An improving housing market helped residential landlord Grainger (GRI) beat net asset value (NAV) forecasts for the year to 30 September. However, the shares only improved 0.8% in early trading as a 38% fall in pre-tax profits deterred investors from piling into the stock.

As canny investors know pre-tax profits are an unreliable performance metric for property companies and these results are a perfect example why. The acquisition of Equity Release Increments (ERIL), a property portfolio it had previous sold in early 2014, has boosted the value of the revenue-generating portfolio but forced profits for the year down to £50 million from the £81.8 million reported a year earlier.

The gross value of its net assets had grown 9.7%, or by 28p, during the period to 319p a share, well ahead of N+1 Singer’s 301.5p forecast.

Web - Grainger - 19 Nov 2015

Sales of its vacant properties were 9.1% higher than in the previous year, while margins saw a slight improvement to 50.5% from 49.2% year-on-year.

Grainger is making progress in plans to sell its 6,000 homes in Germany to simplify its business model, which is reported to be part of a strategy to fight-off the arrival of activist investor Crystal Amber.

Andrew Cunningham, Grainger

Chief executive Andrew Cunningham is stepping down after 20 years to be replaced next month by Helen Gordon from Royal Bank of Scotland (RBS). Finance director Mark Greenwood is also leaving the business amid claims that the company is beefing up its management to fight Crystal Amber.

Issue Date: 19 Nov 2015