Grainger: Cheaper, but not cheap enough

Research evidence excerpt

Grainger: Cheaper, but not cheap enough

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slowing, but in-line with long run average rate of c.3.0%-3.5%. While Grainger's reported 52 Week range GBP 2.30-1.50

affordability improved slightly over the half to 27% (rent as a proportion of income), more

broadly, as reported by Sky News, rents have reached the highest-ever level relative to earnings.

Should affordability continue to see pressure, this could impact rental growth, which already

appears to be slowing. According to Zoopla, UK-wide rent growth has slowed to 1.9% as of Q126,

down from 2.8% last year, and while the ONS reports a higher figure of +3.4% YoY, it was lowest

in London at +1.7% YoY (London & SE 46% of Grainger's BTR portfolio by value). Zoopla also

report that demand for rental homes is 14% lower than a year ago, its lowest level for 6 years, Source: IDC

and also finds that that there are 11% more homes available for rent than a year ago, both of Link to Barclays Live for interactive charting

which could put downward pressure on rental growth.

European Real EstateGiven this weakening in the broader rental market, we run a scenario analysis, Figure 1, where

Eleanor Frew, CFA

we find that if rental growth slows to 2% pa from FY27, all else equal, FY29e earnings could be

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c.6% below guidance. eleanor.frew@barclays.com

Barclays, UK

Rising finance costs could also impact FY29e guidance: One of the key messages with FY25

results last November was the focus on deleveraging, as we discussed in Grainger: Now what? Paul May, CFA

+44 (0)20 3134 1444

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies paul.j.may@barclays.com

covered in its research reports. As a result, investors should be aware that the firm may have a Barclays, UK