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PRS REIT cuts long-term dividend forecast

PRS REIT cuts long-term dividend forecast

Steve Smith, chairman of the PRS REIT, said: “The PRS REIT made pleasing progress in the first half, and the growth in the number of completed rental homes is showing through in these financial results. We closed the half year with about 3,575 homes either built or under construction, with that number now at around 3,951.

Looking over the remainder of the financial year, we anticipate short term headwinds that are likely to cause some delays to current construction schedules. We have therefore re-estimated our stabilised covered dividend target taking this into account, and now estimate it to be around 5.5p per share from 6.0p previously. Our dividend targets for the current financial year and each year thereafter until stabilisation is 5.0p per share. Outside these delays, the model is working well, with delivery and operational costs in line with expectations, continuing high demand for our homes, and good visibility on the deployment of the remaining tranches of our gross capital.

Housing for the family rental market remains critically undersupplied and the opportunity for the company to establish itself as a major provider of high quality, professionally managed houses in the UK remains substantial. Consequently, the board continues to view long term prospects with confidence.”

[QD comment: Planning hold-ups are delaying construction on a number of sites. This pushes out the date when PRS REIT’s income covers its dividend payments and this eats away at the company’s capital, depressing its dividend paying ability in the long-term. In this six-month period, the company made a revenue loss of about 0.1p per share, which was offset by a capital profit of about 1.6p, making a 1.5p return for the period overall. Dividends totalled 3.5p however and so the NAV fell by 2p. The company says that the revised lower dividend will be fully covered by June 2022. This is a shame because it seems as though otherwise everything is going pretty well for the company.]

PRSR : PRS REIT cuts long-term dividend forecast

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