Grainger plc

So good morning everyone, and welcome to Granger's Half Year Results. In a time of global uncertainty, our business continues to deliver strong results, growth in earnings, and an excellent outlook. Now this shouldn't be a surprise. We are in a needs-based real estate sector. We are a resilient business in a structurally supported sector, and we continue to deliver strong growth. The agenda this morning is I will take you through the highlights and Rob will take you through the financial results and then I'll talk about our market and the drivers of growth and we'll have time for Q&A. In the first half we have delivered a strong performance and we are delivering compounding earnings growth. Our guidance is to deliver 60 million of EPRA earnings this year, and that's a 12% uplift on 2025, and 72 million, a 35% increase by full year 29, and that's after rebasing our finance costs. We are on track. This is a resilient business with a high demand for our product, high occupancy and a large and diverse customer base. Our growth is underpinned by wage inflation and our strong customer affordability. Our growth is locked in with a committed pipeline on site and we are leasing into an undersupplied market, this with improved margins. Deleveraging is a priority and we'll see us reducing net debt, targeting a 300 to 350 million reduction and targeting a net debt to EBITDA of eight times. We have a great track record of asset recycling with disposals in line with valuation and our 850 million of non-core assets support our committed pipeline and our deleveraging. So we delivered another strong financial performance in line with expectations. Our rental income was up 7.8%, our like for like was 3.1% and our earnings growth was 4%. We have increased our dividend 3% And our NTA is 290 pence per share. Now, this is slightly lower than full year 25, and it reflects the valuers' sentiment about the sector rather than concrete deals in our geographies. And as a reminder, our NTA has been resilient as outward yield movement has been substantially mitigated by rental growth. Our operational platform continues to deliver ahead of the market. As a reminder, we underwrite at between 95% and 97% occupancy, and we've maintained high occupancy at 96%. We've achieved strong retention at 61%, healthy customer affordability at 27% of our customers' income spent on rent. And this is very healthy because on average, mid-30s is seen as affordable. We have strong operational efficiency, still at 25%, even after absorbing higher cost. And as a reminder, our gross-to-net includes all maintenance and refresh costs. Grainger is a resilient and growing business and here are five key reasons. One, we are a needs-based asset class. Everyone needs somewhere to live and there is a shortage of good quality rental homes and this is getting more challenging. We have low obsolescence, we are AI resilient and indeed we are more likely to be a beneficiary of AI in our operations because of our data and insights. Two, we deliver inflation linked growth underpinned by wage inflation and a trend for renting for longer. Three, we have a very diversified customer base and that's diversified in employment, diversified in geography and less than 10% of our customers are students and that's a self-imposed cap. Four, we have limited cost inflation exposure. In our developments, our construction costs are fixed. In our operations, our energy costs are around 2 million per annum. And of course, our homes are significantly more energy efficient than the wider market, helping our customers in their overall occupation costs. five we have embedded margin expansion and earnings growth. Our stable tech enabled platform is scalable for growth and as we add more homes through our committed pipeline this will increase earnings growth and deliver margin expansion. The strong pace of our disposals continues and it is this that is funding our deleveraging and future growth. And as a reminder, we have done over 2 billion of recycling since the start of our strategy and 700 million since 2022. There was a degree of market stagnation in RQ1, and the long-awaited and delayed budget caused many buyers to pause, but we've achieved £82 million of sales completed or exchanged year-to-date. And we are seeing strong demand for our ex-regulated properties and our non-core PRS, and we haven't seen any slowdown in momentum in recent weeks. we still have 850 million of non-core disposals to support our strategy. Now we included a similar slide to this a year ago, but it's important to revisit. Our disciplined capital allocation will drive returns. Our current priorities are the completion of our committed pipeline of schemes on site and deleveraging. Our committed pipeline of 775 homes will cost £120 million to complete and it is this that will drive our uplift in earnings. Our second priority will be to reduce our net debt to bring LTV to around 30% and net debt to EBITDA to 8 times and this is supported by our non-core disposal programme. These first two priorities facilitate the growth in our earnings and they optimise our capital structure. We have been clear that following our two priorities, we will consider other options to drive future returns for shareholders. And at our current share price, share buybacks are a strong contender for capital allocation following our key priorities of deleveraging and completion of our schemes on site. we will allocate capital into whichever is most accretive to shareholder returns. We are focused on delivering shareholder value in the short, medium and long term. So turning to our portfolio, we have a high quality build to rent portfolio of just under 3 billion and a pipeline delivering significant earnings growth. Our regulated tenancies continue to sell well but are now around £530 million and they are a source to fund our future growth. Our onsite committed pipeline seen here shaded in black will deliver 775 homes and 14 million of net rents, which is a key driver of our 35% earnings growth. And there's just 120 million to spend remaining. We have over 2000 homes secured and an outer pipeline of 1200 homes in planning and legals. We have strong partnerships and optionality for the future. The growth in our portfolio will leverage our central costs and drive our EBITDA margin expansion. At our current share price, share buybacks look more accretive than our secured pipeline. This pipeline, though, provides a valuable store of future growth. This slide demonstrates the consistent delivery of our business and the vast increase in our income and margin. We have consistently grown our income, our earnings, and our margin, and our growth is continuing. Our strong growth in our rents, in our EPRA earnings, and as we drive operational leverage, we will deliver more EBITDA margin expansion. We have a track record of delivering growth, but there is a lot more to come. And with that, I'll hand over to Rob.

