SGM.L Regulatory News (SGM)

10 October 2018

AIM: SGM

SIGMA CAPITAL GROUP PLC

("Sigma" or the "Group" or the "Company")

The private rented sector ("PRS") and urban regeneration specialist

Re: The PRS REIT plc

Sigma, the private rented sector, residential development and urban regeneration specialist, notes that The PRS REIT plc ("PRS REIT") has issued its first quarterly update for the new financial year, as well as its maiden final results, covering the 13 months from commencement of trading on 31 May 2017 to 30 June 2018.

A Sigma subsidiary, Sigma PRS Management Limited, is Investment Advisor to the PRS REIT, sourcing investments, managing assets and providing advice on a day-to-day basis.

Copies of both announcements can be found below, and via the following link: https://www.theprsreit.com/page/regulatory-news-service 

Enquiries:

10 October 2018

PRSR.L

The PRS REIT plc

("Company" or "PRS REIT")

First Quarter Update

for Financial Year ended 30 June 2019

The 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 first three months of its new financial year to 30 June 2019.

KEY POINTS

Summary

Rental Income

Debt Finance

Dividend

Outlook

*see Definitions

QUARTERLY REPORT FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2018  

Introduction 

The PRS REIT plc continues to make good progress towards its target of deploying c. £900m (once fully geared) of resource into the Private Rented Sector ("PRS") to create a substantial portfolio of high quality, newly-built rental homes, catering mainly for families.

Some 16 months on from launch, as at 30 September 2018, the Company has c. £756m of funding deployed or committed to deployment. This equates to approximately 5,100 new rental homes when completed and an estimated rental value ("ERV") of £47.1m p.a. This represents very encouraging progress.

The number of completed PRS homes at 30 September 2018 stood at 595, generating an annualised rental income of £5.7m (30 June 2018: c. £3.6m from 405 homes). These homes, which are a mix of two, three and four-bedroom properties, are located across 14 sites in the North West, East Midlands, West Midlands, South Yorkshire and the South East.

Completed and contracted development at 30 September 2018 amounted to c. £384m of gross development cost ("GDC") with committed development amounting to c. £372m of GDC.

The ERV of completed and contracted sites at 30 September 2018 was c. £24.1m, from a combined c. 2,530 new homes (when fully built). The ERV from committed development at 30 September 2018 was £23.0m p.a, equating to approximately 2,570 PRS homes when all the sites are built-out. 

The Company's Investment Advisor, Sigma PRS Management Limited ("Sigma PRS"), a subsidiary of Sigma Capital Group ("Sigma"), continues to source sites that meet the Company's investment criteria, and to qualify, manage and oversee all assets.

Development and Acquisition Activity

The PRS REIT's development activities progressed well during the first quarter of the new financial year. By the end of September, approximately 2,100 homes, with a GDC of £306m and an ERV of £19.3m p.a., were under construction across multiple sites in the Company's target cities and conurbations.

During the period, construction commenced on four new development sites, which when completed will deliver c. 710 new homes with an ERV of c. £6.4m p.a., for a GDC of c. £100m.

The Company has signed forward contracts to purchase a development site in Harlow, Essex, which has planning consent for c. 94 homes with a GDC of c. £27.3m.

Acquisitions 

In the period, the PRS REIT purchased a newly-completed and let PRS site in Smethwick, near Birmingham, from Sigma for £10.3m. Comprising 63 homes, the annualised rental income is c. £0.6m p.a. In addition, the Company signed forward purchase agreements with Sigma to acquire two PRS sites, which are due for completion in the second half of 2019. These two sites, located respectively in the West Midlands and Essex, have a combined ERV of £1.1m p.a..

Debt Facilities

Sigma PRS is in discussions with the Company's banking partners regarding an additional £200m of debt to support the growth of the PRS REIT. Once agreed, this will bring the total funding capacity of the PRS REIT to c. £900m.

Dividend

The Company expects to declare a dividend for the first quarter of the new financial year, which covers the three months to 30 September, at the end of October 2018.

Summary

As previously highlighted, the Company's aim is to deliver family homes near key centres of employment, with convenient access to the transport infrastructure, and close to good primary schools. There is continued strong demand for the Company's homes, and forecast demand continues to outstrip supply, particularly for family homes, the PRS REIT's major focus.

