Housebuilder achieves steady rental income, despite lockdown

PRS REIT, the Manchester-based housing group, said its rental income has hardly been affected by the coronavirus outbreak.

The business, a real estate investment trust established to invest in new-build homes for the private rented sector, issued a fourth quarter trading update, up to June 30.

By that date it had completed a total of 2,082 new homes, compared with 1,173 at the same point a year ago.

Rental income per annum stood at £19.1m, up from £10.7m in June 2019.

However, the total number of contracted homes reduced, due to the COVID-19 lockdown and social distancing measures. This number was 2,750 in the quarter to June 30, 2020, down from 3,196 last year. Estimated rental value (ERV) also dropped from £30.3m in 2019 to £27.1m.

But the ERV per annum for completed and contracted homes still showed an improvement from £41m in 2019 to £46.2m.

The group said during the fourth quarter, which includes an eight week period when construction activity was suspended or disrupted because of COVID-19 related restrictions, only 135 additional rental homes were completed.

This compares with 330 completed homes in the prior quarter.

Nonetheless, in mid-June, after construction activity resumed, the company reached the milestone of completing the 2,000th new-build home for its portfolio.

The pace of construction, as previously highlighted, is now necessarily slower than before the COVID-19 outbreak, owing to the social distancing requirements necessary to maintain a safe working environment.

However the board said it is pleased with progress so far, and approximately 450 new homes are expected to be completed during the first quarter of the new financial year.

Rent collection was not materially impacted by the national lockdown, and 98% of rent due in the fourth quarter has been collected, compared with 99% in the third quarter.

The company has agreed payment plans for those households that have required assistance, and current lockdown-related rent arrears constitute just 0.49% of annual passing rent.

Rental demand remained strong, with prices steady at pre-COVID-19 levels, and reservations at June 30, 2020 stood at 429. The pace at which tenants are taking residence is beginning to increase with the continued easing of restrictions.

As announced on June 18, an interim dividend payment of 1.0 pence per ordinary share in respect of the third quarter of the financial year will be payable on July 17.

Details of the fourth quarter interim dividend will be declared at the end of July.

The board said it continues to target a total dividend of 4p per share for the financial year and a minimum of 4p per share for the new financial year ending June 30, 2021.