PRS specialist benefitting from UK’s ‘urgent social problem’
Build-to-rent investor PRS REIT is benefitting from would-be home buyers being priced out of the market by high interest rates.
Average rents across its portfolio of more than 5,000 homes increased 10%, from £849 per month to £934.
However the average household income of its tenants jumped from £41,000 to £51,000 – resulting in its average tenant spending a lower proportion of its household income on rent.
The company said: “We believe that it is reasonable to assume this improvement reflects a combination of wage inflation and the emergence of a wealthier cohort of disenfranchised would-be home buyers.”
PRS REIT specialises in single-family homes, with the majority of its 71 sites in the North West and West Midlands.
Its revenue increased 18% in the year to June, to £49.7m. Profits were down 63%, to £42.5m, but this was because of a huge jump in fair value adjustments on investment property in the previous year.
Steve Smith
PRS REIT chairman Steve Smith said its “single-family rental homes are helping to fix an urgent social problem”.
“Prospects are very positive,” he added. “The structural shortage of high-quality rental homes in the UK and rising demand place the company in a strong position.”
PRS REIT’s most lucrative sites include Empyrean in Salford, which generates £3.2m in annual rent, Reynolds Place in Worsley at £1.58m, and Prescot Park in Merseyside contributes £1.48m.
Smith said: “We are well-advanced in the delivery of an initial portfolio of around 5,500 homes, providing over £1bn of assets with an anticipated rental income stream of over £60m a year.
“Our model is highly resilient. Following our debt refinancing in July, more than 80% of our long-term investment debt is at favourable fixed rates for an average 16 years, and the portfolio gearing is low at 37%.”
PRS REIT has also appointed lawyer Karima Fahmy to its board as a non-executive director. Jim Prower, currently independent non-executive director, will stand down at December’s AGM.
