TIDMPRSR
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 Tel: 020 3178 6378 (c/o
Steve Smith, Non-executive Chairman KTZ Communications)
Sigma PRS Management Limited Tel: 0333 999 9926
Graham Barnet, Mike McGill
N+1 Singer Tel: 020 7496 3000
James Maxwell, James Moat, Sebastian Burke
Panmure Gordon (UK) Limited Tel: 020 7886 2500
Chloe Ponsonby (Corporate Broking), Alex Collins
(Corporate Finance)
G10 Capital Limited (part of the IQEQ Group Tel: 020 3745 2826
as AIFM)
Paul Turner
KTZ Communications Tel: 020 3178 6378
Katie Tzouliadis, Dan Mahoney
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
GBP0.9bn in a portfolio of high quality homes for private rental
across the regions, having 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 ("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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