Publication of Circular & Notice of GM

RNS Number : 6074N

PRS REIT PLC (The)

01 February 2021

 

PRSR.L

The PRS REIT plc

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

Publication of Circular and Notice of General Meeting in relation to proposed amendment to the Company's investment policy

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 announce that it will today post to its shareholders a circular (the "Circular") in relation to the Company seeking approval from shareholders to amend its investment policy (the "Proposal").

As previously announced by the Company on 11 January 2021, the Board confirmed its intention to apply to the Financial Conduct Authority ("FCA") for the Company's issued share capital to be admitted to the Premium Segment in early 2021 (the "Migration"). The Migration is expected to, inter alia, and as further set out in the Circular, broaden the Company's share register and facilitate its eligibility for inclusion in FTSE's EPRA and UK Index Series.

Following discussions with the FCA in connection with the Migration, it is proposed that the Company amend its investment policy by limiting its gross committed (but unspent) construction costs to 25% of the Company's gross asset value at the time of commitment. The Company considers this to be a suitable test to manage the levels of construction risk within the Company and in line with its objective of spreading investment risk under Chapter 15 of the FCA's Listing Rules. As at 31 December 2020, the gross committed (but unspent) construction cost was equal to 11% of the Company's gross assets. 

Furthermore, it is proposed to reduce the limit on investment in a single development site or investment site from 20% to 10% of the Company's gross assets.

The Company is satisfied that the Proposal will not limit its business plan or impede its delivery of the investment objectives of the Company and its stated strategy.

N+1 Singer is acting as the Company's sponsor in connection with the Migration.

Implementation of the Proposal requires the approval of shareholders and is therefore conditional on the passing of an ordinary resolution to approve the change in investment policy that will be proposed at a general meeting to be held at 10 a.m. on 23 February 2021, notice of which is set out in the Circular.

The Circular, including a Notice of General Meeting and form of proxy, setting out details of the Proposal will be posted to shareholders today.

The Circular, Notice of General Meeting, together with the form of proxy, will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM   and will also be available to download from the Company's website at https://www.theprsreit.com/. Each of the documents may also be obtained from the Company Secretary.

 

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, Mike McGill	Tel: [phone]
N+1 Singer  James Maxwell, James Moat, Sebastian Burke	Tel: [phone]
Panmure Gordon (UK) Limited Chloe Ponsonby (Corporate Broking), Alex Collins (Corporate Finance)	Tel: [phone]
G10 Capital Limited (part of the IQEQ Group as AIFM) Paul Turner	Tel: [phone]
KTZ Communications Katie Tzouliadis, Dan Mahoney	Tel: [phone]

Appendix

If approved by shareholders at the General Meeting, the Company's investment policy will be restated, as will the means by which the Company will achieve its investment objective, as follows with effect from the end of the General Meeting:

Investment objective

The Company seeks to provide investors with an attractive level of income together with the prospect of income and capital growth through investment in a portfolio of newly constructed residential private rented sector sites of multiple units ("PRS units") comprising mainly family homes, to be let on Assured Shorthold Tenancies (as defined in the Housing Act 1988) to qualifying tenants.

Investment policy

The Company's investment policy is to pursue its investment objective by investing in PRS units in or near towns and cities in the UK predominantly the Midlands and the North.

The Company is creating a portfolio of homes targeted at the family market, the largest cohort within the private rented sector, and therefore is investing predominantly in housing with the addition of some low rise apartments to provide both choice and wider market appeal, in the major conurbations and larger employment centres in the UK, predominantly England, outside London. The locations are chosen for their accessibility, in that they are situated on the main road and rail links, with access to good primary schooling and economic activity, promoting long term employment prospects and thereby a strong need for housing. The new build nature of the assets, alongside standardised specifications, means that they benefit from a 10-year building warranty, typically from the NHBC (National House Building Council) as well as manufacturers warranties, providing for a low level of capital expenditure allied to a predictable and low cost maintenance regime.

The sourcing of assets is undertaken by the Investment Adviser ("Sigma PRS") and is done so by two principal methods. In the first instance, development sites ('PRS development sites') are selected and assessed, detailed planning permission achieved and a fixed price design and build contract signed with one of the Sigma PRS's construction partners and the delivery process is managed on behalf of the Company by Sigma PRS. As the assets are acquired with detailed planning consent and fixed price design and build contracts, the Company is exposed to minimal development risk. The construction risk is mitigated with standard design and build contracts containing liquidated damages clauses for non-performance, financial retentions for one year post completion and a parent company guarantee ensuring the satisfactory performance by the contractor and providing an indemnity for losses incurred. In accordance with the right of first refusal agreement with Sigma PRS, the Company intends to source not less than two thirds of its assets in this way.

To expedite the growth of the Company, the balance of assets are acquired by entering into forward purchase agreements with the Sigma Capital Group plc ("Sigma"), the ultimate holding company of Sigma PRS, which are acquired as completed and stabilised developments using the same construction partners and supply chain, thereby ensuring homogeneity of the housing stock. A variation on this method is the purchase of completed and stabilised developments from third parties using approved construction partners.

Investment Restrictions

The Group is aiming to create a high quality, diversified portfolio and the following investment restrictions are observed:

· the Group is only investing in private rented residential houses and apartments located in the UK (predominantly in England);

· the Group may invest in assets that require development by means of the Group's forward funding model, which when completed would fall within the Company's investment policy, provided that the Group will not undertake development without planning consent in place and that the gross committed (but unspent) construction costs to the Group of all such forward funded development does not exceed 25 per cent. of the aggregate gross value of total assets of the Group at the time of commitment, as determined in accordance with the accounting principles adopted by the Group from time to time (the 'gross asset value').  Any forward funded development will only be for investment purposes.

· In order to further manage risk in the portfolio, no investment in the Group in any completed PRS site or PRS development site will exceed 10 percent of the aggregate value of the gross asset value of the Group at the time of commitment); and

· the Group is not investing in other alternative investment funds or closed ended investment companies

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 and to provide shareholders with an attractive level of income together with the potential for capital and income growth. The Company is investing £0.9bn in a portfolio of high quality homes for private rental across the regions, having 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 ("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 unrivalled property 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 also manages the rental of completed homes through its award winning rental brand 'Simple Life'. The Company's 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 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 Investment Manager 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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