1. The private rented sector Opportunities and challenges Kurt Mueller, Director of Corporate Affairs CIH South East Conference 2013 1

2. Our business The UKs largest listed residential property owner and manager A trader, investor and manager of residential properties 2 OPERATIONAL PLATFORM InvestmentAsset management Property ManagementDevelopment

3. Snapshot of Grainger We directly own c.£2.2bn of residential assets We manage on behalf of third parties c.£1bn of residential assets

4. Owning and managing residential 4 High quality assets Gross yield of 6.9% Robust income stream Low voids Strong locations +60% of UK portfolio in London and S/E 90% of German assets in four strongest regions

5. Attracting partners and investment

6. The growth of PRS 6

7. PRS market 7 The number of private rented households has increased from 2.00 million (10%) in 1999 to 3.62 million (17%) in 2010-11. Strong future growth prospects for rental sector Economic conditions adding to renting demand o Constrained mortgages o High deposits Growing cultural acceptance of renting

8. Challenges of PRS investment Limited acquisition opportunities, scale is challenging High capital values based on vacant possession value mean low yields Competition on land with house-building for sale What concerns do we have with long term management of PRS?

9. What are investors looking for? Net yields over 5% Rental growth Scale Blocks High quality Capital value growth?

10. So how to make PRS investment work? Valuation on investment value Land value paid for over the long term Section 106? Design Management efficiencies (economies of scale)

11. Two examples London Road, Barking Royal Borough of Kensington & Chelsea

12. Project being constructed by Bouygues. Barking is located in Zone 4 and is well serviced by public transport. Ground floor has been let to ASDA and Grainger have agreed to acquire the residential component. No on site affordable housing. Start on site December 2012. Practical completion in June 2015. 20% deposit payable on exchange no further staged payments. Key Financial Data Number Of Units100 Estimated Rental Income£1,261m Purchase Price£13,700m Gross Yield9.34% London Road, Barking

13. 13 Young Street Hortensia Road 125 year lease on two high profile sites in Royal Borough of Kensington & Chelsea

14. 14 Delivering on the Groups strategy SALES Sales of high end apartments to repay cost of development, as well as providing development profit and development management fees RENTS Remaining stock rented out at either market or affordable rent levels Grainger has 125 year income from share of net rent FEES Grainger will asset and property manage both sites, earning fees on top of the development management fees (under sales)

15. Thank you www.graingerplc.co.uk @graingerplc kmueller@graingerplc.co.uk