Our pipeline of development opportunity is extremely healthy and the Company is on track to commit the balance of its c. £900m of funding in early 2019. Over and above this, Sigma PRS has identified a further £689m pipeline of qualified development opportunities, which is contractually controlled in Framework or Collaboration Agreements with partners, over which the Company has exclusive access. The Company therefore remains well-positioned for continued progress.

*DEFINITIONS

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:

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 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.

10 October 2018

PRSR.L

The PRS REIT plc

("PRS REIT" or "the Company" or "the Group")

Maiden Final Results

Covering the 13 months from commencement of trading on 31 May 2017 to 30 June 2018

The PRS REIT, the closed-ended real estate investment trust established to create a portfolio of newly-built rental homes mainly for families across the UK, is pleased to announce its maiden preliminary results. These results cover a 13 month period from 31 May 2017, the date of the Company's launch and commencement of trading, to 30 June 2018, the Company's financial year end.

KEY POINTS

Operational

Financial

Post Period Review and Outlook

Steve Smith, Chairman of the PRS REIT, commented:

"We have performed well over our first thirteen months of trading and, while there were some site-specific delays in the period, we are pleased with overall progress. About £756m of our funding resource has now been committed to the delivery of new rental housing, which represents some 5,100 new homes. Of this, 595 homes are completed and let, approximately 2,000 are under construction, and the balance is due to start construction after procurement processes have been completed.

"Our access to land and development opportunities is one of our key strengths, and we remain on track to have committed £900m - our full resource when additional gearing is included - to sites early in 2019.

"The rental market for family homes remains especially undersupplied and we have experienced strong demand for our professionally-managed family housing. Overall, therefore, we believe that the Company is in an extremely good position to deliver our planned programme of new family homes, and to prosper as the UK rented housing sector continues to grow."

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.

*DEFINITIONS

For further information, please contact:

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 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.

CHAIRMAN'S STATEMENT

Introduction

I am pleased to present the PRS REIT's audited financial results covering the period from its launch and IPO on 31 May 2017 to its financial year end on 30 June 2018. As this is the Company's maiden set of audited results, there are no comparative figures.

The Company performed well over the first thirteen months of operations and we are encouraged by its progress to date. Despite some site-specific delays in the fourth quarter, the overall timetable for the delivery of the targeted c. 5,700 new family rental homes remains on track.

As previously reported, we closed the maiden financial period to 30 June 2018, with c. £248m of completed and contracted development activity, and with an additional c. £437m committed to development sites that are due to be acquired. Annualised rental income at 30 June 2018 stood at c. £3.6m from 405 completed homes, with rental demand strong. The estimated rental value ("ERV") of the new homes that were either completed or under construction at 30 June 2018, is c. £15.5m p.a., from a total of approximately 1,710 homes.

Our first quarter update for the current financial year to 30 June 2019, which was published today, shows continuing encouraging progress. Our completed and contracted development at 30 September 2018 stood at c. £384m, with a further c. £372m committed to additional development sites. A total of £756m of the PRS REIT's funding resource is therefore now in, or close to, active deployment. The sites are located across multiple regions, in line with our intention to create a geographically diverse range of new family rental homes, across urban conurbations in England, outside of London.

We are aiming to commit our total potential resource of c. £900m (once fully geared) early in the second half of the financial year to 30 June 2019. Over and above this, a c. £689m pipeline of qualified development opportunities has been identified and is contractually controlled in Framework or Collaboration Agreements with partners.

Financial Results

The Company's revenues for the period from 31 May 2017 to 30 June 2018 amounted to £1.8m and were generated by rental income. After the deduction of non-recoverable property costs, net rental income was £1.5m. Expenses in the period were £4.3m and the gain from the fair value adjustment on investment property was £5.5m. As a result, the Company's operating profit was £2.7m.

Finance income from short term deposits was £0.6m.The profit after taxation was £3.2m and basic earnings per share on an IFRS basis was 1.0p.

Net assets as at 30 June 2018 stood at £486m, representing a net asset value ("NAV") per share of 98.3p on an IFRS basis, as adopted by the European Union. As at 30 June 2018, there is no difference between the IFRS NAV per share and the EPRA NAV per share.

Dividends

The Company's policy is to pay dividends to shareholders on a quarterly basis. For the period to 30 June 2018, the Company paid total dividends amounting to 5p per share, which was in line with the target stated in its IPO Prospectus.

The Company will declare its dividend for the first quarter of its new financial year, covering the three months to 30 September 2018 at the end of October 2018.

