Grainger’s residential rent payments rose to 99% in September. Credit: Wikimedia Commons.
Portfolios concentrating on residential and essential business rents defy lockdown slump
Two of the UK’s largest listed commercial and residential property groups, Grainger plc and LondonMetric, have registered strong performances despite the challenging economic conditions.
Grainger plc, the UK’s largest listed residential landlord, maintained rent collections at above 95 per cent since March, rising to 99 per cent by September. LondonMetric, whose property holdings are generally concentrated in warehouses and long-term leases, announced it has collected more than 98 per cent of rents in the third quarter.
The figures indicate that, despite fears that rents across the property market would be deferred or forgiven, the actual picture is more complicated. Industrial properties such as warehouses have been largely unaffected by Covid-19, due to the rise in delivery services and online shopping. At the same time occupants of mid-market residential properties, which represents most of Grainger’s portfolio, have been insulated from the economic shocks of Covid-19 to a greater degree than those in lower-level jobs.
Many retail chains such as Boots, Primark and JD Sports renegotiated their rental terms or stopped paying altogether during the first lockdown when they had to suspend instore trading. LondonMetric has focused on essential commercial properties, such as grocery stores, roadside services and convenience stores. These businesses have been able to trade throughout both lockdowns and have largely continued to pay their rent on time.
Both companies increased their dividend by 5 per cent on a per-share basis, despite Grainger registering a 16 per cent fall in pre-tax profit. LondonMetric registered a pre-tax profit of £85.4 million compared with a loss of £10.7 million a year earlier.
With the possibility of a COVID-19 vaccine becoming widely available early next year, both companies are bullish about their prospects for 2021. Mark Clare, the chairman of Grainger plc, said: “The foundations are solid, and the progress made this year will stand Grainger in good stead for the months and years ahead. Our pipeline will deliver a further 8,950 new high-quality homes and we will continue to build vibrant communities across the UK.”
Andrew Jones, the CEO of LondonMetric, said: “Whilst we remain vigilant to the impact of Covid-19, our focus on owning the right assets in the winning sectors that can generate a secure and growing dividend, positions us well for the future.”