Last checked at 
25 Jul 2023 07:00
PRSR.L
The PRS REIT plc
("the PRS REIT" or "the Company")
Fourth Quarter Update
Strong Asset Performance
Including Rental Growth of 7.5%
The PRS REIT, the closed-ended real estate investment trust that invests in high-quality, new build, family homes in the private rented sector ("PRS"), is pleased to provide an update on activity for the fourth quarter of its financial year ended 30 June 2023.
Market fundamentals remain strong
The business model remains firmly supported by market fundamentals, most significantly, a rapidly expanding rental sector, population growth, changing household formation and grossly insufficient new housing volumes. Reflecting this and the general lack of supply of good quality rental homes, demand for the Company's homes - single-family rental housing - remains very high. The performance of the portfolio continues to be outstanding. Occupancy levels and rent collection are high, whilst arrears are low and, over the 12 months to 30 June 2023, rental growth was at 7.5% across the portfolio. The PRS REIT remains in a very strong market position, and the Board is confident about prospects, with affordability (being average rent as a proportion of gross household income) at 25% and the Company's costs substantially fixed following the recent debt refinancing.
Fourth quarter performance
| At 30 Jun 2023 | At 31 Mar 2023 | At 30 Jun 2022 |
Number of completed homes | 5,080 | 5,010 | 4,786 |
Estimated rental value ("ERV") per annum | £55.0m | £52.7m | £47.8m |
Number of contracted homes | 444 | 516 | 693 |
ERV per annum | £3.8m | £5.2m | £4.4m |
Completed and contracted sites | 71 | 71 | 68 |
ERV of completed and contracted sites | £58.8m | £57.9m | £52.2m |
Rent collected in period relative to rent invoiced for the same period |
99% |
101% |
100% |
Like-for-like rental growth on stabilised sites in the preceding 12 months |
7.5% |
5.7% |
5.1% |
Delivery Progress
The Company's portfolio of single-family houses remains the largest of its kind in the UK and it continues to expand with 70 new rental homes added to the portfolio in the fourth quarter of the financial year. This has taken the total number of homes added during the financial year as a whole to 294 and the number of completed homes in the portfolio to 5,080 (30 June 2022: 4,786).
The estimated rental value ("ERV") of the 5,080 completed homes at 30 June 2023 was £55.0m per annum, a 15% increase on the same point last year (30 June 2022: 4,786 homes with an ERV of £47.8m per annum). A further 444 homes, with an ERV of £3.8m per annum, were contracted at 30 June 2023, and are at varying stages of the construction process.
Asset Performance
Asset performance remains very strong. Rent collection* for the period was 99% and total occupancy at the end of the quarter was at 97%, with 4,932 of the 5,080 completed homes occupied. A further 59 homes were reserved at the quarter end for applicants who had passed referencing and paid rental deposits. Total arrears at 30 June 2023 remained low at £0.6m (30 June 2022: £0.6m). Like-for-like rental growth over the year has risen to 7.5% on stabilised sites, from 5.7% at the end of the third quarter. Affordability (average rent as a proportion of gross household income) remains very strong at 25%, which is significantly lower than Home England's guidance of less than 35%.
Demand for the PRS REIT's high quality, professionally managed rental homes remains strong. Homes are well-located and close to employment centres, good primary schools, local amenities and transport links, with these factors helping to drive demand. The Company's focus on providing a high level of customer service continues to receive favourable comment in tenant surveys.
*Rent collection is defined as rent collected in the period against rent invoiced in the same period.
Financial
As previously reported on 10 July 2023, the Company refinanced its £150m revolving credit facility, securing a £102m facility of fixed-rate debt for 15 years and a further £75m of floating-rate debt for two years, providing the Company with the flexibility to refinance the floating element in due course. An interest rate cap is in place on the floating rate debt.
