Residential Landlord Defies Market Headwinds with Strong Growth
Newcastle-based property giant Grainger Plc has demonstrated remarkable resilience in the face of challenging market conditions, reporting significant income growth and rewarding shareholders with its twentieth consecutive dividend increase. The real estate investment trust (REIT), which specialises in the build-to-rent sector, has successfully navigated the pressure of high interest rates through strategic portfolio management and cost control.
Financial Performance Exceeds Expectations
Preliminary full-year results for the period ending September 2025 reveal a robust 12% increase in net rental income to £123.6 million. The company's European Public Real Estate Association (EPRA) earnings, a crucial industry performance metric, also climbed 12% to reach £53.7 million. This impressive performance enabled Grainger to announce a 10% dividend hike to 8.31 pence per share, marking two decades of consistent growth in shareholder returns.
Chief Executive Helen Gordon highlighted the company's strategic moves, including the successful sale of £169 million worth of lower-yielding properties. These proceeds are being reinvested into the company's £343 million pipeline of new projects, a key driver of future growth ambitions. The business, which owns and manages more than 11,000 rental homes across the UK, has set ambitious targets to boost EPRA earnings to £72 million by its 2029 financial year.
Strategic Positioning for Future Growth
Ms Gordon provided detailed guidance on the company's forward trajectory, stating: "We continue to target £60 million (8.1p per share) by FY26 and £72 million (9.7pps) by FY29 in line with guidance, even after assuming we absorb higher interest rates over this period." She emphasised that this growth would be delivered through the company's committed pipeline, with only approximately £130 million of capital expenditure remaining to be deployed.
The company's conversion to a Real Estate Investment Trust structure represents a significant strategic evolution following its transformation into the UK's leading listed build-to-rent business. Ms Gordon noted this move would enhance shareholder returns and support the company's long-term strategy. She also welcomed regulatory clarity provided by the Renters' Rights Act, which aligns with Grainger's business model and rejects rent control measures.
The net asset value of Grainger's portfolio has increased by 5.0% over the past five years, demonstrating resilience despite rising interest rates. The company plans to focus on driving cost efficiencies and reducing debt by approximately £300-350 million, targeting a net debt to EBITDA ratio of around 8x and a loan-to-value ratio of approximately 30%.
With the residential rental sector consistently outperforming both commercial real estate and inflation over the past two decades, Grainger's leadership remains confident in their ability to deliver progressive dividend growth for years to come, backed by annual operating cashflow and sales proceeds exceeding £200 million.
