PRS REIT has posted a sharp increase in net asset value (NAV) for the year to 30 June 2022, off the back of strong estimated rental growth across its residential portfolio.
The group’s NAV was up 30% year-on-year to £639m or 116.4p per share (2021: £490m or 99.0p per share). Like-for-like blended rental growth over the year was 5.1% on stabilised sites (where all units have been completed and either all or nearly all have been let). Re-lets to new tenants achieved around 10% rental growth.
The portfolio’s 4,856 homes had an estimated rental value (ERV) £49.4m per annum, up 27% on last year. Over the year, the company completed an additional 802 homes, and has a further 693 contracted homes in the pipeline with an ERV of £7.2m a year.
The portfolio has an occupancy rate of 98% and rent collection of 99%.
Adjusted earnings per share for the year was 3p, while the group paid dividends totalling 4p. A minimum dividend of 4p per share is targeted for full year 2023.
Gearing on the portfolio (measured as net debt vs. investment value) was 31%, with 62.5% of the existing £400m of investment debt fixed at an average rate of 2.9%.
The portfolio total has been revised down by 100 homes to 5,600 with ERV of £57.5m per annum (previously 5,700 homes, with ERV of £55.0m), due to price inflation on new sites and higher debt costs. The company said the portfolio would reach 5,000 homes around the end of 2022.
The macro-economic environment – especially rising interest rates – is increasing the numbers moving from buying homes to renting, the group said.
Steve Smith, chairman, commented: “The portfolio continues to perform very well. We have seen strong rental growth and anticipate increased occupier demand, particularly in a rising interest rate environment, which will make home ownership more unattainable for some. Affordability is more achievable for our customers. Our tenant base spends on average 25% of their income on rent, which is lower than last year’s figure of 29%.
“While there are current challenges, we are well positioned to weather the current volatility. More than 60% of our long-term investment debt is at favourable fixed rates for an average 17 years, and the portfolio gearing is low at 31%.
“The structural shortage of high-quality rental homes in the UK and rising demand against a backdrop of higher interest rates continue to demonstrate a need for our model of high-quality, professionally-managed single family rental homes.”
PRSR : PRS REIT reports sharp NAV uplift