Strategy in action:
We will improve total returns to shareholders by:
- Strategic objective: Maintaining our leading position in residential property
Delivery and outcome: Repeated contributions to the development of the residential market, which has resulted in new opportunities presented to us because of our leading position.
- Strategic objective: Locating our assets in areas of higher economic activity
Delivery and outcome: 62% of our UK portfolio is located in London and the South East of England by value and 82% of German properties by value are located in the four most affluent regions of Germany in the West and South of the country. This geographic weighting has resulted in our outperformance of market indices in valuation and sales.
- Strategic objective: Increasing the proportion of non-trading income (rents and fees)
Delivery and outcome: Innovative transactions to increase exposure to the rental market such as ‘Build to Rent’ and ‘Registered Provider’ for social housing and new business partnerships in 2012 have increased fee income by 45% in 2012. We will continue to grow the proportion of operating profits composed of rents and fees through developing relationships with existing and future partners and building operating and management platforms. And we will build on opportunities arising in all parts of the residential property market using our core skills in property and asset management.
- Strategic objective: Reducing our financial and operational gearing
Delivery and outcome: Debt reduced by £260m in 2012. As our debt and LTV ratios reduce we will match our operational gearing to our business model and we will efficiently and transparently manage interest rate derivatives. We aim to have our total group net debt down to £1bn by the end of 2013, which will result in an LTV of approximately 50%, all things equal.
By changing the profiles of our asset base and income streams and by reducing gearing, we have been repositioning our business for the future. We will retain this focus which will enable the Group to take advantage of opportunities as they arise.
The Grainger of the future will have a greater proportion of its activities in the rented sector and will supplement these by leveraging its asset and property management platform in co‑investment vehicles and fee income business.
Comment on strategy objectives:
Grainger has three sources of income across our areas of business activity:
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Sales |
Rental |
Fee |
| UK residential |
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| Retirement solutions |
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| Fund management and residential investments |
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| Development |
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| German residential |
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A key part of our strength is the resource, expertise and capability to both initiate and take advantage of opportunities in the residential environment.