Thank you, Helen, and good morning, everybody. Today, I'm going to run through the financial performance for the half year and outline the strong earnings growth that we have to come. The first half has been another period of strong growth with rents up 8% demonstrating Granger's resilience and our market leading position. We have again delivered a strong operational performance with light for light rental growth at 3.1% and occupancy at 96%. EPRA earnings grew by 4% and we're on track to deliver our guidance of 12% growth to 60 million for the full year. Our dividend per share increased by 3%. And EPRA NTA was down 2.7% to 290p due to valuations. And I'll cover this in more detail later. So turning to the income statement in more detail. Our overall like-for-like rental growth was strong at 3.1% in line with long-term averages. Stabilized gross to net remained at 25%, demonstrating our ongoing focus on cost efficiency. Our overheads were flat in the half, having implemented a £2 million annualised cost saving in the period, and this will keep overheads flat for the next two years. Interest costs increased during the half due to one-off costs relating to refinancing our bank debt, with the benefits of this to be delivered in the second half and beyond. We continue to see EPRA earnings growth up 4% in the half in line with our plan to deliver our guidance of 60 million for the full year. As expected, sales profits were lower at 5.2 million in the first half, reflecting phasing of regulated sales with a strong pipeline for the second half. Other adjustments include derivative valuation movements and restructuring costs associated with our cost saving initiatives. So looking at the moving parts of the 8% increase in our net rent for the period, strong occupancy and like-for-like rental growth of 3.1% contributed £1.5 million. And this was driven by good rental growth in BTR in line with guidance at 2.9%, with new lets delivering 2% and renewals 3.3%. Our regulated portfolio delivered 5.9%. The strong lease-up performance of our recent pipeline deliveries has contributed an additional £5.7 million of net rent, and our asset recycling programme offset this growth by £2.4 million. Looking forwards, we'd expect full-year build-to-rent rental growth to be in line with the long-term average of 3% to 3.5%. This chart shows the key movements in NTA over the period and our NTA was down 8p at 290p per share. Net rents and fees added 9p with overheads and finance costs offsetting this by 5p. Overall our portfolio valuation for the period was down 1.1% and the PRS portfolio saw 1.4% valuation decline with ERV growth of 1.1% offset by around 25 basis points of outward yield shift reflecting macro sentiment. Valuations on the REGS portfolio were up 0.6% demonstrating their resilience and further details of the valuation can be seen in the appendices of this presentation. Now looking at net debt. Net debt increased in the half to £1.5 billion in line with our plans. Operational cash flows remained strong with £85 million generated with disposals contributing £61 million net of fees. We're targeting £200 million of operational cash flows for the full year. As mentioned at the full year, investment in our built-to-rent portfolio has continued to moderate as we work our way through the committed pipeline. There was £80 million invested during the period, with a further £120 million to spend on the pipeline and the majority of this falling into FY27. As Helen explained, in line with our capital allocation strategy, we'll continue to generate high levels of sales. These proceeds will be used to fund the remaining committed pipeline and also to lower leverage by 300 to 350 million by FY29. Going forwards, we therefore expect net debt to be broadly flat on FY25 by the FY26 year end before starting to deliver from FY27. and our balance sheet remains in good shape. Both net debt at 1.5 billion and LTV at 40.2% were up slightly over the period in line with our plans. We maintain strong liquidity and a robust hedging profile with rates fixed in the mid 3% range. In the half, we successfully extended our £540 million of bank facilities to 2033 and reduced margins, further de-risking our balance sheets, and this will give an annualised saving of £1 million. As previously highlighted, we plan to reduce our debt by around £300 to £350 million by FY29 as we continue to sell through our lower yielding non-core assets. And this will see our net debt at around £1.1 billion, which will equate to around an eight times net debt to EBITDA, an LTV of around 30%, which we see is the right capital structure for the long term. As net debt is brought down, this will help mitigate the impact of rising finance costs as our low rate hedging rolls off, ensuring continued strong earnings growth. And we remain confident of delivering our previously communicated guidance. We're on track to deliver our EPR earnings guidance of 60 million this year and the 35% increase to 72 million by FY29. And we see this growth as exceptionally strong, particularly as it's delivered through a period in which we'll absorb the full rebasing of our interest costs to market levels. We've modelled interest at 5.5%, which a number of people thought was prudent last time, but of course is now looking more realistic. And the bridge on this slide breaks down the key drivers of delivering this, which are unchanged, and they include the benefits of like-for-like rental growth assumed at 3% to 3.5%, the yield pickup from recycling out of our lower-yielding REX assets into our Build to Rent portfolio, scale efficiencies with EBITDA margins growing to over 60%, and the mitigating impacts of reducing debt on higher interest rates. So to summarise, we've continued to deliver a very strong operational performance with rental income increasing by 8%. We continue to de-risk the balance sheet through refinancings. We're focused on deleveraging using disposals to reduce our debt by 300 to 350 million. We maintain our upper earnings guidance of £60 million for the full year and £72 million by FY29 from the delivery of just our committed pipeline alone, whilst also fully absorbing the headwind of higher interest rates. Despite the current macroeconomic uncertainty, our underlying business continues to demonstrate its compelling resilience and compounding growth both now and for the years to come. And with that, I now hand you back to Helen.

