GRI increased its dividend by 63% and introduced new policy linking payments to rental growth
Companies: Grainger plc
The UK's largest private landlord, Grainger Plc has reported strong full-year results, announcing a 69% jump in adj earnings, and a 64% increase in PBT to £84.2m.
The hefty increase in adj earnings was driven by growth in net rental income, robust sales performance, and lower operational and financial costs.
Grainger management has launched a new dividend policy for investors, directly linking growth in net rental income to payments. This has resulted in a 4.5p total divi for FY16, up from 2.75p last year, a welcome 63% increase.
"During our strategic transition the equivalent to 50% of net rental income will be returned to Shareholders."
The firm made solid strategic progress during the period, growing its PRS (Private Rented Sector) pipeline ahead of plan, securing £389m of its £850m investment target, increasing net rental income by 15%, and reducing gross net property operational costs to 28% (from 31% FY15).
N+1 Singer analyst Andrew Watson covered the results this morning, saying the company was still trading on a significant and "unwarranted" 20% discount:
"...key NNNAV and recurring PBT metrics in line with our forecasts. Sales performance and rental income growth was strong in H2, as previewed in the positive FY trading update driving our 19% PBT upgrade in early October (11/10).
The PRS investment pipeline continues to grow now standing at £389m secured and £347m in legals as Grainger pursues an £850m investment target by 2020. A 3.05p final dividend is in line with the revised policy to distribute 50% net rental income. The shares continue to trade on a significant, and unwarranted, 20%+ discount to NNNAV. "
CEO Helen Gordon said it had been a "transformational" year for the group, with significant progress made in delivering its private rented sector growth strategy set out in January.
"We have secured £389m of investment, disposed of our non-core businesses, improved the capital structure of the company and reduced operational costs following an internal restructure. We have delivered strong financial results alongside these changes, with adjusted earnings increasing by 69% to £53.1m and a total return of 10.6%.
The private rented sector growth opportunity is very compelling. With capacity to invest and a repositioned business, we are well placed to significantly improve our income and shareholder returns as we achieve our strategic objectives."
GRI's share price opened up 2.4% before pulling back.
