PRSR Prs Reit (the) Plc

TIDMPRSR

RNS Number : 0166H

PRS REIT PLC (The)

25 July 2023

PRSR.L

The PRS REIT plc

("the PRS REIT" or "the Company")

Fourth Quarter Update

Strong Asset Performance

Including Rental Growth of 7.5%

The PRS REIT, the closed-ended real estate investment trust that invests in high-quality, new build, family homes in the private rented sector ("PRS"), is pleased to provide an update on activity for the fourth quarter of its financial year ended 30 June 2023.

Market fundamentals remain strong

The business model remains firmly supported by market fundamentals, most significantly, a rapidly expanding rental sector, population growth, changing household formation and grossly insufficient new housing volumes. Reflecting this and the general lack of supply of good quality rental homes, demand for the Company's homes - single-family rental housing - remains very high. The performance of the portfolio continues to be outstanding. Occupancy levels and rent collection are high, whilst arrears are low and, over the 12 months to 30 June 2023, rental growth was at 7.5% across the portfolio. The PRS REIT remains in a very strong market position, and the Board is confident about prospects, with affordability (being average rent as a proportion of gross household income) at 25% and the Company's costs substantially fixed following the recent debt refinancing.

Fourth quarter performance

 
                                            At         At         At 
                                        30 Jun     31 Mar     30 Jun 
                                          2023       2023       2022 
-----------------------------------  ---------  ---------  --------- 
 Number of completed homes               5,080      5,010      4,786 
 Estimated rental value ("ERV")       GBP55.0m   GBP52.7m   GBP47.8m 
  per annum 
-----------------------------------  ---------  ---------  --------- 
 Number of contracted homes                444        516        693 
 ERV per annum                         GBP3.8m    GBP5.2m    GBP4.4m 
 Completed and contracted sites             71         71         68 
 ERV of completed and contracted      GBP58.8m   GBP57.9m   GBP52.2m 
  sites 
-----------------------------------  ---------  ---------  --------- 
 Rent collected in period relative 
  to rent invoiced for the same 
  period                                   99%       101%       100% 
-----------------------------------  ---------  ---------  --------- 
 Like-for-like rental growth 
  on stabilised sites 
  in the preceding 12 months              7.5%       5.7%       5.1% 
-----------------------------------  ---------  ---------  --------- 
 

Delivery Progress

The Company's portfolio of single-family houses remains the largest of its kind in the UK and it continues to expand with 70 new rental homes added to the portfolio in the fourth quarter of the financial year. This has taken the total number of homes added during the financial year as a whole to 294 and the number of completed homes in the portfolio to 5,080 (30 June 2022: 4,786).

The estimated rental value ("ERV") of the 5,080 completed homes at 30 June 2023 was GBP55.0m per annum, a 15% increase on the same point last year (30 June 2022: 4,786 homes with an ERV of GBP47.8m per annum). A further 444 homes, with an ERV of GBP3.8m per annum, were contracted at 30 June 2023, and are at varying stages of the construction process.

Asset Performance

Asset performance remains very strong. Rent collection* for the period was 99% and total occupancy at the end of the quarter was at 97%, with 4,932 of the 5,080 completed homes occupied. A further 59 homes were reserved at the quarter end for applicants who had passed referencing and paid rental deposits. Total arrears at 30 June 2023 remained low at GBP0.6m (30 June 2022: GBP0.6m) . Like-for-like rental growth over the year has risen to 7.5% on stabilised sites, from 5.7% at the end of the third quarter. Affordability (average rent as a proportion of gross household income) remains very strong at 25%, which is significantly lower than Home England's guidance of less than 35%.

Demand for the PRS REIT's high quality, professionally managed rental homes remains strong. Homes are well-located and close to employment centres, good primary schools, local amenities and transport links, with these factors helping to drive demand. The Company's focus on providing a high level of customer service continues to receive favourable comment in tenant surveys.

*Rent collection is defined as rent collected in the period against rent invoiced in the same period.

