Grainger (GRI) H2 2024 earnings summary

Executive summary

• Delivered another year of strong growth, with net rental income and dividend both up 14% year-over-year, driven by the addition of 1,236 new homes and high occupancy rates above 97%.

• EPRA earnings increased 21% year-over-year, reflecting operational leverage and successful portfolio expansion, with upgraded guidance for FY26 EPRA earnings to £60 million.

• Strategic asset rotation continued, with £274 million in non-core asset sales funding £270 million of pipeline investments, supporting ongoing portfolio growth.

• The business is on track for REIT conversion by October 2025, expected to enhance returns and mark a shift to a compounding build-to-rent income model.

• Strong operational platform and high customer satisfaction underpin results, with market fundamentals robust as demand rises and supply tightens.

Financial highlights

• Net rental income rose 14% to £110.1 million, and dividend per share increased 14% to 7.6p.

• EPRA Earnings increased 21% to £48.0 million year-over-year.

• Adjusted earnings fell 6% to £91.6 million due to lower sales profits from regulated portfolio disposals.

• EPRA NTA declined 2% to 298p per share, mainly due to a one-off tax change, but returned to growth in the second half.

• IFRS profit before tax rose 48% to £40.6 million.

Outlook and guidance

• Upgraded FY26 EPRA earnings guidance to £60 million, targeting around 50% growth over the medium term.

• Expectation of double-digit net rental income growth in FY25, with net rents projected to reach £148 million as the committed pipeline is delivered.

• Sustainable total return target of at least 8%, combining recurring earnings yield and capital growth.

• Dividend policy to shift to minimum 80% of EPRA earnings post-REIT conversion.

• FY25 rental growth expected to remain above the long-term average of 3-3.5%.