Grainger forms JV with property investor to buy portfolio

FTSE 250-listed residential property owner Grainger has partnered up with property investor Dorrington to create a 50/50 joint venture (JV) called Walworth Investment Properties that will acquire a portfolio of South London residential property.

FTSE 250-listed residential property owner Grainger has partnered up with property investor Dorrington to create a 50/50 joint venture (JV) called Walworth Investment Properties that will acquire a portfolio of South London residential property.

The portfolio, which was previously wholly-owned by Grainger, comprises 598 residential units and two commercial units, and produces gross rental income in the region of £6.0m per annum, reflecting a gross yield of around 5.3%.

Nick Jopling, Executive Director of Property at Grainger, said: "We know Dorrington well and consider them to be a high quality partner, with whom we share a similar long term investment view.

"As partners, we plan to build on our strong relationship with the residents of the Walworth Estate to ensure that we continue to improve the portfolio and maximise the opportunity from the investment. This is a unique portfolio, with strong prospects, and we look forward to working with Dorrington to deliver a good service and enhance value."

The joint venture has arranged a non-recourse debt facility of £60m. The assets have been sold into the JV at Grainger's carrying value of £111m.

Taking into account the debt finance, Grainger's investment of about £28m in the joint venture, and allowing for working capital requirements, the immediate impact on Grainger's net debt will be a reduction of around £83m.

The transaction crystallises a return of 36% on Grainger's equity investment over the two year period since it took over full ownership of the portfolio in March 2011.

The group said that the strong return on the transaction reflects the success of its focused asset management programme in growing the capital value of the portfolio and added that the creating of the JV will enable it to participate in future valuation gains and rental income from the portfolio, while crystallising the gains already achieved.

The share price rose 0.87% to 150.80p by 08:50 Monday.

NR

Recommended

Get healthy returns from these three healthcare stocks
Share tips

Get healthy returns from these three healthcare stocks

Professional investor Paul Major of the BB Healthcare Trust highlights three of his favourite healthcare stocks.
25 Oct 2021
Share tips of the week – 22 October
Share tips

Share tips of the week – 22 October

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
22 Oct 2021
Three dividend stocks from the dynamic Asia/Pacific region
Share tips

Three dividend stocks from the dynamic Asia/Pacific region

Professional investor Sat Duhra of the Henderson Far East Income investment trust highlights three of his favourite stocks.
18 Oct 2021
Share tips of the week – 15 October
Share tips

Share tips of the week – 15 October

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
15 Oct 2021

Most Popular

Properties for sale for around £1m
Houses for sale

Properties for sale for around £1m

From a stone-built farmhouse in the Snowdonia National Park, to a Victorian terraced house close to London’s Regent’s Canal, eight of the best propert…
15 Oct 2021
How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021
Emerging markets: the Brics never lived up to their promise – but is now the time to buy?
Emerging markets

Emerging markets: the Brics never lived up to their promise – but is now the time to buy?

Twenty years ago hopes were high for Brazil, Russia, India and China – the “Brics” emerging-market economies. But only China has beaten expectations. …
18 Oct 2021