Outlook

The Board would like to thank the Company's shareholders and other stakeholders for their support in the PRS REIT's first period. While there have been challenges, as at 30 September 2018, we have completed, contracted or committed on c.£756m of development, representing approximately 5,100 new rental homes. Our geographic coverage is diverse and now extends to over 60 sites, including those sites currently being developed under forward purchase agreements that we intend to buy, once completed and let. This represents excellent progress as we move towards the full deployment of c. £900m of funding when our second tranche of £200m of borrowings is in place.

The structural drivers supporting the growth in the private rented sector remain strong, and the limited supply of high quality new rental housing, house price inflation, affordability constraints, and an increase in the number of households, will be favourable to our growing stock of high quality rental houses.

The rental market for family homes, as opposed to flats, is especially undersupplied, and we have found ready demand for our professionally managed rental homes.

The Company's access to land is one of its key strengths and we believe this aspect of our model, in particular, places the Group in an extremely good position to deliver its planned programme and to prosper as the UK rented housing sector continues to grow.

Steve Smith

Chairman

INVESTMENT ADVISER'S REPORT

Sigma PRS Management Limited ("Sigma PRS"), the Company's Investment Adviser and a wholly-owned subsidiary of Sigma Capital Group plc, is pleased to provide its report on the PRS REIT's activities and progress since its launch on 31 May 2017.

BUSINESS ACTIVITIES

The PRS REIT plc is a public limited company incorporated in England on 24 February 2017. The PRS REIT, together with its subsidiaries, is the first quoted Real Estate Investment Trust ("REIT") to focus on the Private Rented Sector ("PRS").

On 31 May 2017, the Company successfully completed its IPO, raising initial gross proceeds of £250m through the issue of 250 million ordinary shares of one pence each. The shares were admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange. On completion of the IPO, Sigma PRS Management Limited was appointed as Investment Adviser to the Company.

INVESTMENT OBJECTIVE AND BUSINESS MODEL

The PRS REIT is seeking to provide investors with an attractive level of income, together with the prospect of income and capital growth, through investment in a portfolio of newly-constructed residential private rented sector sites of multiple units, comprising mainly family homes, let on Assured Shorthold Tenancies (as defined in the Housing Act 1988) to qualifying tenants.

The Company is investing in multiple sites in cities and towns across the UK, mainly targeting the largest employment centres in England, outside of London. The locations closely follow the main rail and road infrastructure, and rental homes will be new-build and come with the benefit of 10 year National House Building Council or equivalent warranties.

The Company is concentrating on traditional housing, which has a broad spectrum of demand, with differing house types for different life stages, including smaller houses for young couples and families, and larger houses for growing families. It will also invest in some low rise flats in appropriate locations.

The PRS REIT is building its portfolio of PRS assets in two ways:

The PRS REIT retains the right of first refusal to acquire and develop any sites sourced by Sigma PRS that meets its investment objective and policy.

There are certain restrictions in the PRS REIT's investment policy, for instance the PRS REIT will not invest in other alternative investment funds or closed-end investment companies.

Achieving Scale and Reducing Risk

The Sigma PRS Platform

The Investment Adviser is utilising Sigma Capital Group plc's well-established PRS delivery platform ("Sigma PRS Platform") to help the PRS REIT achieve scale and to minimise development and operational risk. It plays a central role in sourcing and developing investment opportunities.

The Sigma PRS Platform comprises relationships with construction partners, central government, and local authorities. The primary construction partner is Countryside Properties, which has undertaken to deliver a minimum of 5,000 new family homes in the next three years via the Sigma PRS Platform, over and above those already in process. Other construction partners include Engie, Keepmoat Homes and Galliford Try. Homes England (formerly known as Homes and Communities Agency), which is an executive non-departmental public body sponsored by the Ministry of Housing, Communities & Local Government, works closely with Sigma in the common goal of accelerating new housing delivery in England.

All pre-development risks are identified and underwritten by Sigma Capital Group plc and its partners, and development sites will have an appropriate certificate of title, detailed planning consent and a fixed price design and build contract with one of Sigma Capital Group plc's housebuilding partners. During the construction phase, the properties are pre-let and subsequently occupied as they complete.

Through its wide network of relationships, the Sigma PRS Platform is an excellent source of land for development sites, and is also able to deliver a variety of high-quality house types efficiently and in volume. This strongly underpins the PRS REIT's objective to build at scale and across multiple geographies.

Multiple Geographies

By creating assets across multiple locations and regions, we aim to minimise the PRS REIT's concentration risk.

