Register Log-in Investor Type

News

PRS REIT updates on progress

PRS REIT updates on progress

PRS REIT updates on progress – PRS REIT has updated the market on the final three months of its financial year ended 30 June 2019, and provided an overview of progress over its first two years.

Since launch on 31 May 2017, 1,173 new homes have been delivered, generating a rental income stream of GBP10.7m a year. 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 GBP760 per calendar month, and when a vacancy has arisen, the re-letting period has averaged 6 days.

At the end of June 2019, 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 annual rental income will rise to approximately GBP41m (on 4,369 homes). The new homes coming through will further diversify the geographic spread of the 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%.

Development sites acquired

During the last quarter of its financial year, the company purchased five development sites (one through a forward-purchase agreement with Sigma Capital Group plc), which will add a further 437 new homes once fully developed for a total gross development cost of GBP63.7m. The ERV of these new homes is GBP3.9m 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. PRS REIT expects to expand its presence in this region, and a further site is currently under review.

Bought completed sites too

The company also acquired a newly-completed PRS site in Telford, Shropshire, from Sigma for a total consideration of GBP12.7m, following an independent valuation. The site comprises 78 homes, with an expected rental income of GBP0.7m per annum.

Ramping up construction

The 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

A further GBP200m of debt facilities was agreed in May 2019 on attractive terms with Scottish Widows and Lloyds Bank, bringing the total gross balance of deployable funds to GBP900m. The 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 original target at IPO. Details of the next payment 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 2022.

PRS REIT expects to report on audited full year results in late September.

PRSR : PRS REIT updates on progress

Leave a Reply

Your email address will not be published. Required fields are marked *

Please review our cookie, privacy & data protection and terms and conditions policies and, if you accept, please select your place of residence and whether you are a private or professional investor.

You live in…

You are a…