TIDMPRSR
RNS Number : 4790D
PRS REIT PLC (The)
10 October 2018
10 October 2018
PRSR.L
The PRS REIT plc
("PRS REIT" or "the Company" or "the Group")
Maiden Final Results
Covering the 13 months from commencement of trading on 31 May
2017 to 30 June 2018
The PRS REIT, the closed-ended real estate investment trust
established to create a portfolio of newly-built rental homes
mainly for families across the UK, is pleased to announce its
maiden preliminary results. These results cover a 13 month period
from 31 May 2017, the date of the Company's launch and commencement
of trading, to 30 June 2018, the Company's financial year end.
KEY POINTS
Operational
-- Significant progress since launch - c. GBP685m of funding was
deployed or committed to deployment in the period to 30 June
2018
- rising to c. GBP756m at 30 September 2018, which equates to
c. 5,100 new rental homes when completed
-- Dividend target of 5p per share for the financial period was
achieved - a dividend yield of 5%, based on the IPO issue price
of 100p
-- Funding resources were significantly increased over the period:
- second equity placing raised an additional GBP250m (gross)
in February 2018, following the IPO fundraise of GBP250m (gross)
- debt facilities of GBP200m were secured in June 2018
- additional debt facilities of GBP200m are under discussion.
Once in place the Company's total funding resource is c. GBP900m
-- The development of a large-scale, geographically diversified
portfolio of high quality family rental homes is well underway.
At 30 June 2018:
- 405 homes were completed, generating annualised rental income
of c. GBP3.6m
- completed and contracted* development amounted to c. GBP248m
of gross development cost ("GDC") and the estimated rental
value ("ERV") of the sites when fully completed is c. GBP15.5m
p.a.
- committed* development amounting to GDC of c. GBP437m was
in process, with an ERV of c. GBP27.4m p.a. once all the sites
are fully built-out
Financial
-- Total revenue of GBP1.8m, generated from rental income, with
net rental income of GBP1.5m
-- Operating profit of GBP2.7m
-- Profit after finance income and tax was GBP3.2m
-- Earnings per share on an IFRS basis was 1.0p
-- Net assets at 30 June 2018 stood at GBP486m, representing a
net asset value ("NAV") per share of 98.3p on both an IFRS and
EPRA basis
Post Period Review and Outlook
-- At 30 September 2018 (as announced separately today in the First
Quarter Update for FY 30 June 2019):
- 595 homes were completed, generating an annualised rental
income of GBP5.7m
- completed and contracted* development amounted to c. GBP384m
of GDC and the ERV of the sites when fully completed is c.
GBP24.1m p.a.
- committed* development with GDC of c. GBP372m was in process,
with an ERV of c. GBP23.0m p.a. when all the sites are fully
built-out
- total ERV of completed, contracted and committed development
is c. GBP47.1m p.a.
-- Full commitment of c. GBP900m of funding resource is on track
for early 2019
-- Over and above this, a further c. GBP689m pipeline of qualified
development opportunities has been identified and is contractually
controlled in Framework or Collaboration Agreements with partners
Steve Smith, Chairman of the PRS REIT, commented:
"We have performed well over our first thirteen months of
trading and, while there were some site-specific delays in the
period, we are pleased with overall progress. About GBP756m of our
funding resource has now been committed to the delivery of new
rental housing, which represents some 5,100 new homes. Of this, 595
homes are completed and let, approximately 2,000 are under
construction, and the balance is due to start construction after
procurement processes have been completed.
"Our access to land and development opportunities is one of our
key strengths, and we remain on track to have committed GBP900m -
our full resource when additional gearing is included - to sites
early in 2019.
"The rental market for family homes remains especially
undersupplied and we have experienced strong demand for our
professionally-managed family housing. Overall, therefore, we
believe that the Company is in an extremely good position to
deliver our planned programme of new family homes, and to prosper
as the UK rented housing sector continues to grow."