We are targeting a mix of locations that demonstrate both higher yielding profiles (predominantly those in the North of England) and developments where there is greater potential for capital appreciation (often in our Southern opportunities). Proximity to good primary schools is also key factor for us as we select sites.

In addition, no investment will be made in any single completed PRS site or PRS development site that exceeds 20 per cent. of the aggregate value of the total assets of the Company at the time of commitment.

Simple Life Brand

Our rental homes are marketed under the 'Simple Life' brand (www.simplelifehomes.co.uk). As well as providing tenants with well-designed, quality homes, it is important to us that tenants also receive high customer service levels. The creation of the Simple Life brand helps to identify our product to potential customers and, over time, we would like it to be recognised as the 'gold standard' for tenant experience.

We believe that the long term nature of our approach to the ownership of our assets will help to promote a sense of tenant security, and that the neighbourhood initiatives we sponsor will also help to foster a sense of community.

FINANCING RESOURCE

Equity Placing Programme

At the end of January 2018, having fully committed the net proceeds of the funds raised at the Company's IPO on 31 May 2017, a second equity placing was announced. This placing closed early, on 20 February 2018, raising gross proceeds of £250m at 102.5p per share from both existing and new shareholders. As previously reported, Homes England participated in this second placing, taking its direct investment in the Company to a total of c. £30m.

Debt Facilities

The Company is using gearing to enhance equity returns and, at the end of June 2018, completed terms for debt facilities totalling £200m. The facilities are provided by Scottish Widows ("SW") and Lloyds Banking Group ("LBG") and were agreed after a review of the market undertaken by J C Rathbone Associates.

We are currently holding discussions to put in place a further £200m of debt facilities. The PRS REIT's aggregate borrowings will always be subject to an absolute maximum, calculated at the time of drawdown of the relevant borrowings of not more than 45 per cent. of the gross asset value.

OPERATIONAL REVIEW

Development Activity and Acquisitions

During the period under review, total development activity either completed, contracted or committed amounted to c.4,600 new family homes with a total gross development cost ("GDC") of approximately £685m. These homes, consisting of two, three and four bedroomed properties, are located across the major conurbations of England including the North West, Yorkshire, East Midlands, West Midlands and the South of England, and are being delivered by our construction partners, Countryside Properties, Engie, Keepmoat Homes and Galliford Try. The ERV of these properties is expected to be in the region of £42.9m p.a..

Since IPO to 30 June 2018, the Company has acquired five fully-developed and let PRS sites from Sigma Capital Group plc. Four of these sites are located in the North West of England, with the fifth situated in Yorkshire. The five sites were acquired for c. £51m in total, having been independently valued by a third party for the PRS REIT. Together, they comprise 282 PRS homes and generate an annualised rental income of c. £2.5m.

At the end of June 2018, including those homes delivered through the Company's development activity, the PRS REIT had a portfolio of 405 completed homes, generating an annualised rent income of c. £3.6m.

Construction Resource

The construction resource available to the PRS REIT was substantially increased in June 2018 through a new Collaboration Agreement with Countryside Properties PLC ("Countryside") and Sigma Capital Group plc. This new agreement is targeting the delivery of a further 5,000 PRS homes via the Sigma PRS Platform over the next three years, over and above those already in process. Most importantly, the agreement allows Sigma PRS to map out the PRS REIT's continuing delivery and expansion with significantly greater clarity. The commitment also allows Countryside to deliver homes more quickly on its larger, mixed tenure sites.

Other construction partners added since IPO are Galliford Try and Engie, complementing Keepmoat Homes and Countryside. All four partners deliver a specified range of properties selected for their suitability for our target markets. The consistency in specification also enables greater efficiency in the long-term management and maintenance of our properties.

FINANCIAL RESULTS

Income statement

The Group's revenue for the period was £1.8m, which was all derived from rental income. After the deduction of non-recoverable property costs, the net rental income was £1.5m. Expenses for the first period of operation were £4.3m, whilst the gain from the fair value adjustment on investment property was £5.5m. This resulted in an operating profit of £2.7m. Finance income for the period from short term deposits was £0.6m. The profit after finance income and taxation was £3.2m. The earnings per share on an IFRS basis for the period was 1.0p.

Dividends

The Company has declared and paid a total of 5p per ordinary share for the period under review, which comprised the following:

On 31 January 2018, the Company declared a dividend of 1.5p per ordinary share for the period to 31 December 2017. The dividend was paid on 16 March 2018 to shareholders on the register as at 16 February 2018. The ex-dividend date was 15 February 2018.

