Grainger : Trading Update

11 August 2016

Grainger plc

('Grainger', the 'Company', the 'Group')

Trading Update

Strong rental and trading performance

Grainger plc, the UK's largest listed residential landlord, today provides an update on trading for the ten months to 31 July 2016.

Helen Gordon, Chief Executive, said:

'Operational activity over the period has been in line with management expectations. In our private rented sector (PRS) portfolio, we are seeing good rental growth and demand for our high quality, well managed rental homes. We continue to see strong levels of trading from our regulated tenancy portfolio, with high interest among home buyers, steady transactional activity and robust pricing.

'We have not seen any material impact on our business following the EU Referendum, although we are monitoring the situation closely. With a strong balance sheet and low financial gearing, we are well positioned to take advantage of new potential PRS investment opportunities following the EU Referendum. We remain confident in and committed to delivering our strategy to grow net rental income while simplifying the business to improve returns.'

Highlights

Robust lettings and sustained rental growth

▪ Continued high levels of demand for our UK private rented sector homes (PRS), with good lettings and levels of rental growth.

▪ Year to date rental growth on new lets of 4.9% and 2.8% on renewals.

▪ On newly acquired assets, we have seen rental growth increasing over the past three months, with rent increases on new lets in July averaging 5.8% and the time taken to let the properties falling steadily over the last three months.

Continued momentum in sales

▪ Strong performance from sales, in line with management expectations.

▪ £91m of revenue from sales of vacant properties over the period (July 2015: £81m), at an average of 7.7% above the September 2015 year end vacant possession value (HY16: 6.8%).

▪ Sales pipeline of £188m (July 2015: £172m).

▪ Non-core development land sale completed in April, subsequent to the March half year end, delivering revenue of £8.0m and profit of £5.8m.

Further progress on our strategy

On 28January 2016 we set out our updated strategy to capitalise on the PRS market opportunity and be the UK's leading private landlord, by building on our heritage and leveraging our regulated tenancy portfolio, simplifying and focusing the business on the PRS, and growing net rental income.

Growing net rental income

Our PRS investment is progressing well. Since the beginning of the second half we have:

▪ Started construction of our £100m Clippers Quay scheme in Salford (614 homes);

▪ Progressed construction on the first two of seven PRS development sites in partnership with the Royal Borough of Kensington and Chelsea, 21 Young Street (53 homes) and Hortensia Road (31 homes), with completions anticipated May 2018 and February 2017 respectively;

▪ Started on site at our £17m, 104 home scheme in Berewood, Waterlooville, our first family style PRS development;

▪ Acquired 120 units at Kings Dock Mill for £14.5m.

Simplifying and focusing Grainger and reducing costs

▪ Key strategic disposals completed in the second half, including the £325m disposal of our Equity Release business in May and the sale of the majority of our remaining Germany portfolio in June for £42m;

▪ We have internally restructured the business to reflect our focus on improving total returns for shareholders, and are on target to achieve the 24% cost savings by FY17 which we set out at our half year results in May;

▪ We re-couponed two legacy swaps, securing significantly lower rates at a discount. The upfront cost was £37.8m; our cost of debt will fall from 4.5% at the half year to around 4%.

In July, we converted our PRS Fund, GRIP, into a REIT, creating the first substantial Residential REIT in the UK, demonstrating the suitability of this structure for PRS investment. The new structure of the vehicle does not alter the economic interest of APG, our JV partner, or Grainger, with c.75:25 stakes, respectively.

-ENDS-

For further information:

Grainger plc

Helen Gordon/ Vanessa Simms/ Kurt Mueller

London Office Tel: +44 (0) 20 7940 9500

Newcastle Office Tel: +44 (0) 191 261 1819

Camarco

Ginny Pulbrook / Geoffrey Pelham-Lane

+44 (0) 20 3757 4992/4985