This announcement is released by The PRS REIT plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 ("MAR") and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR.
*DEFINITIONS
Contracted refers to sites under construction (under a design
& build contract), which have been purchased by the
PRS REIT or the PRS REIT's Investment Adviser (forward
sold to the PRS REIT).
Committed refers to development sites that have been approved
or are under formal appraisal by the Investment Adviser,
and where planning consent is being sought, and/or
are in the process of being acquired.
Pipeline refers to sites that have been identified as being
suitable for appraisal. These sites are typically
sourced from Sigma's PRS Platform, and are typically
under a Framework Agreement or Collaboration Agreement
with a construction partner.
For further information, please contact:
The PRS REIT plc Tel: +44 (0)20 3178 6378
Steve Smith, Non-executive Chairman
Sigma PRS Management Limited Tel: +44 (0)333 999 9926
Graham Barnet, Graeme Hogg
N+1 Singer Tel: +44 (0)20 7496 3000
James Maxwell, James Moat, Ben Farrow
Stifel Tel: +44 (0)20 7710 7600
Mark Young, Neil Winward, Gaudi Le Roux
G10 Capital Limited (AIFM) Tel: +44 (0)20 3696 1302
Gerhard Grueter, Anthony Wood, Gaia Udage
KTZ Communications Tel: +44 (0)20 3178 6378
Katie Tzouliadis, Emma Pearson
NOTES TO EDITORS
About The PRS REIT plc
(www.theprsreit.com)
The PRS REIT 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. It has 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 is a private rented sector, 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. It 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. Its 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 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 Adviser
is an appointed representative (reference number: 776293) of the
AIFM.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the PRS REIT's audited financial results
covering the period from its launch and IPO on 31 May 2017 to its
financial year end on 30 June 2018. As this is the Company's maiden
set of audited results, there are no comparative figures.
The Company performed well over the first thirteen months of
operations and we are encouraged by its progress to date. Despite
some site-specific delays in the fourth quarter, the overall
timetable for the delivery of the targeted c. 5,700 new family
rental homes remains on track.
As previously reported, we closed the maiden financial period to
30 June 2018, with c. GBP248m of completed and contracted
development activity, and with an additional c. GBP437m committed
to development sites that are due to be acquired. Annualised rental
income at 30 June 2018 stood at c. GBP3.6m from 405 completed
homes, with rental demand strong. The estimated rental value
("ERV") of the new homes that were either completed or under
construction at 30 June 2018, is c. GBP15.5m p.a., from a total of
approximately 1,710 homes.
Our first quarter update for the current financial year to 30
June 2019, which was published today, shows continuing encouraging
progress. Our completed and contracted development at 30 September
2018 stood at c. GBP384m, with a further c. GBP372m committed to
additional development sites. A total of GBP756m of the PRS REIT's
funding resource is therefore now in, or close to, active
deployment. The sites are located across multiple regions, in line
with our intention to create a geographically diverse range of new
family rental homes, across urban conurbations in England, outside
of London.
We are aiming to commit our total potential resource of c.
GBP900m (once fully geared) early in the second half of the
financial year to 30 June 2019. Over and above this, a c. GBP689m
pipeline of qualified development opportunities has been identified
and is contractually controlled in Framework or Collaboration
Agreements with partners.
Financial Results
The Company's revenues for the period from 31 May 2017 to 30
June 2018 amounted to GBP1.8m and were generated by rental income.
After the deduction of non-recoverable property costs, net rental
income was GBP1.5m. Expenses in the period were GBP4.3m and the
gain from the fair value adjustment on investment property was
GBP5.5m. As a result, the Company's operating profit was
GBP2.7m.
Finance income from short term deposits was GBP0.6m.The profit
after taxation was GBP3.2m and basic earnings per share on an IFRS
basis was 1.0p.