Thanks, Rob. In this section, I'm going to provide evidence to support why we and many others think build to rent is a great real estate sector to be in and why living and build to rent screens as one of the most wanted asset classes. Our investment case is that investing in residential provides low risk compounding growth with diversified customers, and this provides resilience and growth. The attraction of Build to Rent comes from two main features. It's positive growth drivers and it's low risk nature. So looking at just four features of its growth and four reasons why the sector is low risk. One, it has real scale and liquidity. There are 5.6 million rental households and Build to Rent is just 2.6%. There are market fundamentals of a needs-based asset class with a structural undersupply and growing demand. Three, it has a compounding effect, 3% plus rental growth over the long term and inflation linking through the cycle. And four, build to rent delivers a true net yield. All refresh costs are delivered through the gross to net, no dilapidations, and that's in stark contrast to commercial property. And then there are the four low risk factors. So linked to that previous point, designs of homes endure. There's no obsolescence as we've seen in other real estate sectors. Two, there is low volatility. Even during COVID, our occupancy was averaging 90% plus. Three, low depreciation. There are no end of lease write downs. And four, we have a growing low risk, diverse customer base with strong affordability and more customers renting for longer. So we are an attractive asset class with growth fundamentals and low risk. So just looking at these supportive attributes, the compounding effect means that private residential rents have significantly outperformed commercial. This growth has been resilient and affordable. It is underpinned by wage growth, and that's people's ability to pay. And that is providing inflation linkage and growth through the cycle. There's an opportunity to scale. Now, Grainger is the largest player, but there are 5.6 million rental homes and only 150,000 purpose-built built-to-rent homes. So there's a long way to go. And Granger's core customer demographic is 25 to 34, and it does not see the higher levels of unemployment or volatility in employment rates that are experienced by those below 25. So residential's resilient and growing demand base has helped rents to grow year on year without pricing corrections seen in the commercial sector. And this combined with a net yield that explicitly captures all ongoing maintenance, lettings, voids and refresh cost justifies its lower yield. Sadly, there is a continued reduction in private landlords and buy-to-let investors. Increasing regulation and fears of it, together with increased finance costs, has seen a net loss of over £200,000. rental properties from small private landlords between July 2022 and August 2025. So the blue bars here are the inflows and the orange bars are landlords selling and leaving the sector and the black line shows the reducing supply from small landlords. The introduction of the Renters' Rights Act led to a significant acceleration of this. The slide on the right is showing the steady decline of buy-to-let mortgages amongst individuals. Anecdotally, reports of accelerated sales by landlords reaching 700 homes a day in the run-up to the introduction of the Renters' Rights Act will exacerbate these numbers. But as a large investor with the leading operational platform, we deliver efficient management and stronger earnings growth. And we can comply much more easily with the new regulations. We have a sector-leading operating platform. This platform is leading to our EBITDA margin expansion, which has grown rapidly and we're on track to deliver 60%. And since the start of our strategy, we have a very disciplined approach to cost control. Our overheads now are broadly the same as they were 10 years ago, whilst our net rental income has more than tripled. As Rob mentioned, we've taken a further two million out of our cost base, and we've done this through our investment in our processes and technology. Our investment in our proprietary technology platform, Connect, and in data and AI to make our operations more efficient and more customer focused. We are leveraging data and AI to attract and retain customers and run our business more efficiently. It is also providing us with customer and asset level insights in real time. So this is a very valuable platform to attract, retain and serve our residents. And our customer base is reflective of the quality and the positioning of our portfolio. Modern, efficient assets aimed at a diverse mid-market customer. 