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Grainger raises £209mln in share placing to fund acquisitions

Published: 08:40 02 Sep 2021 BST

Grainger - Grainger raises £209mln in share placing aimed at funding acquisitions

Grainger (LSE:GRI) PLC raised £209mln in a share placing that will be spent on new acquisitions aimed at accelerating the company's private rented sector (PRS) growth strategy.

The provider of private rental housing said it placed around 67.37mln new shares at 310p each, a discount of 4.6% to Wednesday’s closing share price of 325p. The shares represent around 9.99% of its share capital.

As part of the placing, Grainger (LSE:GRI)’s new chief financial officer Rob Hudson acquired 112,900 shares, giving him a 0.02% stake in the group.

Grainger said it will use the proceeds to fund two recent acquisitions, Becketwell in Derby and The Forge in Newcastle, which it bought for £95mln.

In addition, it plans to acquire at least two schemes located in London and the South East of England, comprising 580 homes and representing a total investment value of £202mln, and four schemes in targeted regional cities comprising 925 homes and with total investment value of £226mln.

Grainger said it has a current total pipeline of £2.1bn with £428mln in planning and legals, alongside a joint venture with Transport for London (TfL) representing £600mln.

The acquisitions enabled by the share placing are expected to enhance future net rental income by £18mln, while the secured pipeline and the new acquisitions are predicted to double net rental income, the group said.

Commenting on the completed share placing, Grainger chief executive Helen Gordon said: "We are delighted with the support we have received from our shareholders. Grainger has a well- articulated growth strategy to further strengthen our nationwide PRS market leadership position with 10,000 homes and a further pipeline to almost double that. Our vision is to continue to provide high quality, mid-market, well located rental homes. This placing secures significant growth in net rental income and therefore dividend."

Commenting on current trading, Grainger said it is seeing positive market conditions with continued lettings growth as the UK economy reopens after the pandemic lockdowns.

“The long-term structural drivers underpinning growing demand for rental housing in the UK remain strong. Supply remains constrained and is set to continue to fall significantly short of rental demand. A shift from individual, private landlords to larger-scale professional landlords, such as Grainger, is accelerating, driven by consumer trends and government policy,” the company said.

It said lettings enquiries were up by 296% from January to the end of July, while lets agreed rose by 166%.

Its Gatehouse Apartments scheme in Southampton, comprising 132 homes, was fully let in under four months, well ahead of underwriting. Meanwhile, The Filaments, comprising 376 homes, achieved 231 homes let in under five months, also ahead of underwriting.

Three schemes were launched in July and are performing well with The Headline in Leeds ahead of expectations and underwriting, having achieved 101 homes let to date, and Apex Gardens and Windlass Apartments in London achieving 19 and 15 homes let respectively, ahead of underwriting.

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