Net assets as at 30 June 2018 stood at GBP486m, representing a
net asset value ("NAV") per share of 98.3p on an IFRS basis, as
adopted by the European Union. As at 30 June 2018, there is no
difference between the IFRS NAV per share and the EPRA NAV per
share.
Dividends
The Company's policy is to pay dividends to shareholders on a
quarterly basis. For the period to 30 June 2018, the Company paid
total dividends amounting to 5p per share, which was in line with
the target stated in its IPO Prospectus.
The Company will declare its dividend for the first quarter of
its new financial year, covering the three months to 30 September
2018 at the end of October 2018.
Outlook
The Board would like to thank the Company's shareholders and
other stakeholders for their support in the PRS REIT's first
period. While there have been challenges, as at 30 September 2018,
we have completed, contracted or committed on c.GBP756m of
development, representing approximately 5,100 new rental homes. Our
geographic coverage is diverse and now extends to over 60 sites,
including those sites currently being developed under forward
purchase agreements that we intend to buy, once completed and let.
This represents excellent progress as we move towards the full
deployment of c. GBP900m of funding when our second tranche of
GBP200m of borrowings is in place.
The structural drivers supporting the growth in the private
rented sector remain strong, and the limited supply of high quality
new rental housing, house price inflation, affordability
constraints, and an increase in the number of households, will be
favourable to our growing stock of high quality rental houses.
The rental market for family homes, as opposed to flats, is
especially undersupplied, and we have found ready demand for our
professionally managed rental homes.
The Company's access to land is one of its key strengths and we
believe this aspect of our model, in particular, places the Group
in an extremely good position to deliver its planned programme and
to prosper as the UK rented housing sector continues to grow.
Steve Smith
Chairman
INVESTMENT ADVISER'S REPORT
Sigma PRS Management Limited ("Sigma PRS"), the Company's
Investment Adviser and a wholly-owned subsidiary of Sigma Capital
Group plc, is pleased to provide its report on the PRS REIT's
activities and progress since its launch on 31 May 2017.
BUSINESS ACTIVITIES
The PRS REIT plc is a public limited company incorporated in
England on 24 February 2017. The PRS REIT, together with its
subsidiaries, is the first quoted Real Estate Investment Trust
("REIT") to focus on the Private Rented Sector ("PRS").
On 31 May 2017, the Company successfully completed its IPO,
raising initial gross proceeds of GBP250m through the issue of 250
million ordinary shares of one pence each. The shares were admitted
to trading on the Specialist Fund Segment of the Main Market of the
London Stock Exchange. On completion of the IPO, Sigma PRS
Management Limited was appointed as Investment Adviser to the
Company.
INVESTMENT OBJECTIVE AND BUSINESS MODEL
The PRS REIT is seeking 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,
comprising mainly family homes, let on Assured Shorthold Tenancies
(as defined in the Housing Act 1988) to qualifying tenants.
The Company is investing in multiple sites in cities and towns
across the UK, mainly targeting the largest employment centres in
England, outside of London. The locations closely follow the main
rail and road infrastructure, and rental homes will be new-build
and come with the benefit of 10 year National House Building
Council or equivalent warranties.
The Company is concentrating on traditional housing, which has a
broad spectrum of demand, with differing house types for different
life stages, including smaller houses for young couples and
families, and larger houses for growing families. It will also
invest in some low rise flats in appropriate locations.
The PRS REIT is building its portfolio of PRS assets in two
ways:
-- by acquiring residential development opportunities, with
these development sites sourced and managed by Sigma PRS
(or another member of Sigma Capital Group plc acting as
development manager). When completed, homes on these sites
are subsequently let to individual qualifying tenants.
The PRS REIT aims to fund a minimum of two-thirds of the
new properties this way.
-- by acquiring already completed and let PRS sites that fulfil
the Company's investment objectives, including return and
occupancy hurdles. Completed sites are acquired from Sigma
Capital Group plc, pursuant to a forward purchase agreement
between the PRS REIT and Sigma Capital Group plc. Should
the opportunity arise, the PRS REIT may acquire newly-built
PRS assets, from third party vendors. The Company has the
ability to fund up to a maximum of one third of new properties
in this manner.
