’s biggest private landlord saw profit rise to £65.2m for the six months to the end of March compared with £3.5m a year earlier.
The company has credited a number of profitable deals for the uplift, including a £14.9m gain on its £18.5m purchase of 317 freehold properties in the HI Tricomm Holdings portfolio, which are let to the Ministry of Defence until 2028.
Grainger’s director of corporate affairs Dave Butler said: “There’s been some really good sales and profits in there. It’s a strong set of results. We’ve made a big play of diversifying our income stream over the last year or so. The UK residential portfolio is still producing good profits and will do for years to come, but we’ve got the platform, skills and assets we can use for other deals.”
Boosted by strong performance in London and the South East, the UK portfolio valuation rose by 2.2%, while German values dropped by just 0.1%.
The total sales pipeline as of May 13 this year was £155m. However, the company has also completed a number of deals in the last year.
Grainger took full ownership of a portfolio of 1,650 properties in central London, buying the remaining 40% from Genesis Housing Group for £15m, giving them control of properties near Westminster with a market value of £289m.
It also signed agreements to promote the development of 4,500 residential units in the Aldershot urban extension, and secured planning permission for 2,500 residential units at Newlands in Hampshire.
Ears pricked up in the industry last month when it announced a link-up with Lloyds Bank, which would see it manage distressed buy-to-let properties on the bank’s books.
The deal will see it earn £2m fee income per annum, with no capital investment. Butler said the company has been very selective in adding to its housing portfolio of late, with specific interest in housing in London and the South East. He said: “We outperform the national house price average because we’re very specific with our portfolio. We’re very picky about what we buy. It has to give a good yield.
“London is very separate from the rest of the UK and operates more like New York, and we’re keen to invest in the South East.”
Grainger has also said it will announce a tender to shareholders instead of an interim dividend, offering one share for every 238 held at the price of 149p. Butler said the move, which will return £2.6m to shareholders, was “a signal to the market to say we think our shares are undervalued”.
He said: “By doing this we can offer a return to shareholders while highlighting the discount we see on our shares. We don’t think the market presently realises the strength of our underlying portfolio.”