Full-year results from PRS REIT (PRSR) underline the scale of the bargain pension asset manager Waypoint is getting with its £646.2m acquisition of the family home rental fund.
In the year to 30 June, net asset value per share rose 7.4% to 143p from 133.2p, although the rate of growth slowed to 2.3% in the second half from 139.6p NAV per share of at 31 December.
A strategic review launched after activist investors Robert Naylor and Chris Mills joined the board last year only generated one agreed bid from Waypoint, which was finalised last month after private equity giant KKR withdrew.
However, the auction did no harm to the business with adjusted earnings per share advancing 19% to 4.4p, driven by a 13% increase in rental income and cost control. These covered 4.3p dividends which had risen from 4p in the previous year.
After costs and including a 1.1p per share dividend next month, total net proceeds from the as yet uncompleted deal should be 116.4p per share to shareholders, an 18.6% discount to the new valuation. When the sale was announced in September it represented 17% less than the 31 December NAV. At just under 112p, PRSR shares have risen 13% in the past year.
Our view
Richard Williams, property analyst at QuotedData, said: “These results confirm my feeling that substantial value is being left on the table in this proposed deal. The company has achieved annual rental uplifts in the double digits once again, and its NAV has grown to £785m. In comparison, shareholders will receive just £633.2m if the deal goes through, once expenses and tax are accounted for. Shareholders are yet to vote, but without a better offer on the table and the alternative a drawn-out piece-meal sell-off of sites – my feeling is that it will pass despite the valuation gap.”