The PRS REIT retains the right of first refusal to acquire and
develop any sites sourced by Sigma PRS that meets its investment
objective and policy.
There are certain restrictions in the PRS REIT's investment
policy, for instance the PRS REIT will not invest in other
alternative investment funds or closed-end investment
companies.
Achieving Scale and Reducing Risk
The Sigma PRS Platform
The Investment Adviser is utilising Sigma Capital Group plc's
well-established PRS delivery platform ("Sigma PRS Platform") to
help the PRS REIT achieve scale and to minimise development and
operational risk. It plays a central role in sourcing and
developing investment opportunities.
The Sigma PRS Platform comprises relationships with construction
partners, central government, and local authorities. The primary
construction partner is Countryside Properties, which has
undertaken to deliver a minimum of 5,000 new family homes in the
next three years via the Sigma PRS Platform, over and above those
already in process. Other construction partners include Engie,
Keepmoat Homes and Galliford Try. Homes England (formerly known as
Homes and Communities Agency), which is an executive
non-departmental public body sponsored by the Ministry of Housing,
Communities & Local Government, works closely with Sigma in the
common goal of accelerating new housing delivery in England.
All pre-development risks are identified and underwritten by
Sigma Capital Group plc and its partners, and development sites
will have an appropriate certificate of title, detailed planning
consent and a fixed price design and build contract with one of
Sigma Capital Group plc's housebuilding partners. During the
construction phase, the properties are pre-let and subsequently
occupied as they complete.
Through its wide network of relationships, the Sigma PRS
Platform is an excellent source of land for development sites, and
is also able to deliver a variety of high-quality house types
efficiently and in volume. This strongly underpins the PRS REIT's
objective to build at scale and across multiple geographies.
Multiple Geographies
By creating assets across multiple locations and regions, we aim
to minimise the PRS REIT's concentration risk.
We are targeting a mix of locations that demonstrate both higher
yielding profiles (predominantly those in the North of England) and
developments where there is greater potential for capital
appreciation (often in our Southern opportunities). Proximity to
good primary schools is also key factor for us as we select
sites.
In addition, no investment will be made in any single completed
PRS site or PRS development site that exceeds 20 per cent. of the
aggregate value of the total assets of the Company at the time of
commitment.
Simple Life Brand
Our rental homes are marketed under the 'Simple Life' brand
(www.simplelifehomes.co.uk). As well as providing tenants with
well-designed, quality homes, it is important to us that tenants
also receive high customer service levels. The creation of the
Simple Life brand helps to identify our product to potential
customers and, over time, we would like it to be recognised as the
'gold standard' for tenant experience.
We believe that the long term nature of our approach to the
ownership of our assets will help to promote a sense of tenant
security, and that the neighbourhood initiatives we sponsor will
also help to foster a sense of community.
FINANCING RESOURCE
Equity Placing Programme
At the end of January 2018, having fully committed the net
proceeds of the funds raised at the Company's IPO on 31 May 2017, a
second equity placing was announced. This placing closed early, on
20 February 2018, raising gross proceeds of GBP250m at 102.5p per
share from both existing and new shareholders. As previously
reported, Homes England participated in this second placing, taking
its direct investment in the Company to a total of c. GBP30m.
Debt Facilities
The Company is using gearing to enhance equity returns and, at
the end of June 2018, completed terms for debt facilities totalling
GBP200m. The facilities are provided by Scottish Widows ("SW") and
Lloyds Banking Group ("LBG") and were agreed after a review of the
market undertaken by J C Rathbone Associates.
We are currently holding discussions to put in place a further
GBP200m of debt facilities. The PRS REIT's aggregate borrowings
will always be subject to an absolute maximum, calculated at the
time of drawdown of the relevant borrowings of not more than 45 per
cent. of the gross asset value.