On 30 April 2018, the Company, declared a dividend of 1.0p per ordinary share for the period to 31 March 2018. The dividend was paid on 31 May 2018 to shareholders on the register as at 11 May 2018. The ex-dividend date was 10 May 2018.

On 31 July 2018, the Company declared a dividend of 2.5p per ordinary share in respect of the period to 30 June 2018. The dividend was paid on 31 August 2018 to shareholders on the register as at 10 August 2018. The ex-dividend date was 9 August 2018.

Balance Sheet

The principal items in the balance sheet are investment property of £121.1m, cash and cash equivalents of £374.3m, and trade and other payables of £13.3m.

The investment property includes completed assets and assets under construction at fair value. Trade and other payables includes £9.8m of development expenditure that was paid in July 2018. At 30 June 2018, the Group had no long term borrowings.

Debt Financing

Prior to the period end, the PRS REIT agreed debt facilities of £100m with the Lloyds Banking Group and £100m with Scottish Widows.

The facility with Lloyds is a revolving credit facility for an initial term of two years, which can be extended further for up to two years. Interest is based on three month LIBOR plus applicable margin and the loan is secured over assets allocated to Lloyds Banking Group.

The facility with Scottish Widows is a term loan of 15 years, which will be drawn in two equal instalments fixed for March and April 2019. Interest was fixed at the 15 year swap rate of 1.588% plus applicable margin and the loan is secured over assets allocated to Scottish Widows.

Key performance indicators

The Group's key performance indicators include:

As this is the Company's first period of trading there are no comparisons for a prior period.

MARKET OVERVIEW

Demand for high quality rental housing, particularly for families, across the UK's major urban centres remains very strong. There are a number of factors driving this demand, including population growth, house price inflation and mortgage constraints.

In 2016, the UK population was nearly 66m, with approximately 27.8m households. Over the next eight years, the population is widely forecast to grow by 5.4% or 3.5m people, and the number of households is expected to increase by 8.1% or an extra 2m households.

Since the mortgage market review in 2014, the onus on lenders to ensure that borrowers can afford their loan commitments has increased. Accordingly, mortgage providers may lend no more than 15% of new mortgage contracts, in a given quarter, at a loan-to-income ratio of over 4.5 times. However after a prolonged period of house price inflation, the median household income to median house price stands at 7.6 times. Mortgage deposits have also become a hurdle to ownership, with deposits now approximately 19% of the purchase price. This represents over 60% of annual household income. In the 1990's, buyers typically needed a 5% deposit, representing approximately 12% of household income.

Government and policy makers are now prioritising the supply of new homes and seeking to reform the housing market. The Government's Housing White Paper, published in February 2017, set out such plans and identified PRS as an important mechanism to help accelerate overall housing supply. As we have previously commented, mixed-tenure development typically enables the delivery of housing at a considerably faster rate than market-for-sale developments. The Government's revised National Planning Policy Framework ("NPPF") and Planning Practice Guide, published in July 2018, also recognised Build to Rent as its own tenure type that should be prescribed on certain sites where the need is apparent. This recognition should help to unlock further opportunity for the Company and its construction partners.

According to research by Savills, there are only approximately 22,500 completed build-to-rent units currently in the UK, over half of which are in London. The pipeline of units under construction is higher at approximately 37,500, 60% of which are in the regions. We estimate that the Company accounts for nearly 10% of this regional delivery. However, it important to note that most activity is in high-rise flatted development, while the PRS REIT's focus is on houses, providing a clear point of difference.

POST PERIOD REVIEW

The PRS REIT continues to make good progress, as announced in the Company's first quarter update covering the first three months of the new financial year to 30 June 2019.

As at 30 September 2018, a total of approximately £756m of funding has been either deployed or is committed to deployment. This equates to c. 5,100 new rental homes when completed. Of this total, c. £384m has funded or is funding development that is now either complete or currently under construction, equating to c. 2,130 new family homes. The balance of c. £372m is committed under forward contracts to qualified sites yet to start the construction phase.

The Company's annualised rental income at 30 September 2018 increased to c. £5.7m from 595 completed homes and, at the same date, completed and contracted development amounted to c. £384m of GDC, with the ERV of the sites when fully completed at c. £21.0m p.a.. A further c. £372m of funding is committed to developments, which when fully built-out will provide an ERV of c. £23.0m p.a. In addition, a further c. £689m pipeline of qualified development opportunities has been identified, and is contractually controlled in Framework or Collaboration Agreements with partners.

