Grainger refinances GRIP portfolio after buying out partner
By Josh White
Date: Friday 19 Jul 2019
(Sharecast News) - Residential landlord Grainger has successfully agreed a refinancing with Rothesay Life for its 'GRIP' portfolio, it announced on Friday.
The FTSE 250 company said the new facility had been agreed ahead of the 2020 maturity date for the previous GRIP facility, and at the earliest opportunity without incurring repayment fees.
It said the new facility consisted of two tranche tenors - a £75m tranche for seven years, and a £200m tranche for 10 years - with a blended interest rate of 2.3%, compared to a previous rate of 3.2%.
Grainger acquired the full interest in GRIP, a £700m private rented sector portfolio of around 1,700 occupied private rental homes, in December from its joint venture partner APG.
At the time, the firm said that it would seek to refinance the debt on the portfolio to secure terms on a longer-term basis, and at a lower rate, which it had now achieved.
It said the refinancing marked the final stage of integration of the GRIP portfolio, following the successful restructuring of the vehicle, delivering operational improvements including an immediate improvement in operating costs to 26% from 32%, achieving overheads savings of £4m, and continuing to add value to the portfolio through a refurbishment programme and private rented sector development schemes.
Grainger said its operational private rented sector portfolio now consisted of more than 8,600 occupied private rental homes, with its pipeline set to deliver another 8,000 new rental homes once complete.
"We are pleased to secure this new financing from Rothesay Life at attractive long-term rates, which is an endorsement of the quality of the GRIP portfolio," said chief executive Helen Gordon.
"This deal supports Grainger's ambition to grow as the UK's leading residential landlord, with a strong balance sheet and financing that matches the long-term, low-risk nature of private rental assets."
At the same time, Grainger responded to an announcement from the Mayor of London, who had proposed reviews of the London rental market including the introduction of rent controls.
The company said the proposals were subject to parliament's support and new legislation, which the mayor had acknowledged he did not have the power to implement.
It said that in his statement, Sadiq Khan recognised the difference between build-to-rent and professionally developed and managed properties compared to the wider buy-to-let sector, adding that he was calling for incentives and support for the build-to-rent and professional rental market in order to protect investment in new housing supply and existing high-quality rental homes.
"This aligns to Grainger's strategic aims and our position in the market," the board said in its statement.
"The mayor's plans focus on affordability and tenant security in the rental market, and both are at the heart of Grainger's business model which focuses on mid-market rental homes and keeping our customers for the long-term."
Of Grainger's total portfolio of around 8,600 properties, 22% were open market rented in the wider London area.
"The proposals, if implemented, have limited effect on Grainger's business."
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