PRS REIT reports continued progress in latest six-month update

Housing completions and rental values have increased during the year, says PRS REIT, the Manchester-based real estate investment trust established to invest in new-build homes for the Private Rented Sector.

In a trading update to the stock market today following the close of its financial year, the group revealed that the number of completed homes as of August 31, stood at 1,289 across 17 fully-completed sites and eight part-completed sites.

That compares with 1,173 homes across 17 fully-completed sites and four part-completed sites a year ago.

The estimated rental value of these homes is £11.76m per annum, up from £10.7m last year.

At the end of August, 59 sites were either completed or contracted for development, compared with 54 the previous year, with the gross development cost amounting to £734m, an increase on £661m.

Once all of these sites have been fully completed and let, the company’s annual rental income is expected to rise to be approximately £46m from an estimated 4,718 units. That compares with £41m from 4,369 units in 2018.

The company said completed assets are performing well, with rental demand strong, and key costs remain in line with management expectations.

Approximately 91% of the company’s total net funding is now in deployment and the balance of around £90m is committed to sites that are expected to be contracted over coming months.

The total portfolio is now anticipated to comprise approximately 5,400 new family homes, reflecting a combination of factors, including increasing allocation to sites in the South East. The overall yield target for 2022 at stabilisation remains at 5.5 pence per share.

PRS Reit said progress since the start of the new financial year has continued positively, in line with management expectations, and it will be publishing its audited full year results on September 25.

Sigma Capital Group, the Manchester-based parent company of the PRS REIT’s investment adviser and development manager, also announced its interim results today.

Revenues in the six months to June 30 rose from £4.8m to £5.8m, while pre-tax profit increased from £4.2m to £4.3m.

It said strong revenue growth was driven by the continuing expansion of managed PRS activity, while cash generation significantly improved benefiting from increased activity.

The second half of the financial year has started well, with 42 development sites under way at August 31, which should deliver a further 3,429 new rental homes

The board said it is continuing to seek to broaden the company’s reach and funds under management.

Chief executive Graham Barnet said: “The effectiveness of our model for large-scale delivery of family homes for the private rental market is now firmly established.

“In May, we delivered our 1,000th home for the PRS REIT, just two years after its launch and delivery is increasing as development sites complete.

“We expect to commit the balance of the PRS REIT’s net funds to further sites over the next few months, and have seven of our own self-funded developments under way.

“The launch of the Scottish PRS Fund, which is backed by Scottish Government, is exciting and takes us into Scotland, a new geography for our model.

“Demand for high-quality rental homes for families remains high and, notwithstanding current political uncertainties, we remain confident that Sigma is well-positioned to achieve its targets for both this year and next year.

“We are also continuing to seek opportunities to broaden our geographies as well as the funds under our management.”