Residential landlord Grainger (GRI) improves 2.7% 222.4p as its development pipeline extends into upmarket parts of London.
The £898.3 million cap has spent £160 million to bolter its residential property portfolio, adding 61 freehold properties in Knightsbridge and Chelsea. The need for ‘modernising’ suggests Grainger is confident of adding real value to the portfolio’s saleable floor space.
The portfolio generates £1.92 million rent a year, but the real pay day will come when Grainger sells the houses. This is unlikely to happen in the short-term as the majority of properties are regulated tenancies, meaning that the tenants have the right to live there for the rest of their lives.
The intention is that the development and refurbishment will enhance their value, but in the meantime, putting its cash to work in order to boost net asset value (NAV) is Grainger's strategy. The company's NAV currently stands at 242p, after rising 9% from the 223p recorded in 2012. This puts the stock on an 8.8% discount to NAV.
Grainger’s chief executive officer Andrew Cunningham, the subject of a Shares Griller interview in December, will be hoping that the market is as strong as it is today when he comes to selling the properties. In the past 12 months prices in London gained 17.7%, according to the Office for National Statistics.