The private rented sectorOpportunities and challenges

Kurt Mueller, Director of Corporate Affairs

CIH South East Conference

2013

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Our business

The UK’s largest listed residential property owner and manager

A trader, investor and manager of residential properties

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OPERATIONAL PLATFORM

Investment Asset management

Property Management Development

Snapshot of Grainger

• We directly own c.£2.2bn of residential assets

• We manage on behalf of third parties c.£1bn of residential assets

Owning and managing residential

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• High quality assets

• Gross yield of 6.9%

• Robust income stream

• Low voids

• Strong locations

• +60% of UK portfolio in London and S/E

• 90% of German assets in four strongest regions

Attracting partners and investment

The growth of PRS

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PRS market

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• The number of private rented households has increased from 2.00 million (10%) in 1999 to 3.62 million (17%) in 2010-11.

• Strong future growth prospects for rental sector

• Economic conditions adding to renting demando Constrained mortgageso High deposits

• Growing cultural acceptance of renting

Challenges of PRS investment

• Limited acquisition opportunities, scale is challenging

• High capital values based on vacant possession value mean low yields

• Competition on land with house-building for sale

• What concerns do we have with long term management of PRS?

What are investors looking for?

• Net yields over 5%• Rental growth• Scale• Blocks• High quality• Capital value growth?

So how to make PRS investment work?

• Valuation on investment value• Land value paid for over the long term• Section 106?• Design• Management efficiencies (economies of

scale)

Two examples

• London Road, Barking

• Royal Borough of Kensington & Chelsea

• Project being constructed by Bouygues.

• Barking is located in Zone 4 and is well serviced by public transport.

• Ground floor has been let to ASDA and Grainger have agreed to acquire the residential component.

• No on site affordable housing.

• Start on site December 2012.

• Practical completion in June 2015.

• 20% deposit payable on exchange no further staged payments.

Key Financial Data

• Number Of Units 100

• Estimated Rental Income £1,261m

• Purchase Price £13,700m

• Gross Yield 9.34%

London Road, Barking

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Young Street Hortensia Road

125 year lease on two high profile sites in Royal Borough of

Kensington & Chelsea

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Delivering on the Group’s strategy

SALES

• Sales of high end apartments to repay cost of development, as well as providing development profit and development management fees

RENTS

• Remaining stock rented out at either market or affordable rent levels

• Grainger has 125 year income from share of net rent

FEES

• Grainger will asset and property manage both sites, earning fees on top of the development management fees (under sales)

Thank you

• www.graingerplc.co.uk

• @graingerplc

• kmueller@graingerplc.co.uk