4 Jul 2019 07:00
4 July 2019
AIM: SGM
SIGMA CAPITAL GROUP PLC
("Sigma")
The private rented sector ("PRS") and urban regeneration specialist
Re: The PRS REIT plc - Fourth Quarter Update
Sigma, the private rented sector, residential development and urban regeneration specialist, notes that The PRS REIT plc ("REIT") has issued an update for the final three months of the financial year ended 30 June 2019, which also provides an overview of the REIT's progress over its first two years since its inception.
Sigma's subsidiary, Sigma PRS Management Limited, is Investment Adviser to the REIT, sourcing investments, managing assets and providing advice on a day-to-day basis.
A copy of the announcement can be found below, and via the link below. https://www.theprsreit.com/page/regulatory-news-service
Enquiries:
Sigma Capital Group plc |
| Graham Barnet, Chief Executive |
| T: 020 3178 6378 (today) |
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| Malcolm Briselden, Finance Director |
| T: 0333 999 9926 |
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KTZ Communications |
| Katie Tzouliadis, Dan Mahoney |
| T: 020 3178 6378 |
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N+1 Singer(NOMAD and Broker) |
| James Maxwell, James Moat, Ben Farrow |
| T: 020 7496 3000 |
4 July 2019
PRSR.L
The PRS REIT plc
("Company" or "PRS REIT")
Fourth Quarter Update
PRS REIT, the closed-ended real estate investment trust established to invest in new build homes in the private rented sector ("PRS"), is pleased to provide an update for the final three months of the financial year ended 30 June 2019, and an overview of the Company's progress over its first two years since its inception.
The First Two Years
Since the launch of PRS REIT on 31 May 2017 up to 30 June 2019, 1,173 new homes have been delivered, generating a rental income stream of £10.7m per annum. Built for the private rental market and designed mainly for families, the homes are located across 21 fully or partially completed sites in Greater Manchester, Merseyside, the Midlands and Yorkshire. The average monthly rental across these properties is £760 per calendar month, and when a vacancy has arisen, the re-letting period has averaged 6.1 days.
At the end of June 2019, the close of the Company's financial year, the number of new homes under construction stood at 3,196 across 37 sites. Once this tranche of homes has been completed and let, the Company's annual rental income will rise to approximately £41m (on 4,369 homes). The new homes coming through will further diversify the geographic spread of the Company's portfolio, with the units located across 54 sites of varying sizes across the major regions in England.
Gross yields and cost management to date are in line with management expectations. As at 30 June 2019, the average gross yield on developed assets was 6.2%.
Progress over the Fourth Quarter
The table below summarises the Company's progress over the fourth quarter ended 30 June 2019.
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| At 30 June 2019 | At 31 March 2019 |
| Number of completed PRS units | 1,173 | 944 |
| Estimated rental value ("ERV") of completed homes per annum | £10.7m | £8.6m |
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| Number of completed and contracted* sites | 54 | 49 |
| Number of completed and contracted* units | 4,369 | 3,951 |
| Gross development cost ("GDC") of completed and contracted* sites | £661m | £603m |
| ERV of completed and contracted* sites per annum | £41m | £37m |
Development Sites Acquired
During the last quarter of the financial year, the Company purchased five development sites (one through a forward-purchase agreement with Sigma Capital Group plc ("Sigma")), which will add a further 437 new homes once fully developed for a total GDC of £63.7m. The ERV of these new homes is £3.9m per annum. These newly acquired sites are located in the North West, North East and West Midlands.
The development site in the North East is the Company's first site in the region, and was acquired in conjunction with Galliford Try. Located in Middlesbrough, it will comprise c.80 homes when completed. The Company expects to expand its presence in this region, and a further site is currently under review.
Completed Sites Acquired
In the period, the Company also acquired a newly-completed PRS site in Telford, Shropshire, from Sigma for a total consideration of £12.7m, following an independent valuation. The site comprises 78 homes, with an expected rental income of £0.7m per annum.
Construction Resource
The Company's Investment Adviser, Sigma PRS Management, part of Sigma, is seeking to add additional construction resource by developing relationships with high quality, regional housebuilders. This will complement the existing core delivery partners and extend the portfolio's geographic spread. One site has been agreed with a proposed new partner, and additional sites are under review.
Debt Facilities
As previously announced, a further £200m of debt facilities was agreed in May 2019 on attractive terms with Scottish Widows and Lloyds Bank, bringing the Company's total gross balance of deployable funds to £900m. The Company's total debt facilities are fully committed* to development sites.
Dividend
The total dividend target for FY 2019 remains 5p per share. This would bring the total dividend for the first two years to 10p per share, the Company's original target at IPO. Details regarding the payment of the Company's quarterly dividend are expected to be declared at the end of July 2019.
The annual dividend targets for FY 2020 and FY 2021 remain at 5p per share respectively, with the Company targeting a stabilised dividend of 5.5% from 20221.
Summary
The Company has progressed in line with management expectations during the fourth quarter of the financial year. There are 37 sites are currently under construction across England, and the volume of completions continues to grow. Completed assets are performing well and market demand for the Company's homes remains strong.
The PRS REIT is well-positioned at the start of the new financial year, with increased construction resource, identified development opportunities, including in new geographic regions, and stable, well-controlled costs.
The Company expects to report on audited full year results in late September.
1. This is a target only and there can be no assurance that the target can or will be met and should not be taken as an indication of the Company's expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the Company will make any distributions at all and should decide for themselves whether or not the target dividend yield is reasonable or achievable.
*DEFINITIONS
Contracted | refers to sites under construction (under a design & build contract), which have been purchased by the PRS REIT or the PRS REIT's Investment Adviser (forward sold to the PRS REIT). |
Committed | refers to development sites that have been approved or are under formal appraisal by the Investment Adviser, and where planning consent is being sought, and/or are in the process of being acquired. |
This announcement is released by The PRS REIT plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
For further information, please contact:
The PRS REIT plcSteve Smith, Non-executive Chairman
| Tel: 020 3178 6378 (c/o KTZ Communications) |
Sigma PRS Management LimitedGraham Barnet
| Tel: 0333 999 9926 |
N+1 Singer James Maxwell, James Moat, Ben Farrow
| Tel: 020 7496 3000
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StifelMark Young, Neil Winward, Gaudi Le Roux
| Tel: 020 7710 7600 |
G10 Capital Limited (AIFM) Gerhard Grueter, Anthony Wood, Gaia Udage
| Tel: 020 3696 1302 |
KTZ Communications Katie Tzouliadis, Dan Mahoney | Tel: 020 3178 6378 |
NOTES TO EDITORS
About The PRS REIT plc(www.theprsreit.com)
The PRS REIT is a closed-ended real estate investment trust established to invest in the Private Rented Sector and to provide shareholders with an attractive level of income together with the potential for capital and income growth. It has raised a total of £500m (gross) through its Initial Public Offering, on 31 May 2017, and a subsequent placing in February 2018. Both fundraisings were supported by the UK Government's Homes England with direct investments.
LEI: 21380037Q91HU97WZX58
About Sigma Capital Group plc(www.sigmacapital.co.uk)
Sigma Capital Group plc ("Sigma") is a private rented sector, 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. It 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. Its subsidiary, Sigma PRS Management Limited, is Investment Adviser to The PRS REIT plc.
About Sigma PRS Management Limited
Sigma PRS Management Limited is a wholly-owned subsidiary of AIM-quoted Sigma Capital Group plc and is Investment Adviser to The PRS REIT plc. It sources investments and 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 Investment Adviser is an appointed representative (reference number: 776293) of the AIFM.