SUMMARY AND OUTLOOK

Demand in the rental sector continues to grow. The fundamental imbalance between the supply of good quality rental housing and demand remains large, and the loss of stock, as a result of legislative changes that have made the buy-to-let sector much less attractive to private individuals, exacerbates supply constraints. Lack of affordability in the market-for-sale sector continues to drive up demand for rental homes.

The family housing rented market, which according to the Residential Landlords Association represents just under 50% of tenants, is large and remains the focus of our approach to the private rental marketplace.

In the draft analysis of a review into build out rates in the UK by Rt Hon Sir Oliver Letwin, build-to-rent was cited as a key component in a basket of measures to deliver more housing stock more quickly. We view this as further helpful, independent affirmation of the role that build-to-rent has in assisting in speeding up housing delivery in the UK.

We remain confident of prospects for the Company over the new financial year, supported by the enhanced resource that is now in place and the volume of sites that are in the process of being delivered or about to start construction. The Sigma PRS Platform provides us with very strong access to site acquisition opportunities across our target geographies and this underscores our very positive view of the Company's long term growth aspirations.

FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income

For the period from 31 May 2017 to 30 June 2018

All of the Group activities are classed as continuing and there were no comprehensive gains or losses in the period other than those included in the statement of comprehensive income.

Consolidated Statement of Financial Position

As at 30 June 2018

As at 30 June 2018, there is no difference between IFRS NAV per share and the EPRA NAV per share.

Consolidated Statement of Changes in Equity

For the period from 31 May 2017 to 30 June 2018

Attributable to equity holders of the Company

Consolidated Statement of Cash Flows

For the period from 31 May 2017 to 30 June 2018

NOTES TO THE FINANCIAL STATEMENTS

1. General information

This final results announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors 9 October 2018.

2. Basis of Preparation

The financial information set out in this announcement does not constitute statutory financial statements for the period ended 30 June 2018. The report of the auditor on the statutory financial statements for the period ended 30 June 2018 was (i) unqualified; (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for the period ended 30 June 2018 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

3. Segmental information

For the period from 31 May 2017 to 30 June 2018, the Directors regard the Group as having just one reportable segment, property, and the business only operates in the United Kingdom therefore segmental information is not presented.

4. Unrealised gains on investment property

The total unrealised gains on investment property during the period were are set out below.

5. Taxation

As a UK REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business, provided it meets certain conditions as set out in the UK REIT regulations. For the current period ended 30 June 2018, the Group did not have any non-qualifying profits and accordingly there is no tax charge in the period. If there were any non-qualifying profits and gains, these would be subject to corporation tax.

It is assumed that the Group will continue to be a UK REIT for the foreseeable future, such that deferred tax has not been recognised on temporary differences relating to the property rental business. No deferred tax asset has been recognised in respect of the unutilised residual current period losses as it is not anticipated that sufficient residual profits will be generated in the future.

6. Earnings per Share

Earnings per share amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period. As there are no dilutive instruments, only basic earnings per share is quoted below.

The calculation of basic earnings per share is based on the following:

7. Dividends

The following dividends were paid during the period:

On 31 January 2018, the Company declared a first interim dividend in respect of the period from 31 May 2017 to 31 December 2017 of 1.5 pence per Ordinary Share, which was paid on 16 March 2018 to shareholders on the register as at 16 February 2018. The ex-dividend date was 15 February 2018.

On 30 April 2018, the Company declared a second interim dividend in respect of the period from 1 January 2018 to 31 March 2018 of 1.0 pence per Ordinary Share which was paid on 31 May 2018 to shareholders on the register as at 11 May 2018. The ex-dividend date was 10 May 2018.

Subsequent to the period end, on 31 July 2018, the Company declared a third interim dividend in respect of the period from 1 April 2018 to 30 June 2018 of 2.5p per Ordinary Share, which was paid on 31 August 2018 to shareholders on the register as at 10 August 2018. The ex-dividend date was 9 August 2018

8. Availability of statutory financial statements

Copies on the full statutory financial statements will be available from the Company's offices at 18 Alva Street, Edinburgh, EH2 4QG no later than 31 October 2018 and are available on its website at www.theprsreit.com 

9. Annual General Meeting

The Annual General Meeting of the Company will be held the offices of Nplus1 Singer Advisory LLP, One Bartholomew Lane, London, EC2N 2AX on Wednesday, 28 November commencing at 11.00 am.