85% of our residents are over 25 and the majority are in that 25 to 40 age range. And they have good customer affordability. 27% of their income is spent on rent, which is below the UK average. They work in diverse sectors of healthcare, financial, IT, education and many are key workers. And this together with our diverse geography gives us a great high quality customer and asset base providing resilient and growing income. Our homes are designed to insulate customers from energy cost inflation. Granger's customers pay for their own energy and Granger's built-to-rent properties are the most efficient. 99.9% are A to C and over 85% are A or B. And the chart shows the average energy bill for an apartment across EPC A to C and the comparison to the wider rental market. So our customers pay significantly lower energy bills as a result of our energy efficient portfolio. And Grange's direct energy bill is only 2 million per annum. Our strategy is to invest in cities with long-term growth fundamentals and supply and demand fundamentals. And it is the result of rigorous research, city champions driving local knowledge and insights. London remains our best city for long-term growth. We have a strong track record of sourcing across the UK and the gold stars represent where we have schemes under construction now. So our committed pipeline is in exactly the best places. Three schemes illustrated here are on site. The Merrick in Southall, next to the Elizabeth line, will be delivered early next year and that's over £9 million in net rental income when stabilised. Alloy Apartments in Guildford, 179 homes, phase 2 of the mint, will deliver £3 million of income when stabilised. And our Connected Living London JV with TfL at Chiswick Reach represents a real milestone. It is also our first scheme delivered by a house builder. And at this scheme, our income of £2 million will be enhanced by fees. Now this month marked a major milestone in England's private rented sector. On the 1st of May, the Renters' Rights Act came into force, giving a clear and certain environment to the build-to-rent investor. We have invested in processes, training and technology to prepare our business for the changes. But for small landlords, these may be seen as difficult to manage, but our scale and our technology puts us in a good position to embrace and adopt these changes. Reassuringly, the government chose not to implement rent control or caps when it had the opportunity to do so in this Act. They have repeatedly confirmed it is not their policy and this is not the policy of the main opposition. So we can now move forward with certainty. There is broad support across political parties for Build to Rent and recognition that Build to Rent can help raise standards, professionalise the rental sector and increase housing supply. So we are a business that delivers a high quality income stream with compounded earnings and embedded growth. We are a resilient business and vastly underestimated is the value of our operational platform vertically integrated, enabled by a tech first approach and a sector leading gross to net efficiency. This is enabling high occupancy and attracting a wide customer base. We have locked in growth from our committed pipeline. Our headline growth is delivered by our committed pipeline, but we have a secured pipeline of great sites, which gives us optionality for the future. We have a track record of delivering on sales, even in difficult markets, and we will use our 850 million of non-core assets to support one of our key priorities of deleveraging. We will deliver 60 million of earnings this year, a 12% increase, and we're on track to deliver 72 million by 2029 after refinancing. So we're a resilient growth business. As the UK's only listed build-to-rent platform, we continue to benefit from a structurally undersupplied rental market and long-duration inflation-linked income. So the earnings outlook for Grainger is excellent. Thank you. I'll now invite you to ask questions. I'm going to be joined by Rob, but we have got senior people in the room that can help with questions. Tom.

