Residential landlord Grainger struggles with debt

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by Gill Montia

Grainger Plc, the UK’s largest listed residential landlord, saw its share price slide at the end of last week, after offering to pay out its bondholders early in a move aimed at reducing the group’s debt.

The offer, which has a deadline of 4th November, is a debt for equity swap that will dilute the group’s stock and therefore prompted some shareholders to sell.

The company is particularly vulnerable to the downturn in the UK housing market, as its assets are largely tied up in residential property.

With house prices falling by over 12% during the past twelve months, according to Halifax and Nationwide, the value of Grainger’s portfolio is shrinking, having declined to £2.4 billion by the end of August.

In addition, the group reported earlier this month that margins on property sales were falling because it was selling more properties with sitting tenants.

The company says it is confident that prices will recover but in the meantime has embarked on cost cutting measures that can shore up its balance sheet, including halting new developments and reviewing its acquisitions strategy.

Grainger was formed in 1912 and is therefore no stranger to property market downturns.

It currently owns around 14,000 properties in the UK and 7,000 in Germany.