格兰杰公司（GRI）：2025年上半年在房地产投资信托基金（REIT）转换和租金主导收益之前交易利润下滑

UK | REITsGrainger Plc 1H25: Trading profits tail off ahead of REITconversion & rental-led earnings GRI interims saw strong NRI with growth of 15%, shares trade at c.29%discount to NAV (300p) with a c.4% DY. Our DCF derived PT (280p) &Buy rating remain unchanged as lower 10-yr GILTs are offset by a lowerearnings forecast due to a slowdown in sales of trading properties ahead ofREIT conversion (Oct-25). We expect this to deliver c.50bps TAR with corptax savings of c.£15m in the first year as an earnings-driven REIT. Earnings & Dividends:GRI interims saw strong NRI with growth of 15% to £61.3m, deliveringlfl rental growth of 4.4% (new lets 3.1% vs renewals of 4.9%) from 6.3% with the regulatedportfolio at 7% (7.1%). GRI is seeing 5% of tenant move-outs due to first-time buyers (peakingat 9% in help-to-buy). As mortgage affordability improves following interest rate cuts, we seethis potentially ticking up. Occupancy remains high at 96%,with 89% of customers in the core demographic targetrange of 22-44-year olds. The committed development pipeline has £166m o/standing, andwe expect FY24 EPRA earnings to grow to 25% by FY26 of c.£60m, & to 50% by FY29, evenafter absorbing higher interest costs over the period, with the interim dividend likely increasedby 12% to 2.85p. EPRA earnings will likely be a more prominent reporting metric as growthin adjusted earnings slows with trading profit from the sales of older/lower yielding regulatedstock self-liquidating, hence our slight drop in adjusted earnings forecast. Profit from regulatedsales was in line with last year, & sales were at book, also in line with GRI's historical avg. Portfolio Performance:Property valuations increased with EPRA NTA +1% to 300p. Portfoliovalues rose by 0.8% (HY24: -0.3%) over the 6-month period. The BTR portfolio saw strong ERVgrowth of 1.7% with yields remaining largely flat. The regional PRS portfolio outperformedLondon marginally with stronger ERV growth of 1.9% vs 1.6% in London. Investment Market:£1.1bn of BTR investment activity seen in Q1, forecast to be £6bn for2025, we note that GRI carries little construction risk with primarily fixed-price constructioncontracts via forward-funded acquisitions (where the developer takes on the constructionrisk). REIT conversion:GRI appears on track to convert to a REIT for FY26 (Oct 25); enhancingtotal returns by c.50bps & delivering corporation tax savings of c.£15m in the first year, withsavings growth expected thereafter. GRI's dividend policy is to continually progress growthwith a minimum 80% EPRA earnings payout (c.15% increase in divi last year, & we forecastlow single digits for FY25), topped-up with any tax-free investment sales profits. Financial Position:Balance sheet remains robust with no material refinancing until 2029,LTV is 38.5% (GRI plans to reduce it over medium term) with kd of 3.1% fully hedged &developments funded by the self-liquidating regs at c. 2% NIY. Outlook:Helen Gordon, CEO: "Our business is designed to create shareholder value. Weoperate in a sector with strong structural tailwinds." Sarim Chaudhry * | Equity Analyst+44 (0)20 7548 5328 | schaudhry1@jefferies.com Mike Prew * | Equity Analyst44 (0) 20 7029 8422 | mprew@jefferies.com The Long View: Grainger Plc Investment Thesis / Where We Differ •GRI to continue to move away from being a housing market proxy, witha trajectory towards REIT status as net rental income increases.•Tenanted sales to continue to provide recurring cashflow to be re-engineered into the business. Upside Scenario,325p, +52% Downside Scenario,180p, -16% Base Case,280p, +31% •House prices deflate as affordability ratiosdeteriorate with further pressure on rents dueto consumer spending squeeze.•Marginsondisposalfall,theratioofinvestment to normal sales rises, and overallportfolio liquidity reduces.•Labour government makes private housingplanningprocessandaffordablehousingcontent more difficult.•House prices deflate. •Housing market returns more quickly thanexpected once interest begins to come down.•Acqns of assets are secured at favourablevaluations, Build to Rent and other privaterented developments are acquired at a fasterpace largely using third-party equity, pushingcashflow and devt profits.•BTR capital values compress. •Operational recovery in occupancy, stabilisingand improving modestly.•Valuesgainingmorefromrentalgrowth(6.3% in FY24) with leasing of developmentscontinuing to perform.•Grainger’s portfolio has proven liquidity and atrack record of realistic valuation.•PT based on DCF valuation. Sustainability Matters Catalysts Top Material Issue(s): GHG Emissions -An increasing number of REITs are implementing energyefficiency measures, sourcing clean energy and implementing carbon reduction goals. In spiteof additional costs, landlords can improve pricing power by increasing the penetration of thesemeasures. •As the pool of regulated tenancies declinesfurther, Grainger is diversifying its portfoliointo other, more sust