Grainger remains cautious about growth prospects
Nov 25 2010 by John Hill, The Journal
RESIDENTIAL landlord Grainger remains cautious about the prospects for growth in the housing market, despite reducing its pre-tax losses by nearly £150m in the last year.
The Newcastle-based company, which is the UK’s leading residential landlord, announced pre-tax losses of £20.8m for the year to the end of September, down from £170m in the previous year. Chairman Robin Broadhurst said the company is looking forward to “a successful year”, and there would be “compelling buying opportunities” in 2011 due to the “cyclical nature of property markets”.
The company started to step up its buying programme in 2010, acquiring 308 units for £55.7m compared to seven units for £0.9m in 2009. The board is recommending a final dividend of 1.20 pence per share, bringing the total for the year to 1.70 pence.
Broadhurst said: “In light of the ongoing challenge of the current economic climate, we remain cautious about the prospects for general growth in residential values over the next two years. Nevertheless the Company has repeatedly demonstrated that because of its carefully selected and highly reversionary portfolio and the application of its extensive asset management skills, it can out-perform the sector and we expect to continue this trend in 2011.”
The company said it had made a profit of £38m from sales of properties in its portfolio worth £81m, compared to a profit of £32m last year on sales of £83m. It reduced its sales from land and agriculture-related residential properties from £60m to £40m, but profits from these sales still rose from £8m to £10m. Group revenue for the company, which operates in the UK and Germany, dropped from £302.2m in 2009 to £244.5m in 2010.
During the year, Grainger appointed three new executive directors, with chief operating officer Peter Couch becoming a board member and Nick Jopling arriving as executive property director and Mark Greenwood starting as finance director. It also acquired Sovereign Reversions, subsequently selling half of its stake to Moorfield subsidiary MREF II Equity Release Limited to form a joint venture between the two companies.
Chief executive Andrew Cunningham said the outlook for the economy and the UK residential market was “challenging” but the company had a UK residential and development sales pipeline of £54.9m at November 19 this year.
Cunningham said: “In the short term, as we are currently seeing, factors such as the lack of available credit and low levels of consumer confidence can depress demand. In the longer term, however, the UK suffers from a significant imbalance between supply and demand which helps support price levels.”
He said the changes to social and affordable housing would “provide opportunities” for large residential landlords such as Grainger, and the company would continue to engage with the coalition on issues such as housing benefit and the energy efficiency of existing houses.
