Grainger plc

Grainger reported total rental income up 7.8%, like-for-like rental growth up 3.1%, EPRA earnings up 4%, and dividend per share up 3% in the half year. Occupancy was just under 96%, and management said NTA was slightly lower than full year '25 despite a 100 bps outward yield movement, as rental growth offset valuation pressure. For the full year, the company is on track for GBP 60 million of EPRA earnings, which management said would be a 12% increase versus the GBP 54 million delivered last year, and it reiterated FY29 EPRA earnings of GBP 72 million, or 35% growth. The company guided to deleveraging by GBP 300 million to GBP 350 million, taking debt to around GBP 1.1 billion, with loan-to-value around 30% and net debt/EBITDA around 8x; it also said 540 million of facilities were refinanced and extended to 2033, lowering debt cost by around GBP 1 million per year.

Helen Gordon framed Grainger as a needs-based, resilient housing business benefiting from structural undersupply, wage-linked rent growth, and locked-in pipeline earnings. She emphasized that the business is compounding, operationally strong, and supported by fixed construction costs, high occupancy, strong retention, and a large non-core asset recycling program. Her tone was confident and focused on long-term value creation, while also acknowledging frustration with the share price discount to underlying performance.

Robert Hudson focused on the mechanics behind the earnings outlook: rental growth, pipeline deliveries adding GBP 5.7 million of rent, and disposals of lower-yielding assets supporting the top line. He said the business has locked-in debt at mid-3s for seven years, and the FY29 plan assumes a rebasing to higher interest costs modeled at 5.5%, partly offset by deleveraging to GBP 1.1 billion. He also highlighted GBP 540 million of refinancing extended to 2033 and said bank margin reductions should save around GBP 1 million per annum, while central costs have remained static at GBP 36 million over 10 years and were reduced by a further GBP 2 million.

On debt and dividends, management said higher interest rates will not put the dividend at risk because the impact is already built into guidance and earnings still grow 35% to FY29 even after rebasing. On capital allocation, management said deleveraging is currently more attractive than buybacks because the incremental earnings impact and risk reduction are better at today’s debt cost, which they said is guided to 5.5% and may be closer to 6% now. On regulation and the Renters Rights Act, they said the business is well positioned because it already operates with strong standards and technology, and they do not see rent controls as likely. They also addressed the share price discount, saying they are frustrated by the disconnect but continue to pull all available levers, including capital allocation and operational execution.