PRS REIT has reported a 3.0% uplift in EPRA net tangible assets (NTA) to 120.1p per share in full year results to 30 June 2023.
The private rented sector is in the sweet spot with demand and supply dynamics significantly boosted by the housing and cost of living crisis. Strong estimated rental value (ERV) growth was behind the NAV uplift, with rental growth within the portfolio up 7% over the year on stabilised sites (where all units were completed and either all, or nearly all, had been let at the end of the comparative period).
Yields softened to 4.47% from 4.13%, but the impact on values was more than offset by the increase in ERV.
Re-lets to new tenants achieved 12% rental growth (2022: 10%). At 30 June 2023, ERV (£55.0m) was estimated to be £5.1m higher than passing rent (2022: £2.7m higher), another indicator of the strong rental market.
The group’s portfolio grew by 294 homes over the year to 5,080 completed homes. A further 444 homes with an ERV of £3.8m were under construction at 30 June 2023. As at 30 September 2023 the ERV of the completed and contracted homes was £60.7m.
Rent collection was 99%, with occupancy at 97%. Gross rent arrears was £1.0m at 30 June 2023 (30 June 2022: £0.6m).
Affordability (the average rent as a proportion of gross household income) was very strong at 22% (2022: 25%).
Loan to value (LTV) on the portfolio was 37% (2022: 34%), with 82% of the current £427m of debt fixed at an average interest rate of 3.8%.
Adjusted earnings per share was 3.5p (2022: 3.4p), with total dividends of 4.0p per share declared (2022: 4.0p).
The target dividend of 4.0p per share for this year is expected to be covered by earnings on a run-rate basis the company said.
Steve Smith, chairman, commented:
“The PRS REIT remains a leader in the single-family rental sector. Almost 300 new rental family homes were added to the portfolio during the financial year, with a further 49 added over the first quarter of the new financial year. This has taken the number of completed homes in the portfolio at the end of September to 5,129.
“Our homes continue to rent extremely strongly. Our developments are attractive places in which to live, and are well-located. They are affordable – tenants’ average spend on rent is currently 22% of gross household income, and we pay significant attention to customer service.
“We are well-advanced in the delivery of an initial portfolio of around 5,500 homes, providing over £1 billion of assets with an anticipated rental income stream of over £60 million a year.
“Our model is highly resilient. Following our debt refinancing in July, more than 80% of our long-term investment debt is at favourable fixed rates for an average 16 years, and the portfolio gearing is low at 37%.
“Prospects are very positive. The structural shortage of high-quality rental homes in the UK and rising demand place the Company in a strong position. Our high-quality, professionally-managed, single-family rental homes are helping to fix an urgent social problem.”
PRSR : PRS REIT in the sweet spot
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