Thanks. Good morning. It's Tom Musson at Berenberg. Just a question on your long-term leverage targets. Since you announced them, we've obviously seen swap rates increase quite meaningfully. We also had that noise from the government about potential rent freezes, which I know they retracted. But if there is arguably a bit more sort of long term uncertainty, both on future rental growth and also interest costs, then why are those future debt targets the right ones? And could they not, in fact, be materially lower to help satisfy what seems to be a quite conservatively minded equity investor?

Right, there's quite a lot in there. I'm going to ask Rob to deal with the why is the number the right number. But before we do that, I'll just pick up on why we have had reassurance. And of course, we might be going through a leadership change. I haven't looked in the last 10 minutes, but the... consistently rent caps and rent freezes have been ruled out by this government, by the housing minister, by Angela Rayner, as it happens, when she was housing minister. So we've had consistent reassurance. And the reason that a lot of people who understand this rule, rent caps and rent freezes out, is they know it has the opposite effect, which is it actually drives rent up. And bearing in mind the size of our portfolio and the churn, actually a temporary cap or temporary freeze would actually lead to a lot more growth. But Rob, why don't you answer the debt question?

Yeah, absolutely. Well, fundamentally, we see our business as very much a low risk, low volatility, earning stream business and also the resilience in the balance sheet as well. Really, our earnings guidance and our leverage guidance has been predicated at that level in which we'll be able to grow our earnings throughout the full rebasing to higher interest rates. And you've seen the trajectory that we've got. Now, clearly, we would maintain some flexibility because the variable in all of this will be where interest rates ultimately settle down to. So if indeed we did end up with an even higher for longer compared to what we've modelled, then we obviously have the flexibility through disposals to lower our leverage beyond that as well. With 850 million of assets to dispose of, we do have quite ample flexibility.

Okay, thank you. Maybe a second one if I can. Just a question on how you see the trade-off between share buybacks and leverage. If the share price stays around where it is, could we see you allocate any capital to buying back shares alongside a deleveraging? Or is your preference very much to focus on deleveraging first, so in effect buybacks might not be considered until after FY29?

Yeah, so I think we were clear in the presentation, we see it as after deleveraging. But Rob, why don't you explain why?

Yeah. So actually, we're constantly triangulating the different rates and what makes most sense from an accretion point of view for capital allocation. Current rates, actually, it's the most accretive for us to reduce debt. And of course, in this environment, for the reasons we've just discussed, also reducing our financial risk, I think, given the volatility in the markets, also makes sense. So really, that's our primary focus. As we continue to work through our deleveraging, of course, we'll keep an eye on all the alternatives for use of capital and maintain some agility as a result of that. But really, our focus is on deleveraging for the reasons that we've set out.

That's helpful. Thanks.

