TIDMPRSR
RNS Number : 4330M
PRS REIT PLC (The)
08 January 2019
8 January 2019
PRSR.L
The PRS REIT plc
("Company" or "PRS REIT")
Second Quarter Update
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 second
quarter (three months to 31 December 2018) of its financial year to
30 June 2019.
KEY POINTS
Initial target of committing GBP900m of funding to
new rental homes has now been achieved
Completed and Contracted Development stood at approx. GBP530m at
31 December 2018
Deployment of Funding
-- Initial target of committing GBP900m of funding to new private
rental homes was achieved in Q2:
- equates to about 5,600 new rental homes when completed
(30 Sept 2018: GBP756m and 5,100 homes)
- estimated rental value ("ERV") of these homes is GBP57.0m
p.a. (30 Sept 2018: GBP47.1m p.a.)
-- Completed and Contracted* development at 31 Dec 2018 totalled
approx. GBP530m in gross development cost ("GDC") (30 Sept
2018: approx.GBP384m) and equates to about 3,575 new homes
when fully built
-- Number of homes completed as at 31 Dec 2018 increased to
775 (30 Sept 2018: 595 completed homes)
-- Committed development at 31 Dec 2018 totalled approx. GBP406m
in GDC (30 Sept 2018: GBP372m) and equates to about 2,540
homes when fully built
Rental Income
-- Annualised rental income at 31 Dec 2018 increased to approx.
GBP7.0m from 775 completed homes (30 Sept 2018: approx.
GBP5.7m from 595 completed homes)
-- ERV from completed and Contracted sites at 31 Dec 2018
is estimated at GBP33.2m p.a. (from approx. 3,575 new homes)
-- ERV from Committed development sites at 31 Dec 2018 is
estimated at GBP23.9m p.a. (from approx. 2,543 new homes)
Debt Finance
-- Discussions for an additional GBP200m of debt remain on
track to be completed by the end of March 2019
Dividend
-- The quarterly dividend distribution is expected to be declared
at the end of January 2019
Outlook
-- The Pipeline of additional development opportunity now
stands at approx. GBP1bn
*see Definitions
*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.
QUARTERLY REPORT FOR THE THREE MONTHSED 31 DECEMBER 2018
Introduction
The PRS REIT made very strong progress in the second quarter of
the financial year, most notably achieving its target of committing
over GBP900m of funding to suitable sites for Private Rented Sector
development. As previously reported, the Company is in the process
of creating a substantial portfolio of high quality, new rental
homes across the UK, catering mainly to the family market.
Locations are carefully chosen, with the Company delivering homes
near key centres of employment, with convenient access to the
transport infrastructure, and close to good primary schools.
Deployment of Funding
During the period, 15 sites were contracted with construction
starting on 12 new development sites. When all 15 sites are
completed, this will add approximately 1,310 new homes with an
estimated rental value ("ERV") of about GBP12.5m p.a., for a gross
development cost ("GDC") of approximately GBP205m.
By 31 December 2018, over GBP900m of funding had been committed
to deployment (30 September 2018: GBP756m), with almost 60% or
approximately GBP530m either Contracted or completed at that date
(30 September 2018: GBP384m).
The GBP900m will equate to about 5,600 new rental homes when all
the sites have been completed (30 September 2018: 5,100) and an
estimated rental income stream of GBP57.0m p.a. (30 September 2018:
GBP47.1m). This represents significant progress over the last
quarter.
The GBP530m of completed and Contracted development activity
will equate to some 3,575 new homes when construction finishes,
contributing an estimated rental income stream of GBP33.2m p.a. The
expected gross initial yield is 6.3%, which helps to underpin the
Company's long term yield and dividend targets. These homes are
spread across 43 sites in six regions in England - the North-West,
West Midlands, Greater Birmingham, East Midlands, South Yorkshire,
and the South.
The running total of completed PRS homes at 31 December 2018
stood at 775 (30 September 2018: 595 completed homes), and these
homes are expected to generate annualised rental income of GBP7.0m
(30 September 2018: GBP5.7m). Located across 15 sites, they
comprise a mix of two, three and four-bedroom properties.
At 31 December 2018, the gross development cost of Committed
development totalled GBP406m, with this equating to approximately
2,543 PRS homes when all the sites are built-out, and an estimated
rental income stream of GBP23.9m p.a.
The Company's Investment Adviser, Sigma PRS Management Limited
("Sigma PRS"), a subsidiary of Sigma Capital Group plc ("Sigma"),
continues to source sites that meet the Company's investment
criteria, and to qualify, manage and oversee all assets.
Acquisitions
In the period, the PRS REIT purchased a newly-completed and let
PRS site in Salford, Greater Manchester, from Sigma for GBP11.7m.
Comprising 73 homes, the properties generate an annual rental
income of approximately GBP0.6m. In addition, the Company has
signed forward purchase agreements with Sigma to acquire five
further PRS sites, which are due for completion at various stages
in 2019 and in the first half of 2020.
Debt Facilities
Sigma PRS is in advanced discussions with the Company's banking
partners regarding an additional GBP200m of debt to support the
growth of the PRS REIT. Once agreed, this will bring the total
funding capacity of the PRS REIT to GBP900m.
Dividend
The Company expects to declare an interim dividend relating to
the second quarter of the new financial year at the end of January
2019. It continues to target a total dividend of 5p(1) per share
for the year to 30 June 2019.
Summary
Rental demand for the PRS REIT's high quality new homes remains
very strong and the Company anticipates this continuing.
The Board believes that the Company remains well-positioned for
continued progress. It has clear visibility on the deployment of
over GBP900m of funding, with over GBP530m of GDC now either under
construction of completed. In addition, the Company has access to a
further GBP1bn Pipeline of development opportunity through Sigma's
PRS Platform.
(1) This is a target only and there can be no assurance that the
target can or will be met and should not be taken as an indication
of the Company's expected or actual future results. Accordingly,
potential investors should not place any reliance on this target in
deciding whether or not to invest in the Company or assume that the
Company will make any distributions at all and should decide for
themselves whether or not the target dividend yield is reasonable
or achievable.
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 Tel: 020 3178 6378 (c/o KTZ Communications)
Steve Smith, Non-executive Chairman
Sigma PRS Management Limited Tel: 0333 999 9926
Graham Barnet, Graeme Hogg
N+1 Singer Tel: 020 7496 3000
James Maxwell, James Moat, Ben Farrow
Stifel Tel: 020 7710 7600
Mark Young, Neil Winward, Gaudi Le Roux
G10 Capital Limited (AIFM) Tel: 020 3696 1302
Gerhard Grueter, Anthony Wood, Gaia Udage
KTZ Communications Tel: 020 3178 6378
Katie Tzouliadis, Dan Mahoney
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
GBP500m (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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