TIDMPRSR
RNS Number : 4282E
PRS REIT PLC (The)
04 July 2019
4 July 2019
PRSR.L
The PRS REIT plc
("Company" or "PRS REIT")
Fourth Quarter Update
PRS REIT, the closed-ended real estate investment trust
established to invest in new build homes in the private rented
sector ("PRS"), is pleased to provide an update for the final three
months of the financial year ended 30 June 2019, and an overview of
the Company's progress over its first two years since its
inception.
The First Two Years
Since the launch of PRS REIT on 31 May 2017 up to 30 June 2019,
1,173 new homes have been delivered, generating a rental income
stream of GBP10.7m per annum. 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 close of the Company's financial
year, 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 Company's 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 Company's 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%.
Progress over the Fourth Quarter
The table below summarises the Company's progress over the
fourth quarter ended 30 June 2019.
At 30 June At 31 March
2019 2019
Number of completed PRS units 1,173 944
Estimated rental value ("ERV") of
completed homes per annum GBP10.7m GBP8.6m
------------------------------------- ----------- ------------
Number of completed and contracted*
sites 54 49
Number of completed and contracted*
units 4,369 3,951
Gross development cost ("GDC") of
completed and contracted* sites GBP661m GBP603m
ERV of completed and contracted*
sites per annum GBP41m GBP37m
------------------------------------- ----------- ------------
Development Sites Acquired
During the last quarter of the financial year, the Company
purchased five development sites (one through a forward-purchase
agreement with Sigma Capital Group plc ("Sigma")), which will add a
further 437 new homes once fully developed for a total GDC 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. The Company expects to expand its presence in this
region, and a further site is currently under review.
Completed Sites Acquired
In the period, 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.
Construction Resource
The Company's 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 Facilities
As previously announced, a further GBP200m of debt facilities
was agreed in May 2019 on attractive terms with Scottish Widows and
Lloyds Bank, bringing the Company's total gross balance of
deployable funds to GBP900m. The Company's 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 Company's original target at IPO. Details regarding the
payment of the Company's quarterly dividend 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(1) .
Summary
The Company has progressed in line with management expectations
during the fourth quarter of the financial year. There are 37 sites
are currently under construction across England, and the volume of
completions continues to grow. Completed assets are performing well
and market demand for the Company's homes remains strong.
The PRS REIT is well-positioned at the start of the new
financial year, with increased construction resource, identified
development opportunities, including in new geographic regions, and
stable, well-controlled costs.
The Company expects to report on audited full year results in
late September.
(1.) This is a target only and there can be no assurance that
the target can or will be met and should not be taken as an
indication of the Company's expected or actual future results.
Accordingly, potential investors should not place any reliance on
this target in deciding whether or not to invest in the Company or
assume that the Company will make any distributions at all and
should decide for themselves whether or not the target dividend
yield is reasonable or achievable.
*DEFINITIONS
Contracted refers to sites under construction (under a design &
build contract), which have been purchased by the PRS
REIT or the PRS REIT's Investment Adviser (forward sold
to the PRS REIT).
Committed refers to development sites that have been approved
or are under formal appraisal by the Investment Adviser,
and where planning consent is being sought, and/or are
in the process of being acquired.
This announcement is released by The PRS REIT plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR.
For further information, please contact:
The PRS REIT plc Tel: 020 3178 6378 (c/o KTZ Communications)
Steve Smith, Non-executive Chairman
Sigma PRS Management Limited Tel: 0333 999 9926
Graham Barnet
N+1 Singer Tel: 020 7496 3000
James Maxwell, James Moat, Ben Farrow
Stifel Tel: 020 7710 7600
Mark Young, Neil Winward, Gaudi Le Roux
G10 Capital Limited (AIFM) Tel: 020 3696 1302
Gerhard Grueter, Anthony Wood, Gaia Udage
KTZ Communications Tel: 020 3178 6378
Katie Tzouliadis, Dan Mahoney
NOTES TO EDITORS
About The PRS REIT plc
(www.theprsreit.com)
The PRS REIT is a closed-ended real estate investment trust
established to invest in the Private Rented Sector and to provide
shareholders with an attractive level of income together with the
potential for capital and income growth. It has raised a total of
GBP500m (gross) through its Initial Public Offering, on 31 May
2017, and a subsequent placing in February 2018. Both fundraisings
were supported by the UK Government's Homes England with direct
investments.
LEI: 21380037Q91HU97WZX58
About Sigma Capital Group plc
(www.sigmacapital.co.uk)
Sigma Capital Group plc ("Sigma") is a private rented sector,
residential development, and urban regeneration specialist, with
offices in Edinburgh, Manchester and London. Sigma's principal
focus is on the delivery of large scale housing schemes for the
private rented sector. It has a well-established track record in
assisting with property-related regeneration projects in the public
sector, acting as a bridge between the public and private sectors.
Its subsidiary, Sigma PRS Management Limited, is Investment Adviser
to The PRS REIT plc.
About Sigma PRS Management Limited
Sigma PRS Management Limited is a wholly-owned subsidiary of
AIM-quoted Sigma Capital Group plc and is Investment Adviser to The
PRS REIT plc. It sources investments and manages the assets of The
PRS REIT plc and advises the Alternative Investment Fund Manager
("AIFM") and The PRS REIT plc on a day-to-day basis in accordance
with The PRS REIT plc's Investment Policy. The Investment Adviser
is an appointed representative (reference number: 776293) of the
AIFM.
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END
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