Grainger hacking its way through debt pile

published 12 April 2012

UK residential property owner Grainger has seen an improvement in the market value of its UK and German property portfolios in the first half of its financial year, although the uplift in Germany has been marginal.

The group said completed sales from both its UK and German portfolios in the six months ended March 31st were ahead of the corresponding period in 2011.

First-half sales on vacancy in Grainger's wholly owned UK portfolios have been made at values in excess of September 2011 vacant possession values, while disposals of non-core assets in Germany have been in line with last reported book values.

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However, the firm pointed out that profit before tax for the half year in 2011 was materially enhanced by the partial reversal of mark to market movements on its long term financial derivatives and by gains on acquisitions made in that period. These gains will not be repeated in the first half of 2012.

Mark to market valuations attempt to estimate the current market value of an investment, rather than the price paid.

The company's efforts to reduce its debt level through property disposals will be clear to see by the end of the half year, the group said. At the end of September 2011 net debt levels had risen to £1,454m from from £1,350m a year earlier.

In a statement the firm said: "We anticipate both rental income and fee income to have grown, predominantly due to our portfolio acquisitions of HI Tricomm and the GenInvest portfolio and the growth in our partnership arrangements respectively."