Grainger plc

(Image source: businesslive.co.uk)

UK’s largest players in the build to rent and private rented sector, Grainger PLC was started in 1912 at the Newcastle upon Tyne. Founded by the Dickenson family, the company has currently 9000 homes under its portfolio that are worth £2.9bn. The build to rent and private rented sector has offices in Birmingham, Manchester and Newcastle.

Established by Dickinson family as the Grainger Trust, currently, it is a constituent of the FTSE 250 Index.

The company is recognised globally through the Global Real Estate Sustainability Benchmark and the FTSE4Good index. It was listed on the LSE in 1983 and the Channel Hotels was acquired in 1989 and Bradford Property Trust was purchased in 2003

 The company bought large residential properties In the 1970s and 1980st from British Coal, Reckitt & Coleman and British Rail. In 2006, it started to develop Curzon Park in Birmingham as a joint venture with Development Securities and by 2007 became Grainger plc.

Grainger was selected as the chosen developer for the Hammersmith King Street Redevelopment Scheme in 2008 along with its partner Helical Bar.

Grainger acquired AIM-listed Sovereign Reversions and created a 50:50 joint venture with Moorfield in 2010.

The deal with the Defense Infrastructure Organization to build Wellesley in 2011 which got the Aldershot Cambridge Military Hospital and 3850 homes under its portfolio was another important achievement for Grainger.

Currently, the company is a leader in corporate responsibility and sustainability, and is known globally through the Global Real Estate Sustainability Benchmark and the FTSE4Good index.

Management

The Chief Executive of Grainger is Helen who sits on the Board of Derwent London as a non-executive Director was appointed inJanuary 2016. Prior to Grainger, Helen was the Global head of real estate at RBS.

 During her professional journey, Helen has held many non-exec roles and was also appointed by government appointments as an honorary fellow of Chartered Surveyor.

The non-executive director Vanessa brings with her rich financial experience with expertise in leading and implementing strategic developments. Vanessa has previously been the UK finance director at SEGRO plc since 1998 and oversaw numerous major acquisitions of both Grainger properties and businesses.

The qualified chartered surveyor, Andrew is a member of the Executive Committee and

prior to this he was working at Allsop LLP.

Business Model

Grainger’s business model is based on three focus areas- Originate, Invest and Operate which makes it simple and holistic in operations. The company designs and develops properties for renting purpose and further invests capital in the assets that are located in commercially viable  locations. This helps Grainger to deliver its investors long term and sustainable returns on their investments

The company manages its own properties. From design to development , it has a team of experts that manage the entire end to end process with excellent customer service.

Corporate Governance

The UK’s leading PRS landlord has a systematic and rigorous approach to monitor risks through their risk management and internal control. The company has an effective decision making that ensures risks come with appropriate returns. There is adequate disaster recovery and business continuity procedures based on ‘three lines of defence’ model.

The systematic risk management approach is ‘bottom-up’ and a ‘top-down’ approach this means risks identification is followed by Gross (before mitigation) and Net (after mitigation) done by internal mitigating controls. Risk-scoring matrix has a rolling 12-month period reviewed by an internal committee. The risk report is further reviewed by the Executive and Audit Committee

The Board is responsible for Grainger’s risk management and internal control systems to determine the strategic goals and the risk opportunity with a low risk tolerance.

The Audit Committee further supports the Board to ensure that it continues to carry out the process for reconsidering the principal risks, supported by external whistleblowing channels.

Sustainability

The company has been committed to develop a sustainable operational approach to get a commercial advantage and manage the risks. This has further helped the company in increasing its efficiency and enhance its reputation due to its sustainability strategy. From the business plans to decision-making processes, sustainability has been embedded in its principles. The strategic objectives and the vision of the company to be the UK’s best private landlord is deep rooted in sustainable approach.

From design to operations- sustainability is an essential component in building Grainger as a substantial market-leader. They take a long-term approach when it comes to the wellbeing of their customers and employees.

Properties

Regulated Homes

The company’s Regulated home portfolio generates more than £100m per annum stable and reliable cash flow. Around 6 - 7% of the properties under it becomes vacant each year, enabling the company to capture the uplift from the tenanted value to the vacant value as it sells the property. The returns are generated in three ways in the form of rental income, capital growth and reversionary surplus that is the crystallising reversion of when the property become vacant.

The properties under the portfolio provides a regular rental income with growth linked to Retail Price Index and has a lower yield than other assets. Company then further reinvest these proceeds into higher-yielding new properties.

Private Rented Sector (PRS) homes

These well-located properties are very popular among the company's customers. And its expert operational team manages the properties directly and it is still outperforming the market. These high end properties are developed with good service standards that matches the means to satisfy customers. The company makes sure that the assets stay in high demand, generating sustainable long-term total returns for the shareholders.

The company along with GRIP and institutional investor, APG- provide fund management services to the fund. The market value is £1.26bn and has a rental growth of 3.0%. The gross to net leakage is 26% and the Occupancy rate is 97%.

Grainger Trust

The company delivers affordable housing through Grainger Trust and allows company to manage all tenure types through integral management platform.

The Trust has the ability to acquire the affordable elements of Grainger's pipeline, adding value and creating a community. The trust creates aspirational homes that are designed and built specifically for its residents.