Debt Refinancing and Trading Update

PRS REIT PLC (The)

10 July 2023

 

PRSR.L

The PRS REIT plc

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

Debt Refinancing and Trading Update

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 has completed the refinancing of its £150 million revolving credit facility ("RCF") provided by The Royal Bank of Scotland plc ("RBS") and Lloyds Banking Group plc. The RCF had been originally due to mature in February 2023 and was extended on substantially the same terms to mid-July 2023 (with an option to extend until October 2023). The Board views the refinancing as having been completed on attractive commercial terms in light of the current interest rate environment. 

The Investment Manager has secured a £102 million facility of fixed-rate debt for 15 years, together with a further £75 million of floating-rate debt agreed for two years, providing the Company with the flexibility to refinance this element over that period. An interest rate cap will be put in place on the floating rate debt to hedge against downside risk on further interest rate movements. These new facilities have been established with Legal and General Investment Management and RBS respectively. 

The Investment Manager will immediately deploy almost two-thirds (£115 million) of the total debt, specifically the entire £102 million fixed-rate facility and £13 million of the floating-rate facility, to fund already completed and stabilised sites. The balance of £62 million of floating-rate debt is expected to be drawn down to fund sites completing and stabilising before calendar year 2024.   

The refinancing and a near to completed construction programme, alongside excellent fundamental performance in letting, affordability, occupational levels and rental growth have substantially reduced the risks facing the portfolio, reinforcing its strong position as a market leader in the build-to-rent sector.

Resultant total debt facilities

·      The PRS REIT now has total fixed long-term debt facilities of £352 million, with an average blended interest rate of 3.8%.  This compares favourably with the average net initial valuation yield of 4.3% as at 31 December 2022.    

·      Approximately 82% of the Company's overall debt is now covered by long-term facilities, which have an average term of 16 years. This compared to 63% of overall debt previously covered by long term facilities, with an average term of 17 years.

·      The two new facilities significantly lengthen the maturity of the Company's overall debt facilities.

o  The average term for all debt has increased to 13.7 years at 30 June 2023, from 10.9 years at 31 December 2022.

Portfolio performance

The Company's portfolio of completed rental homes continues to perform well, in line with management expectations. Performance data as at 31 May 2023, shows:

·      occupancy at 97%, and at 98% including applicants who had passed referencing and paid rental deposits;

·      rent collection* at 100% for the 11 months ended 31 May 2023;

·      total arrears modest at c.£0.6m; and

·      like-for-like rental growth over the 12 months ended 31 May 2023 averaged 6.5%, an increase on rental growth of 5.7% over the 12 months ended 31 March 2023. 

Affordability remains strong, with average rent as a proportion of household income at c.25%.  This is comfortably within Home England's 35% target.

The Company expects to provide an update on trading in the fourth quarter of its financial year in late July.

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

For further information, please contact:

The PRS REIT plc Steve Smith, Non-executive Chairman	Tel: [phone] (c/o KTZ Communications)
Sigma PRS Management Ltd Graham Barnet, Mike McGill	Tel: [phone]
Singer Capital Markets James Maxwell, Asha Chotai (Investment Banking) Alan Geeves, James Waterlow, Sam Greatrex (Sales)	Tel: [phone]
Panmure Gordon (UK) Limited Alex Collins (Investment Banking) Tom Scrivens (Corporate Broking)	Tel: [phone]
G10 Capital Limited (part of IQ-EQ) Paul Cowland	Tel: [phone]
KTZ Communications Katie Tzouliadis, Robert Morton	Tel: [phone]

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 £1bn in a portfolio of high-quality homes for private rental across the regions, having raised a total of £0.56bn (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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