Good morning. Neil Green from JV Morgan. Just one, please. You talked about the impact of the renter's rights bill on landlords selling out, but just interested, and I appreciate it's only been a few weeks, if you've seen any impact on your portfolio, whether it's increased admin or people coming to your assets. Just interested to get any take there, please.

Yeah, Neil, it's a really interesting one. I mean, it's very, very early days. So we've only really had a week and a short week in that of trading, but we did see a spike in inquiries, so inbound inquiries. to our portfolio. And I suspect that was because of the notice periods. A lot of sections 21s were served in the lead up to the Renters' Rights Act. So we have seen an increase. But having said that, it's quite hard for us to unpick that because this time of year is our strongest letting period as we go into the summer.

Thank you.

Alistair.

Alistair Stewart at Progressive Equity Research. Just really one broad question on, you know, could you provide a bit of colour on the development industry dynamics? Just now, for instance, build costs, viability. I know who you're looking at. viability challenges, supply chain resilience. And on the flip side, is all of this providing any opportunities in the land market?

I'm going to ask Mike to come to this, but in the land market, obviously, we have got a nice supply of land for the future that we've built up. But Mike, why don't you just talk about the state of the development market?

Thanks, Alistair. So as we know, viability for built rent is challenged. And that's a combination of obviously the values with construction costs higher and become higher over the last three or four years. We have the benefit of a registered provider and a lot of discount market rent, affordable housing, which we've applied for grant for and have been successful. We've got grant applications out now. So we would expect with the changes we've made to the schemes to add density, allied to dropping the affordable housing a small amount, plus the grant help will materially improve the viability of those schemes.

And in terms of actual build costs, are they accelerating? And something that was pointed out to me recently is supply chain resilience.

What's your position on that? So we have, with our forward fund schemes, which are the ones on site at the moment, obviously those costs are fixed. They're fixed with the contractor and fixed with our partner with forward funding. And we do a huge amount of due diligence on both our partner and the supply chain that they enter into to make sure that we have resilience and good companies with good balance sheets. We would take exactly the same route with any direct development in the future to make sure that when we're entering into contracts, they're fixed priced and with good counterparties. In terms of the cost inflation, we've seen the cost inflation. I think it went up by 40%, I think, in the five years. The cost inflation related to Iran, which is what I think you're probably alluding to, isn't clear yet. But obviously the pressures are there. But as I say, we're sort of hedged away from those because of our forward funding. And we will take a view at the time that we would press the button on those development schemes around making sure that we, you know, as we look at our capital allocation, they've got to make sense. They've got to be viable and they've got to be low risk. Thank you.

And I think it's fair to say that there's quite a lot of capacity, Alistair, in the sector at the moment because obviously the house building numbers in the UK have more or less fallen off a cliff.

Hi, morning. Eleanor Furrer at Barclays. You've already hinged at it, but given the rise in financing costs we've seen over the year, there is likely some upside pressure to that 5.5%. So do you see any risk to your FY29 guidance? Should rates stabilise at these levels when you come to refinance?

We based our guidance on 5.5%. Clearly, current rates are tracking a bit higher than that today. Obviously, there's been quite a lot of volatility, and who knows over this period where rates ultimately settle down to it. But what we have is plenty of flexibility and the agility to adapt. And really, you know, our best response, I think, in a higher interest rate environment is to reduce the leverage. And if rates are higher, then we will reduce our leverage by more. And it's very accretive to do that, given that we're trading out of lower yielding assets. So we've got enough tools in our toolkit to effectively manage and, you know, focuses on hitting our guidance.

Great, thank you. Then on life-like rental growth, do you expect the differential between new lets and renewals to continue or will they trend towards each other as a consequence of the Renters' Rights Bill?

In terms of the new lets, we normally find they go stronger in the second half in any event. So I would expect them to go closer together. And of course, our new lets are supportive of our renewals because they're evidence for any debate. Thank you. Chris. Get my pen out, Chris.

Morning, Chris Mannington at Deutsche. Can we just explore the point around the true net yield a little bit more and kind of the cost you're taking, which maybe other commercial companies aren't bearing doubts. But I mean, can you give us any details to what maintenance, what refurbishment costs are and just perhaps flesh that point out?

