Listed rental property group PRS REIT weathers boardroom storm to deliver growth
Listed property investor PRS REIT seems to have weathered any board room turmoil and delivered an increase in rental income and pre-tax profits in its annual results announced to the market this morning.
The company also said its portfolio is very close to completion with 5,425 new homes built; asset performance is excellent, and rental demand remains strong.
Revenue, which is generated wholly from rental income, increased by 17% year-on-year to £58.2 million (2023: £49.7 million).
The business made statutory pre-tax-profits of £93.6m (£42.4m) which includes a £73.4m gain from fair value adjustment on investment property.
TheBusinessDesk.com reported in September that an attempted boardroom coup had been settled with chairman Steve Smith agreeing to stand down and rebel shareholders Robert Naylor and Christopher Mills will join the board as non-executive directors.
The increase in revenue reflects a combination of strong rental growth, a full year’s rental income from homes let part-way through the prior financial year, and the increase in completed homes.
Net rental income for the financial year rose by 18% to £47.3 million (2023: £40.2 million).
The business has also undergone a debt refinancing and as at the financial year-end on 30 June 2024, the Company had £460 million of committed debt facilities available of which nearly £420 million was drawn. This comprised £427 million of investment debt facilities and £33 million of development debt facilities.
At the beginning of the financial year in July 2023, the Company refinanced its £150 million revolving credit facility provided by The Royal Bank of Scotland plc and Lloyds Banking Group plc, agreeing a £102 million fixed-rate debt facility for 15 years with Legal and General Investment Management (“LGIM”) and a £75 million floating-rate debt facility for two years with RBS.
Lending partners across our £460 million of committed debt facilities are: Scottish Widows (£250 million – investment debt); Legal and General Investment Management (£102 million – investment debt); The Royal Bank of Scotland plc (£75 million – investment debt); and Barclays Bank PLC (£33 million – development debt). The majority of the debt (£427 million) is classed as investment debt, with the £33 million debt facility from Barclays Bank available to be drawn as development debt, enabling multiple sites to be developed simultaneously.
Smith, a former chief investment officer of British Land, and a one time senior director of AXA Real Estate will be succeeded by Geeta Nanda in the interim.
In his final address as chairman Smith said: “These are truly excellent numbers reflecting the efficacy of the strategy and the hard work and commitment of the Board, our investment adviser, Sigma, our investors, banking and housebuilding partners, and local and central government supporters. To be in position to deliver a set of results of this quality after so many obstructions along the way, notably COVID and debt cost inflation, is a great achievement. The Company is perfectly poised for its next phase of growth; investors are in a very strong position, with multiple options and, on a personal note, I sincerely hope that investors grasp the opportunity to enable the business to achieve its full potential.
“The Board remains confident about prospects, with affordability – average rent as a proportion of gross household income – and asset performance both very strong. In line with our announcement issued on 13 September, the newly-constituted Board intends to review the Company’s strategy and will provide an update when appropriate. The Company is fully focused on maximising value for all shareholders.”