Financial

As previously reported on 10 July 2023, the Company refinanced its GBP150m revolving credit facility, securing a GBP102m facility of fixed-rate debt for 15 years and a further GBP75m of floating-rate debt for two years, providing the Company with the flexibility to refinance the floating element in due course. An interest rate cap is in place on the floating rate debt.

As a result of the refinancing, approximately 82% of the Company's overall debt is covered by long-term facilities, with an average term of 16 years and an average blended interest rate of 3.8%. The average maturity of its overall debt has increased to 13.7 years at 30 June 2023 from 10.9 years at 31 December 2022. Assuming that the GBP75m floating rate facility is drawn down in full and using today's reference rate, the average blended interest rate on the Group's overall debt facilities would be 4.3%.

With rental demand strong and rising, and the build-to-rent sector still nascent, the Board believes that the encouraging fundamentals should be reflected in future asset valuations.

Dividend

An interim dividend of 1.0 pence per ordinary share in respect of the third quarter of the financial year was paid on 26 May 2023.

The Board expects to declare an interim dividend in respect of the fourth quarter of the financial year ended 30 June 2023 by early August.

For further information, please contact:

 
 The PRS REIT plc                           Tel: 020 3178 6378 
 Steve Smith, Non-executive Chairman         (c/o KTZ Communications) 
Sigma PRS Management Ltd                    Tel: 0333 999 9926 
 Graham Barnet, Mike McGill 
Singer Capital Markets                      Tel: 020 7496 3000 
 James Maxwell, Asha Chotai (Investment 
 Banking) 
 Alan Geeves, James Waterlow, Sam Greatrex 
 (Sales) 
Panmure Gordon (UK) Limited                 Tel: 020 7886 2500 
 Alex Collins (Investment Banking) 
 Tom Scrivens (Corporate Broking) 
G10 Capital Limited (part of IQ-EQ)         Tel: 0207 397 5450 
 Paul Cowland 
 
KTZ Communications                          Tel: 020 3178 6378 
 Katie Tzouliadis, Robert Morton 
 

NOTES TO EDITORS

About The PRS REIT plc

www.theprsreit.com

The PRS REIT plc is a closed-ended real estate investment trust established to invest in the Private Rented Sector ("PRS") and to provide shareholders with an attractive level of income together with the potential for capital and income growth. The Company has investment of over GBP1bn in a portfolio of high-quality homes for private rental across the regions, having raised a total of GBP0.56bn (gross) through its Initial Public Offering, on 31 May 2017 and subsequent fundraisings in February 2018 and September 2021. The UK Government's Homes England has supported the Company with direct investments. On 2 March 2021, the Company transferred its entire issued share capital to the premium listing segment of the Official List of the FCA and to the London Stock Exchange's premium segment of the Main Market. Now comprising over 5,000 build-to-rent homes, the Company believes its portfolio is the largest build-to-rent single-family rental portfolio in the UK.

LEI: 21380037Q91HU97WZX58

About Sigma Capital Group Limited (formerly Sigma Capital Group plc)

www.sigmacapital.co.uk

Sigma Capital Group Limited ("Sigma") is a PRS, 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. The Company 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.

Sigma has created an excellent property procurement and management platform, which sources sites and brings together construction resource to develop them, enabling Sigma to deliver an integrated solution to partners. As well as sourcing sites and managing all stages of the planning and development process, Sigma manages the rental of completed homes through its award-winning rental brand 'Simple Life'. The Company's subsidiary, Sigma PRS Management Ltd, is Investment Adviser to The PRS REIT plc.

About Sigma PRS Management Ltd

Sigma PRS Management Ltd is a wholly-owned subsidiary of Sigma Capital Group Limited and is Investment Adviser to The PRS REIT plc. It sources investments and operationally 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 AIFM is G10 Capital Limited. Sigma PRS Management Ltd is an appointed representative of G10 Capital Limited, which is authorised and regulated by the Financial Conduct Authority (FRN:648953).

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