And it's important to say it is also different from other European residential firms as well. So we take all of the costs of refresh, dilapidations, etc. through our gross to net. We take our void cost, our leasing cost. Everything goes through that 25% number. That's quite different to what happens in commercial where you let a lease for a long period of time. At the end, you may have both obsolescence and dilapidations to come to because you're refreshing the whole time. And the reason for that is because that reflects what our customers are doing. So, you know, we're leasing year to year. And everyone must go into one of our apartments feeling that they're the first person to live there. And so it's actually kept to a very, very high standard. And so that's the philosophy behind it. So what you don't get is at the end, you don't have an obsolescent building where you have to reset. You're getting that genuine true net yield. And I think sometimes I've got some valuers in the room, but the Sometimes I think that's the mist in the investment market, that the minute you let a commercial building, it's actually deteriorating. And the minute you let an apartment, we've got the reverse. We've got the rental growth coming, you know, going up on each letting.

I'm not looking for specifics, but of the 25% gross to net, is it a big chunk, the refurbishment?

It's the largest thing is repairs and maintenance and refresh is the largest part. Obviously, because we have very little void as well.

Thank you. That's helpful. Next one's just on transactional evidence in the market. We're obviously seeing a bit of outward shift everywhere at the moment because of higher bond yields. Just wondering what you're actually seeing in kind of real world examples.

So the first quarter of this year, I think, was one of the strongest quarters in terms of transactions. But it wasn't actually transactions in our kind of stock. There's a lot in terms of transactions. single family housing. So my reference point was there hasn't been an awful lot of transactions in our geographies to prove it. But there is a lot of appetite to invest in the sector. I think the reality is people are not trading out of their portfolios. The

holding on to them if you think of our peer group there's a lot of long-term investors in that peer group so they're holding holding on to them thank you uh and the last one's just about customer behavior more recently there's obviously been some pretty seismic changes out there are you seeing any reticence on the sales side on the rental side is there any cohorts who are maybe doing better or worse just a little bit of fleshing out of that side effects

Well, I think if you'll recall that our affordability level has actually, it's got more affordable, which is telling that in the age demographic that rent with Grainger, their incomes are going up. And actually the 25 to 30 year olds, 34 year olds, often that's the point where their salaries are accelerating. So we're not seeing... We're not seeing any attrition from any of those groups at all. And as I mentioned, a lot of key workers, a lot of people in healthcare, etc. Anecdotally, I know that some of our peers saw a number of notices served after the renters' rights act, the two-month notices, but they have a high proportion of students. And obviously, that gives a lot more flexibility to students that they didn't previously have. because they rented traditionally September to September and now they can obviously give just over two months notice and leave. So there has been some behaviour but not in our portfolio because we restrict the number of students in our portfolio.

Sorry, just on the sales side, any moderating momentum there?

No, the regulated tenancies, I think there's an interesting dynamic going on at the moment, which is that if anyone knows anyone trying to buy a house, actually, it's quite competitive, particularly at the entry point where our regulated tenancies are. And so quite often we've got four or five bidders and we're going to best and final on our ex-regulated properties. I did mention in the presentation, we had a slight slowdown just around the time of the budget. And that was a sensible thing for people to do because one of the kites that was flown was the potential to reduce or abolish standard duty. So why wouldn't you wait a couple of weeks or And of course, we waited an awful long time for that budget to come through. Thanks, Chris.

We had three questions submitted online. So I'll take them in order. We had Darren Loong from Resolution Capital in Australia. Given adjusted earnings is no longer provided as a KPI, will the leadership's team's KPIs and compensation targets move to upper earnings?

Yes, we had a remuneration review that was approved at our AGM in February, which moves us to an EPRA earnings target. So the board are consistent in aligning both short-term and long-term targets to the focus of the business.

Thank you. The next question is from a private shareholder, Mitchell, who asks, EPRA NTA has moved down to 290 pence per share despite operational rental growth remaining positive. How should shareholders think about the risk of further NTA erosion from here? Specifically, are current portfolio valuations already reflecting the higher rate environment, or should we still expect further outward yield pressure to offset rental growth? over the next 12 to 24 months?

