Grainger : Strategy Update

28 January 2016

Strategy Update

Helen Gordon, CEO of Grainger plc, the UK's largest listed residential landlord, today announces a strategy update, commenting:

'Since joining Grainger on 3rd November I have worked closely with our team, undertaking a deep review of every aspect of the business. I have been hugely impressed with the unrivalled knowledge and expertise our people have and the platform that has been developed. Our high quality regulated tenancy portfolio provides an excellent foundation from which we can grow our offering of private rented sector ('PRS') homes.

'However, it is clear that swift and decisive action is required to capitalise on the compelling PRS market opportunity and to enable Grainger to realise its potential of being the UK's leading private landlord. We will transition to one highly focused business that will deliver improved and sustainable, rental asset led shareholder returns.'

There are three key themes around which action will be taken:

Grow rents

• Inject pace and accelerate the acquisition of existing and newly built rental homes;
• Re-allocate development team resources to deliver new PRS stock;
• Refocus the acquisitions team to improve access and conversion of PRS opportunities.

Simplify and focus

• Divest of two divisions: Retirement Solutions (Equity Release) and Germany;
  • Post-disposals, overheads will reduce by c.10%;
• Reduce overheads by transitioning to a simpler, streamlined structure;
  • Operational review underway, report back at HY results in May;
• Exit non-core development assets;
• Prioritise direct investment, with no new funds, and no more focus on fee generation;
• Reduce our cost of financing; targeting 4% cost of debt;
• Concentrate resources on two core assets: regulated tenancies and PRS.

Build on our heritage

• Continued commitment to our high quality, regulated tenancy portfolio which delivers excellent total returns and cash generation which supports our PRS growth;
• Maximise the opportunities from our market leading residential platform by exploiting our existing competitive advantages.

As we look out to 2020, our PRS-led strategic targets are:

• Invest over £850m into PRS assets to drive rental income growth;
• Net rents and income* to more than cover overheads, expenses and financing costs;
• Net rental income to exceed profit from sales;
• Dividend will increase, reflecting the greater proportion of rental income.

In addition the Board of Grainger plc is pleased to announce that Vanessa Simms will join the Group as Finance Director, earlier than anticipated, on Thursday 4 February 2016.^

* Including other recurring income, but excludes normal sales income.

^ Subject to normal FCA confirmations, as previously announced.

-ENDS-

Grainger plc issued this content on 28 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 01 February 2016 09:07:21 UTC

Original Document: http://www.graingerplc.co.uk/media/press-releases/2016/strategy.aspx