Grainger, the UK private rented housing specialist, has raised £186.7m from a placing.
A total of 61.2m new shares in Grainger were placed at a price of 305.0 pence per share, representing a discount of 2.31% to the closing price on 12 February 2020.
Including additional debt of around £120m based on company’s LTV target range, the fundraise will generate aggregate funding capacity of £305m.
The company will use the funds to accelerate its growth strategy in the private rented sector (PRS) by committing to a further £246m of new acquisitions in Nottingham, Birmingham, Cardiff and London. In addition, the group will use the funds to pursue a further £59m of projects currently in the planning and legal pipeline.
The group’s net rental income is expected to increase by £16m when the schemes have been completed and leased, which the company predicts will deliver an extra 0.69 pence to dividend per share. In the current year, the company expects continued divided per share growth despite the increased shares in issue.
Grainger is looking to take advantage of long-term structural drivers underpinning growing demand for rental housing in the UK. The housing market is experiencing a positive uplift in sentiment in housing transactions as well as increased demand for rental homes, especially in cities.
Helen Gordon, chief executive of Grainger, said: “We are delighted with the successful outcome of this fundraise which demonstrates the strong support from our shareholders for our ongoing investment in the private rented sector (PRS). This transaction accelerates our PRS growth strategy in London and the regions, and brings forward £246m of new acquisitions into the secured pipeline, bringing it to c.£1bn. On completion of the new developments our rental income will grow substantially and this will allow us to further enhance total shareholder returns. We look forward to continuing to deliver quality rental homes in the UK.”
JP Morgan Cazenove and Numis acted as joint bookrunners for the placing.
GRI : Grainger raises £186.7m in placing