Yeah, I think we can't get away from the fact that the real estate equity market does have a linkage with the 10-year guilt. I think that that is unjustified in a way in Granger's case, because one of the things that we provide is index linking through our inflation So actually the comparison should probably be at the index link gilt. And there we're obviously screening 300 basis points plus difference between our net yield and an index link gilt. So although the reality is I think we will get caught up in the higher bond market, I think it's probably more people are realising that we've already seen 100 basis points outward yield shift on our prime markets, but very little NTA erosion. And the reason behind that is because rental growth has supported that trend. I'm going to try and do something now, which the brokers are going to go mad with me about, which is just to... Sorry for those on the line, but slide 50 in the deck. shows the NTA resilience of Grainger. And what that's showing is that rental growth has supported our NTA over this period. So whilst our NTA is down around 2%, you can see that some of the other sectors are materially more damaged because they don't have that inflation linking capability in longer leases.

The next set of question is from Akanksha Anand, the real estate analyst at Citi. That's a two-parter. The first one, given the current uncertainty continues, how does the business underwrite the risk from weakening investment markets and slower rates of disposals? What level of discounts might be acceptable to current book values to continue progressing on the immediate priorities of the committed pipeline and debt reduction?

Okay, so a huge part of our sales are actually the regulated tenancies and they've actually maintained or slightly gone up in value. So we're not having to discount. In fact, our sales are actually coming in around there. So we're not having to discount what was the other bit.

The other one's on ERV. Could you put some colour around the drivers for the lower ERV growth at 1.1% for this half compared to 1.9% in the first half last year and 3.2% for the full year in 2025? Where can we see this progressing?

I think we've always said that it'll be between the three to three and a half. That's the underwrite in our business. So an annualised three to three and a half percent. And that's done on the basis of inflation. If we do get a more inflationary environment, of course, we could see that number pick up. But three to three and a half percent is where we see it. And all of the trends that we're seeing at the moment are actually substantiating that. Rob, do you want to add anything to that?

No, I think, I mean, it is aligned to our near-let's growth. Obviously, the ERV growth is a six-month number. And we do expect that to pick up, as we've said. But we're very much, you know, 2.9% overall, like the light rental growth. We're very much in line with where we said we'd be. And we expect that to tick up into our range of 3% to 3.5% for the full year.

A couple more have just come in. So John Wong, real estate analyst at Kempen, looking at your priorities for excess capital, starting new projects from the secured pipeline screens to be at the lowest priority. However, looking at the pipeline, the majority of projects are CLL. Are your priorities aligned with those of TFL? And also, to what extent is the viability of these projects challenged and recognize that it's challenged?

Okay, so we have started one of our CLL projects. John, that's on site right now. Quite exciting because not a lot's being built in London, but that is. And that was an important strategic start on site for us with CLL. They are aligned with us in the fact that we have got a better planning environment now. in London and actually what's been happening on those sites is we're going for higher density and better schemes on those sites, if you like. So actually they have been aligned with, if you like, a deferral to improve the schemes and we have a great working relationship with them and we continue to sort of work closely together.

Final question. It's from Marcus Fairmudge at Columbia Threadneedle. You mentioned that you restrict the number of students. What is the maximum number that you allow? What's the percentage? And do you separately identify distinguished between undergrads and postgrads?

Yeah, we do. Great question. We restrict to 10%. We are below 10%. And we restrict to, we have mainly postgrads or students that are in a relationship with a working person. And there's a reason behind that. that which didn't actually come from the structural situation in student and the reason behind it is because of the environment we want to create within our buildings which is that students if we can remember that fall back can tend to be a bit more noisy and and perhaps not as conducive to professionals at the early stages of their career wanting Not to be doing the beer and pizzas in the corridor. So yeah, that's the reason behind it. But of course, we've been a sort of a beneficiary of that. And also because we're trying to build stable communities and students do have more churn. Any other questions? No more on the line, Kurt. Well, thank you very much, everyone, for coming this morning.