Grainger PLC

[Walkeia]

I searched for a thread on this company - couldn't find one so decided to start one.

Would be interested if anyone holds or has thoughts on this company please.

Just looking at the share price move of this vs. the UK all - dwellings index. Seems strange I can buy it cheaper than Jan 2020 given the move in the underlying UK property and rent market since this period. In addition, the company plans to become a REIT within three years; distributions will have to be a large percentage of income and should mean it becomes more attractive to income investors. Lastly, the most comparable REIT, PRS REIT trades at a ~7% premium to NAV.

[Dod101]

I searched for a thread on this company - couldn't find one so decided to start one.

Would be interested if anyone holds or has thoughts on this company please.

Just looking at the share price move of this vs. the UK all - dwellings index. Seems strange I can buy it cheaper than Jan 2020 given the move in the underlying UK property and rent market since this period. In addition, the company plans to become a REIT within three years; distributions will have to be a large percentage of income and should mean it becomes more attractive to income investors. Lastly, the most comparable REIT, PRS REIT trades at a ~7% premium to NAV.

Good idea. The IC usually writes positively about this company. It appears to have a good long term record with two main income streams, straight rental income and then capital gains from the reversionary sales from regulated rentals. Presumably the capital gains are used to help fund the new developments. They ought to know what they are doing because they have been around for a very long time. Presumably there are no problems with external cladding?

The dividend yield has always been on the low side for me and it has never real seemed like a growth share, so I have always passed it by.

Be interested though to see what others think.

Dod

[MDW1954]

A significant dividend increase seems baked in, certainly. So unless the share price increases, yield looks certain to rise.

MDW1954

[murraypaul]

The dividend yield has always been on the low side for me and it has never real seemed like a growth share, so I have always passed it by.

Be interested though to see what others think.

I hold this as the closest I could find to a pure residential housing play.

Most REIT are commercial, or a mix, or focus on very specific types of housing (social, student, ...)

It seems well managed, and aiming at a sensible market (neither top end nor bottom end).

[Walkeia]

Thanks for responses.

My thinking is it is the closest thing to a Vonovia (huge German residential letting company) in the UK and similar to MurrayPaul I have been looking for exposure to UK residential property without the hassle of managing the transactions and the day to day BTL or via an agent. The only alternative is PRS REIT but it trades ~7% above NAV and, while not uncommon, I wasn't a huge fan of the outsourcing of site procurement

No cladding mentioned in their most recently half-year results so unsure they are impacted by this but will def look at this aspect further.

[murraypaul]

No cladding mentioned in their most recently half-year results so unsure they are impacted by this but will def look at this aspect further.

Trading update in February said this:

https://www.investegate.co.uk/grainger- ... 00060833B/

Fire safety and cladding

The significant proportion of our PRS portfolio has been developed post-Grenfell and we have minimal exposure to cladding with no material costs expected

[Mainwaring]

Thanks for the thread/prompt. Long standing shareholder following an IC write up 10 years ago. I have also supplemented the dividends through the dark art of market timing a second tranche from time to time. Happy enough with recent results and patiently waiting for a higher yield and a higher SP on my under and over £3 challenge. I also hold Vonovia though it’s well under water post the DW acquisition. I might speculate that Grainger would make a fine pension asset for a financial behemoth one day and I’m a willing seller at a substantial premium to NAV.

[SalvorHardin]

Regarding the cladding issue. In last week's Investors Chronicle (20-26 May 2022), there's an article covering Grainger which quotes Granger's CEO who says: "Grainger received a letter directly from the secretary of state saying that BTR (Build-To-Rent) developers were exempt."

Also that Grainger has "checked the past 30 years of its developments for cladding defects with nothing to report"

The article also mentioned that "the company is forecasting the company is forecasting eyebrow-raising levels of growth – with plans to double its net rental income by 2026."

Here's the article for subscribers: "Grainger accelerates rental shift in bid to cut tax bill"

https://www.investorschronicle.co.uk/ne ... ree-years/

Grainger has been on my watchlist for many years and I finally bought a few shares this morning (primarily as an alternative to commercial property shares of which I have rather a lot).

[Wuffle]

I picked up on Moneyweeks mention of Impact Healthcare Reit and it makes an interesting comparison to Grainger.
5 year total return looks about the same but without the volatility (neither has that much).
As someone who has just sold the old family home to finance a remaining parents care, it strikes me that while you own your own property, care home investment might be the better hedge.
What would an actuary think?

W.

[Dod101]

I picked up on Moneyweeks mention of Impact Healthcare Reit and it makes an interesting comparison to Grainger.
5 year total return looks about the same but without the volatility (neither has that much).
As someone who has just sold the old family home to finance a remaining parents care, it strikes me that while you own your own property, care home investment might be the better hedge.
What would an actuary think?

W.

I think care home investment would be an awful investment. Think of the political pressures, the staffing problems and so on. Unless I suppose you have a pool of wealthy oldies in the area who will be willing and able to pay top prices. Even then as the owner/manager you have to find good staff even if you can afford to pay top salaries to them. I think there are far too many pressures on the management. As an investor, it needs modern up to date property a bit like the Health centres being built by the likes of PHP and too many care homes are in big old properties, which are expensive to maintain and keep clean. Then there are the social pressures. There are much better investments associated with property.

Dod

[murraypaul]

That was broadly my thoughts about a number of the specialised residential REITs, whether care homes, assisted living, social housing, ...

They all seem directly or indirectly reliant on government funding for income, which introduces much more external risk than for Grainger, who just build 'normal' flats and rent them privately.

[Hariseldon58]

I see it is held by Capital gearing trust, as is Vonovia.