First Quarter Update

RNS Number : 4794D

PRS REIT PLC (The)

10 October 2018

 

10 October 2018

PRSR.L

The PRS REIT plc

("Company" or "PRS REIT")

First Quarter Update

for Financial Year ended 30 June 2019

The 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 first three months of its new financial year to 30 June 2019.

KEY POINTS

Summary

•	As at 30 September 2018, c. £756m of funding has been either deployed or is committed* to deployment. This equates to c. 5,100 new rental homes when completed (30 June 2018: £685m and 4,600 homes)
	-	the estimated rental value ("ERV") of these homes is £47.1m p.a.
•	Completed homes increased to 595 at 30 September 2018 (30 June 2018: 405 completed homes)
•	Completed and contracted* development at 30 September 2018 amounted to c. £384m of gross development cost ("GDC") (30 June 2018: c.£248m)
•	Committed development at 30 September 2018 amounted to GDC of c. £372m (30 June 2018: £437m)

Rental Income

•	Annualised rental income at 30 September 2018 increased to c. £5.7m from 595 completed homes (30 June 2018: c. £3.6m from 405 completed homes)
•	ERV from both completed and contracted sites, (c. 2,530 new homes) at 30 September 2018 is c. £24.1m p.a.
•	ERV from committed development sites (c. 2,570 new homes) at 30 September 2018 is c. £23.0m p.a. when all the homes are fully built

Debt Finance

•	Discussions for a final tranche of an additional £200m of debt are underway, and are expected to be completed by the end of the first quarter of 2019

Dividend

•	The quarterly dividend distribution is expected to be declared at the end of October 2018

Outlook

•	Full commitment of c. £900m of funding resource is on track for early 2019
•	Over and above this, a further c. £689m pipeline of qualified development opportunities has been identified

*see Definitions

QUARTERLY REPORT FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2018

Introduction

The PRS REIT plc continues to make good progress towards its target of deploying c. £900m (once fully geared) of resource into the Private Rented Sector ("PRS") to create a substantial portfolio of high quality, newly-built rental homes, catering mainly for families. 

Some 16 months on from launch, as at 30 September 2018, the Company has c. £756m of funding deployed or committed to deployment. This equates to approximately 5,100 new rental homes when completed and an estimated rental value ("ERV") of £47.1m p.a.  This represents very encouraging progress. 

The number of completed PRS homes at 30 September 2018 stood at 595, generating an annualised rental income of £5.7m (30 June 2018: c. £3.6m from 405 homes). These homes, which are a mix of two, three and four-bedroom properties, are located across 14 sites in the North West, East Midlands, West Midlands, South Yorkshire and the South East.

Completed and contracted development at 30 September 2018 amounted to c. £384m of gross development cost ("GDC") with committed development amounting to c. £372m of GDC.

The ERV of completed and contracted sites at 30 September 2018 was c. £24.1m, from a combined c. 2,530 new homes (when fully built).  The ERV from committed development at 30 September 2018 was £23.0m p.a, equating to approximately 2,570 PRS homes when all the sites are built-out.

The Company's Investment Advisor, Sigma PRS Management Limited ("Sigma PRS"), a subsidiary of Sigma Capital Group ("Sigma"), continues to source sites that meet the Company's investment criteria, and to qualify, manage and oversee all assets. 

Development and Acquisition Activity

The PRS REIT's development activities progressed well during the first quarter of the new financial year. By the end of September, approximately 2,100 homes, with a GDC of £306m and an ERV of £19.3m p.a., were under construction across multiple sites in the Company's target cities and conurbations.

During the period, construction commenced on four new development sites, which when completed will deliver c. 710 new homes with an ERV of c. £6.4m p.a., for a GDC of c. £100m.

The Company has signed forward contracts to purchase a development site in Harlow, Essex, which has planning consent for c. 94 homes with a GDC of c. £27.3m.  

Acquisitions

In the period, the PRS REIT purchased a newly-completed and let PRS site in Smethwick, near Birmingham, from Sigma for £10.3m. Comprising 63 homes, the annualised rental income is c. £0.6m p.a. In addition, the Company signed forward purchase agreements with Sigma to acquire two PRS sites, which are due for completion in the second half of 2019. These two sites, located respectively in the West Midlands and Essex, have a combined ERV of £1.1m p.a..   

Debt Facilities

Sigma PRS is in discussions with the Company's banking partners regarding an additional £200m of debt to support the growth of the PRS REIT. Once agreed, this will bring the total funding capacity of the PRS REIT to c. £900m.

Dividend

The Company expects to declare a dividend for the first quarter of the new financial year, which covers the three months to 30 September, at the end of October 2018. 

Summary

As previously highlighted, the Company's aim is to deliver family homes near key centres of employment, with convenient access to the transport infrastructure, and close to good primary schools. There is continued strong demand for the Company's homes, and forecast demand continues to outstrip supply, particularly for family homes, the PRS REIT's major focus. 

Our pipeline of development opportunity is extremely healthy and the Company is on track to commit the balance of its c. £900m of funding in early 2019. Over and above this, Sigma PRS has identified a further £689m pipeline of qualified development opportunities, which is contractually controlled in Framework or Collaboration Agreements with partners, over which the Company has exclusive access. The Company therefore remains well-positioned for continued progress.

*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.
Pipeline	refers to sites that have been identified as being suitable for appraisal. These sites are typically sourced from Sigma's PRS Platform, and are typically under a Framework Agreement or Collaboration Agreement with a construction partner.

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 Steve Smith, Non-executive Chairman	Tel: [phone] (c/o KTZ Communications)
Sigma PRS Management Limited Graham Barnet Graeme Hogg	Tel: [phone]
N+1 Singer  James Maxwell, James Moat, Ben Farrow	Tel: [phone]
Stifel Mark Young, Neil Winward, Gaudi Le Roux	Tel: [phone]
G10 Capital Limited (AIFM) Gerhard Grueter, Anthony Wood, Gaia Udage	Tel: [phone]
KTZ Communications Katie Tzouliadis, Emma Pearson	Tel: [phone]

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 £500m (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 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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