Double Boost for Britain’s Biggest Landlord

By Financial News
Double Boost for Britain’s Biggest Landlord

The UK’s biggest private landlord has announced it has been given permission to create a For Profit Registered Provider (RP) of social housing.

The firm has also announced a joint venture which will see investment in rented residential portfolio of 3,000 homes in Germany.

Grainger have partnered with global real estate investment firm Heitman in a 75:25 deal which will see a strategy put in place to boost income growth and active asset management.

This is part of a strategy by Grainger to team up with third-party institutional capital outlets and the deal will see Grainger receive a fee income for its services to the joint venture and retain a strategic stake in the portfolio.

Grainger has also arranged for £122 million of debt to be transferred to the joint venture and the firm continues to own another 3,400 homes in Germany.

Affordable homes

Germany’s residential property sector is attractive because it brings strong income since there is only limited supply coming into the market leaving rentals high and growth strong.

The joint venture will take on £186 million of Grainger’s portfolio of German residential assets from a total of £381 million. This consists of 2,985 residential units across six regions in Germany and produces a profit of £4.2 million a year.

However, it’s the firm’s creation of an RP subsidiary which will help deliver its 7,000 new residential properties in the UK over the next 15 to 20 years – the majority of which will be affordable homes – which is attracting attention.

With the approval from the Homes and Communities Agency to create the RP, Grainger announced the new subsidiary would be called Grainger Trust Limited – the firm’s original name when it began life in Newcastle in 1912.

Grainger’s chief executive Andrew Cunningham said: “Allowing us to operate as a social housing provider will strengthen our overall residential property offer.

“It will also ensure the long-term success of the communities we create and work with.”

Milestone deals

The trust’s first scheme will be to acquire affordable housing from Grainger’s Berewood Development in Hampshire. This is a project of 168 developable acres delivered across 13 phases.

The first 11.2 acre site which has planning consent for 194 new homes – 77 of which will be affordable – and worth around £35 million was sold to Bloor Homes in October.

The new arrangement could see the Grainger Trust owning, renting or managing affordable homes in a portfolio that consists of 40,000 properties across the UK and Germany.

The announcements of the two deals are a milestone in the history of Grainger which has been celebrating its centenary this year.

Grainger will continue its work with other social housing providers and is looking at creating other co-investment vehicles with leading international institutional investors.

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