As a result of the refinancing, approximately 82% of the Company's overall debt is covered by long-term facilities, with an average term of 16 years and an average blended interest rate of 3.8%. The average maturity of its overall debt has increased to 13.7 years at 30 June 2023 from 10.9 years at 31 December 2022. Assuming that the £75m floating rate facility is drawn down in full and using today's reference rate, the average blended interest rate on the Group's overall debt facilities would be 4.3%.
With rental demand strong and rising, and the build-to-rent sector still nascent, the Board believes that the encouraging fundamentals should be reflected in future asset valuations.
Dividend
An interim dividend of 1.0 pence per ordinary share in respect of the third quarter of the financial year was paid on 26 May 2023.
The Board expects to declare an interim dividend in respect of the fourth quarter of the financial year ended 30 June 2023 by early August.
For further information, please contact:
The PRS REIT plc Steve Smith, Non-executive Chairman
| Tel: 020 3178 6378 (c/o KTZ Communications) |
Sigma PRS Management Ltd Graham Barnet, Mike McGill
| Tel: 0333 999 9926 |
Singer Capital Markets James Maxwell, Asha Chotai (Investment Banking) Alan Geeves, James Waterlow, Sam Greatrex (Sales)
| Tel: 020 7496 3000
|
Panmure Gordon (UK) Limited Alex Collins (Investment Banking) Tom Scrivens (Corporate Broking)
| Tel: 020 7886 2500 |
G10 Capital Limited (part of IQ-EQ) Paul Cowland | Tel: 0207 397 5450 |
KTZ Communications Katie Tzouliadis, Robert Morton | Tel: 020 3178 6378 |
NOTES TO EDITORS
About The PRS REIT plc
www.theprsreit.com
The PRS REIT plc is a closed-ended real estate investment trust established to invest in the Private Rented Sector ("PRS") and to provide shareholders with an attractive level of income together with the potential for capital and income growth. The Company has investment of over £1bn in a portfolio of high-quality homes for private rental across the regions, having raised a total of £0.56bn (gross) through its Initial Public Offering, on 31 May 2017 and subsequent fundraisings in February 2018 and September 2021. The UK Government's Homes England has supported the Company with direct investments. On 2 March 2021, the Company transferred its entire issued share capital to the premium listing segment of the Official List of the FCA and to the London Stock Exchange's premium segment of the Main Market. Now comprising over 5,000 build-to-rent homes, the Company believes its portfolio is the largest build-to-rent single-family rental portfolio in the UK.
LEI: 21380037Q91HU97WZX58
About Sigma Capital Group Limited (formerly Sigma Capital Group plc) www.sigmacapital.co.uk
Sigma Capital Group Limited ("Sigma") is a PRS, residential development, and urban regeneration specialist, with offices in Edinburgh, Manchester and London. Sigma's principal focus is on the delivery of large-scale housing schemes for the private rented sector. The Company has a well-established track record in assisting with property related regeneration projects in the public sector, acting as a bridge between the public and private sectors.
Sigma has created an excellent property procurement and management platform, which sources sites and brings together construction resource to develop them, enabling Sigma to deliver an integrated solution to partners. As well as sourcing sites and managing all stages of the planning and development process, Sigma manages the rental of completed homes through its award-winning rental brand 'Simple Life'. The Company's subsidiary, Sigma PRS Management Ltd, is Investment Adviser to The PRS REIT plc.
About Sigma PRS Management Ltd
Sigma PRS Management Ltd is a wholly-owned subsidiary of Sigma Capital Group Limited and is Investment Adviser to The PRS REIT plc. It sources investments and operationally manages the assets of The PRS REIT plc and advises the Alternative Investment Fund Manager ("AIFM") and The PRS REIT plc on a day-to-day basis in accordance with The PRS REIT plc's Investment Policy. The AIFM is G10 Capital Limited. Sigma PRS Management Ltd is an appointed representative of G10 Capital Limited, which is authorised and regulated by the Financial Conduct Authority (FRN:648953).