Quarterly Update

RNS Number : 1889K

PRS REIT PLC (The)

09 April 2018

 

9 April 2018

PRSR.L

The PRS REIT plc

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

Quarterly Update to 31 March 2018

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 three months to 31 March 2018.

KEY POINTS

Continuing strong momentum

Funding

●	A second equity fundraising, in February 2018, secured a further £250m (gross)
●	Credit approved terms secured for £200m debt, from Scottish Widows and Lloyds Banking Group

Development Activity

●	Construction commenced on nine new sites in Q3, with combined Gross Development Cost ("GDC") of c. £97m
	-	will add a further 676 new rental homes, with an Estimated Rental Value ("ERV") of c. £6m
●	An additional four development sites were secured in Q3 for a total of c.£59m
	-	will deliver approximately 386 new homes with an ERV of c. £3.7m, once fully let
●	Total development activity underway, at the end of Q3, amounted to 1,383 new homes
●	Annualised rental income at the end of Q3 increased to c. £2.4m (31 December 2017: £2.1m) - from 276 properties
●	Galliford Try Partnerships added as a construction partner by Investment Adviser, Sigma PRS Management Ltd ("Sigma PRS")
	-	first site acquisition concluded
●	Over £600m GDC of sites have been identified at the end of Q3 through Sigma PRS - an increase of £60m since the last period

Dividend

●	Details regarding the payment of the Company's second dividend for the three months to 31 March 2018, will be published at the end of April

Steve Smith, Chairman of The PRS REIT plc, commented:

"We are pleased to report that the PRS REIT continues to show strong momentum. During Q3, we significantly increased the Company's capital resources, raising a further £250m through a second equity placing and securing credit approved terms for £200m of debt facilities. These new funds will assist us in the continuing expansion of our portfolio of newly-built rental homes. 

"Through our Investment Adviser, Sigma PRS, and its unique PRS delivery platform, we commenced construction on a further 676 new rental homes in the period. We estimate that our annualised rental income stream is approximately £2.4m at the end of Q3, up from £2.1m at the end of Q2.

"We look forward to reporting on continuing progress and will publish details on the payment of the Company's second dividend, for the period to 31 March 2018, at the end of April."

Quarterly Report for the Three Months ended 31 March 2018

The PRS REIT continued to make strong progress and the level of capital deployed and committed during the third quarter of the financial year was in line with management expectations.

As previously reported, on 20 February 2018, the Company raised a further £250m of gross proceeds through the issuance of 243,902,440 ordinary shares at 102.5 pence per ordinary share, under its Placing Programme. This placing was supported by both new and existing investors, including Homes England, which has invested a total of £30m towards our objective of a creating substantial portfolio of high quality, newly-built rental homes for families across England.

In the period, we also agreed credit approved terms for £200m of debt facilities, from Scottish Widows and Lloyds Banking Group, and secured or acquired a further four development sites, for a total of approximately £59m, across our target geographies. These will deliver approximately 386 high quality, new homes for rent, which, when completed and fully let, will generate an ERV of c. £3.7m per annum.

As at 31 March 2018, we have completed and let 276 properties, which will generate an annualised rental income of c. £2.4m (31 December 2017: £2.1m).  Sigma Capital Group plc ("Sigma") continues to build homes in the Initial Acquisition Portfolio, as identified in the Prospectus dated 4 May 2017, and, at 31 March 2018, had completed 73 homes, which are contracted to be sold to the Company as the whole sites complete. In addition, at this date, a total of 1,383 new homes were under construction, with a GDC of just under £200m. As we have highlighted previously, our aim is to deliver family homes near key centres of employment, with convenient access to the transport infrastructure, and close to good primary schools.

The PRS REIT's Investment Adviser, Sigma PRS, which is wholly owned by Sigma, continues to assess further opportunities for the Company and, as at the end of the third quarter, has identified an additional £600m+ GDC of sites across our target geographies since the previous update, taking the total under contract under Construction Framework Agreements to over £600m GDC.

Sigma continues to extend its relationships to support the PRS REIT's ongoing growth and reached an agreement with Galliford Try Partnerships, a subsidiary of Galliford Try plc, the regeneration and construction company, for the acquisition of a first site. The site will deliver 40 new family homes to rent at a GDC of £6.1m and an ERV of c. £385,000 per annum. Construction on the site has already started and the first homes are expected to be completed in autumn 2018. Sigma is exploring further suitable opportunities to extend this relationship, particularly in the West and South West of England.  

As previously reported, the Company paid a maiden dividend of 1.5p per ordinary share for the period to 31 December 2017 in March 2018. Details regarding the payment of the Company's second dividend will be published at the end of April. 

For further information, please contact:

The PRS REIT plc Steve Smith, Non-executive Chairman	Tel: [phone]
Sigma PRS Management Limited Graham Barnet Graeme Hogg	Tel: [phone]
N+1 Singer  James Maxwell, Liz Yong, James Hopton (Corporate Finance) Michael Taylor (Corporate Broking)	Tel: [phone]
Stifel Mark Young, Neil Winward, Tunga Chigovanyika	Tel: [phone]
G10 Capital Limited (AIFM) Gerhard Grueter, Anthony Wood, Gaia Udage	Tel: [phone]
KTZ Communications Katie Tzouliadis, Irene Bermont-Penn, 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.  In its Initial Public Offering, on 31 May 2017, the Company raised £250m gross equity capital and, on 20 February 2018, it raised a further £250m (gross) through an additional Placing. Both fundraisings were supported by the UK Government's Homes England with direct investments totaling c. £30m.

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 the Company's Investment Adviser. It sources investments and manages the assets of The PRS REIT plc and advises the Alternative Investment Fund Manager ("AIFM") and the PRS REIT on a day-to-day basis in accordance with the PRS REIT's Investment Policy. The Investment Adviser is an appointed representative (reference number: 776293) of the AIFM.

 

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