Q4 Update
PRSR.L
The PRS REIT plc
("the PRS REIT" or "the Company")
Fourth Quarter Update
Continued Strong Portfolio Performance
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 2024.
Favourable market fundamentals
Market fundamentals remain strongly supportive of the Company's business model, which is focused on high-quality, professionally managed, build-to-rent homes for families. The single-family sector remains in a significant supply deficit across the UK, and macro trends, including population growth and the rise in household formation, continue to feed demand.
The Company's portfolio performed very strongly over the three months ended 30 June 2024. Occupancy and rent collection remained at very high levels and arrears were low. Rental growth over the 12 months to 30 June 2024 was 11.7% across the portfolio, similar to the previous quarter. In addition, affordability (which is average rent as a proportion of gross household income) remained at a healthy level at 23%. This is well within Homes England's guidance limit of 35%.
The Company's rental homes are energy efficient and well-located, close to employment centres, good primary schools, local amenities and transport links, and close attention is paid to providing residents with a high level of customer service through the award-winning rental brand, Simple Life.
Fourth quarter performance
|
|
At 30 Jun 2024 |
At 31 Mar 2024 |
At 30 Jun 2023 |
|
Number of completed homes |
5,396 |
5,308 |
5.080 |
|
Estimated rental value ("ERV") per annum |
£65.1m |
£62.3m |
£55.0m |
|
Number of contracted homes |
180 |
268 |
444 |
|
ERV per annum |
£1.4m |
£2.4m |
£3.8m |
|
Completed and contracted sites |
72 |
72 |
71 |
|
ERV of completed and contracted sites |
£66.5m |
£64.7m |
£58.8m |
|
Rent collected in period relative to rent invoiced for the same period |
100% |
99% |
99% |
|
Like-for-like rental growth on stabilised sites in the preceding 12 months |
11.7% |
11.7% |
7.5% |
Delivery Progress
The Company's portfolio of single-family houses remains the largest of its kind in the UK and, over the fourth quarter, a further 88 new rental homes were successfully added, with just 180 homes left to be delivered before the initial portfolio is completed. The latest tranche of completed homes has taken the total number of completed homes in the portfolio to 5,396 at 30 June 2024 (30 June 2023: 5,080), with 316 added over the financial year as a whole.
The estimated rental value ("ERV") of the 5,396 completed homes at 30 June 2024 was £65.1m per annum, an 18% increase on the same point last year (30 June 2023: 5,080 homes with an ERV of £55.0m per annum). A further 180 homes, with an ERV of £1.4m per annum, were contracted at 30 June 2024, and are at varying stages of the construction process. The majority of the remaining 180 homes are expected to be completed by the end of 2024.
Portfolio Performance
Portfolio performance remains excellent. Rent collection* for the period was 100% and total occupancy at the end of the fourth quarter was at 96%, with 5,181 of the 5,396 completed homes occupied. At this point, a further 81 homes were reserved for applicants who had passed referencing and paid rental deposits but not yet moved in. Including this cohort, occupancy at 30 June 2024 was 98%.
Total arrears net of bad debt provision at 30 June 2024 was £1.1m, which is low as a proportion of the enlarged portfolio (31 December 2023: £1.0m). Like-for-like rental growth on stabilised sites over the year ended 30 June 2024 increased by 11.7%, which is unchanged on the third quarter. Affordability (average rent as a proportion of gross household income) remained very strong at 23% and is significantly better than Home England's guidance of less than 35%.
*Rent collection is defined as rent collected in the period against rent invoiced in the same period.
Outlook
With 82% of its long-term debt fixed over an average term of 16 years, at an average weighted cost of 3.8%, the Company's costs are substantially fixed. As reported on 9 July 2024, new terms signed with the Company's Investment Adviser and Development Manager have also delivered an immediate cost saving of c.£0.46 million per annum (on a pro forma basis), as well as extended the Company's access to unlocking further attractive investment opportunities in the future. These factors together with the significant mismatch between rental demand and market supply, put the PRS REIT in a very strong market position, and the Board remains very confident about its prospects.
Dividend
An interim dividend of 1.0 pence per ordinary share in respect of the third quarter of the financial year was paid on 31 May 2024.
The Board expects to declare an interim dividend in respect of the fourth quarter of the financial year ended 30 June 2024 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 |
|
Jefferies International Limited Gaudi Le Roux, Tom Yeadon, Harry Randall, Ollie Nott
|
Tel: 020 7029 8000 |
|
G10 Capital Limited (alternative investment fund manager and part of IQ-EQ group) Maria Baldwin
|
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" or "the Company") and to provide shareholders with an attractive level of income together with the potential for capital and income growth. The Company is investing 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. With over 5,300 new rental 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 build-to-rent ("BTR") regeneration specialist, with offices in Edinburgh, Manchester and London. The Company's principal focus is on the delivery of large-scale housing schemes for the private rented sector and Sigma is the UK's leading provider of BTR homes for the single family sector. The Company also has extensive experience in the delivery of multi-family apartment schemes and 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 unrivalled property delivery and management platform, which has delivered or is in the process of delivering over 12,00 homes across the UK to date. The Company has a significant pipeline of development opportunities, which currently stands at over £3 billion in gross development cost. Sigma manages the letting of completed homes through its property platform, which includes 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).
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