Grainger : bond pricing

LEI: 2138007CEIRKZMNI2979

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (OR TO U.S. PERSONS), AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY APPLICABLE LAW

19 April 2018

Grainger plc

Grainger plc reduces debt cost and extends maturity profile with £350 million senior secured bond

Grainger plc (the 'Group'), the UK's largest listed residential landlord, has priced a £350m sterling-denominated senior secured bond at a coupon of 3.375% for 10 years. The bond was rated BBB- by S&P.

The net proceeds from the issue of the Notes will be used to redeem the existing corporate bond (£275m at a coupon of c.5%) that matures in 2020, and for general corporate purposes.

In line with the Group's financing strategy, the refinancing achieves both a reduction in cost of debt and an extension of its maturity profile. The pro forma impact of this refinancing on the Group's financial metrics is as follows:

§ An annual interest saving of c.£3m, reducing the cost of debt from 3.5% to 3.1%.

§ Weighted average debt maturity is extended from 4.7 years to 6.5 years, assuming extension options are exercised. Excluding extension options 5.8 years.

§ The estimated prepayment cost net of tax for the existing corporate bond is £21m which would result in EPRA NAV reducing by 5 pence per share. The impact on EPRA NNNAV is expected to be negligible.

Vanessa Simms, Chief Financial Officer, said:

'We are delighted by the response to this bond issuance. The investor demand is a testament to the successful implementation of our strategy and our growing Private Rented Sector (PRS) portfolio which strengthens our income return.

The refinancing is an important milestone in extending our maturity profile and provides long-term interest rate certainty at an attractive coupon, reducing our annual interest costs by £3m.'

Barclays Bank plc, HSBC Bank plc and The Royal Bank of Scotland plc (trading as NatWest Markets) acted as joint active bookrunners.

The manufacturer target market for the purpose of MIFID II product governance is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID) has been prepared as the Bonds are not available to retail in EEA.

This announcement is not an offer of the Bonds in the United States or any other jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the 'Securities Act').

This communication does not constitute an offer of the Bonds to the public in the United Kingdom. This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom or (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the 'Order') and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as 'Relevant Persons'). Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.

This announcement is an advertisement and not a prospectus for the purposes of Directive 2003/71/EC, as amended.

THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS (EACH AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT ('REGULATION S')). THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE SECURITIES ACT, AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES (AS SUCH TERM IS DEFINED IN REGULATION S) OR TO OR FOR THE ACCOUNT OF U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS THE BONDS ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.

FCA/ICMA stabilisation.