LONDON (ShareCast) - (Sharecast News) - Analysts at Peel Hunt upped their recommendation on shares of residential property business Grainger to \'buy\' from \'add\', citing the strategic boost given to the firm\'s private rental sector aspirations stemming by the recent acquisition of its GRIP joint venture from APG.
The broker said the £396m buyout of real estate investment trust GRIP back in November had delivered a \"strategic boost\" to its PRS business by giving it sole ownership of 1,700 well known, tenanted assets.

However, with Grainger\'s shares having shed 22% of their value between mid-November and late-December and still trading around 10% below where they were before the deal, Peel Hunt believed the market had taken issue with the use of a discounted rights issue to fund the purchase, rather than the acquisition itself.

\"The shares now trade at a 17% discount to our September 2019 NNNAV forecast of 284p, with strong dividend growth prospects over the coming years as the business builds towards its £128m net rental income target,\" noted Peel Hunt.

\"In our view, Grainger remains the preferred method of gaining exposure to PRS assets and their income streams, and as the transition from the historic reversionary portfolio continues, the offer should become cleaner, clearer, and more widely accepted.\"

Peel Hunt also issued a 290p target price on Grainger\'s shares.

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