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Grainger Plc

Grainger plc Response to Mayor of London and Debt Refinancing

Grainger plc (LON: GRI), the UK’s largest listed residential landlord, noted the announcement issued by the Mayor of London, proposing reviews of the London rental market. The proposals are subject to Panarliament’s support and new legislation, which the Mayor himself acknowledges he does not have the power to implement.

In his statement, the Mayor recognises the difference between build-to-rent and professionally developed and managed properties compared to the wider buy to let sector, and he calls for incentives and support for the build-to-rent and professional rental market in order to protect investment in new housing supply and existing high-quality rental homes. This aligns to Grainger’s strategic aims and our position in the market.

The Mayor’s plans focus on affordability and tenant security in the rental market and both are at the heart of Grainger’s business model which focusses on mid-market rental homes and keeping our customers for the long-term.

Of Grainger’s total portfolio of c.8,600 properties, 22% are open market rented in the wider London area. The proposals if implemented have limited effect on Grainger’s business.

Grainger refinances £275m of debt, finalising integration of GRIP PRS portfolio

Grainger plc, also announced today that it has successfully agreed a refinancing with Rothesay Life for its GRIP portfolio. The new facility has been agreed ahead of the 2020 maturity date for the previous GRIP facility and at the earliest opportunity without incurring repayment fees. The new facility consists of two tranche tenors, a £75m tranche for seven years and a £200m tranche for ten years, with a blended interest rate of 2.3%, compared to a previous rate of 3.2%.

Grainger acquired the full interest in GRIP, a c. £700m PRS portfolio of c.1,700 occupied private rental homes, in December 2018 from its JV partner, APG. At the time the company said that it would seek to refinance the debt on the portfolio to secure terms on a longer-term basis and at a lower rate, which it has now achieved.

Today’s refinancing marks the final stage of integration of the GRIP portfolio, following the successful restructuring of the vehicle, delivering operational improvements including an immediate improvement in operating costs (“gross to net”) from 32% to 26%, achieving overheads savings of £4m and continuing to add value to the portfolio through our refurbishment programme and PRS development schemes.

Grainger’s operational PRS portfolio now consists of over 8,600 occupied private rental homes, and its pipeline will deliver an additional c.8,000 new rental homes once complete.

Helen Gordon, Chief Executive at Grainger plc, said:

“We are pleased to secure this new financing from Rothesay Life at attractive long-term rates, which is an endorsement of the quality of the GRIP portfolio. This deal supports Grainger’s ambition to grow as the UK’s leading residential landlord, with a strong balance sheet and financing that matches the long-term, low-risk nature of private rental assets.”