OPERATIONAL REVIEW
Development Activity and Acquisitions
During the period under review, total development activity
either completed, contracted or committed amounted to c.4,600 new
family homes with a total gross development cost ("GDC") of
approximately GBP685m. These homes, consisting of two, three and
four bedroomed properties, are located across the major
conurbations of England including the North West, Yorkshire, East
Midlands, West Midlands and the South of England, and are being
delivered by our construction partners, Countryside Properties,
Engie, Keepmoat Homes and Galliford Try. The ERV of these
properties is expected to be in the region of GBP42.9m p.a..
Since IPO to 30 June 2018, the Company has acquired five
fully-developed and let PRS sites from Sigma Capital Group plc.
Four of these sites are located in the North West of England, with
the fifth situated in Yorkshire. The five sites were acquired for
c. GBP51m in total, having been independently valued by a third
party for the PRS REIT. Together, they comprise 282 PRS homes and
generate an annualised rental income of c. GBP2.5m.
At the end of June 2018, including those homes delivered through
the Company's development activity, the PRS REIT had a portfolio of
405 completed homes, generating an annualised rent income of c.
GBP3.6m.
Construction Resource
The construction resource available to the PRS REIT was
substantially increased in June 2018 through a new Collaboration
Agreement with Countryside Properties PLC ("Countryside") and Sigma
Capital Group plc. This new agreement is targeting the delivery of
a further 5,000 PRS homes via the Sigma PRS Platform over the next
three years, over and above those already in process. Most
importantly, the agreement allows Sigma PRS to map out the PRS
REIT's continuing delivery and expansion with significantly greater
clarity. The commitment also allows Countryside to deliver homes
more quickly on its larger, mixed tenure sites.
Other construction partners added since IPO are Galliford Try
and Engie, complementing Keepmoat Homes and Countryside. All four
partners deliver a specified range of properties selected for their
suitability for our target markets. The consistency in
specification also enables greater efficiency in the long-term
management and maintenance of our properties.
FINANCIAL RESULTS
Income statement
The Group's revenue for the period was GBP1.8m, which was all
derived from rental income. After the deduction of non-recoverable
property costs, the net rental income was GBP1.5m. Expenses for the
first period of operation were GBP4.3m, whilst the gain from the
fair value adjustment on investment property was GBP5.5m. This
resulted in an operating profit of GBP2.7m. Finance income for the
period from short term deposits was GBP0.6m. The profit after
finance income and taxation was GBP3.2m. The earnings per share on
an IFRS basis for the period was 1.0p.
Dividends
The Company has declared and paid a total of 5p per ordinary
share for the period under review, which comprised the
following:
On 31 January 2018, the Company declared a dividend of 1.5p per
ordinary share for the period to 31 December 2017. The dividend was
paid on 16 March 2018 to shareholders on the register as at 16
February 2018. The ex-dividend date was 15 February 2018.
On 30 April 2018, the Company, declared a dividend of 1.0p per
ordinary share for the period to 31 March 2018. The dividend was
paid on 31 May 2018 to shareholders on the register as at 11 May
2018. The ex-dividend date was 10 May 2018.
On 31 July 2018, the Company declared a dividend of 2.5p per
ordinary share in respect of the period to 30 June 2018. The
dividend was paid on 31 August 2018 to shareholders on the register
as at 10 August 2018. The ex-dividend date was 9 August 2018.
Balance Sheet
The principal items in the balance sheet are investment property
of GBP121.1m, cash and cash equivalents of GBP374.3m, and trade and
other payables of GBP13.3m.
The investment property includes completed assets and assets
under construction at fair value. Trade and other payables includes
GBP9.8m of development expenditure that was paid in July 2018. At
30 June 2018, the Group had no long term borrowings.
Debt Financing
Prior to the period end, the PRS REIT agreed debt facilities of
GBP100m with the Lloyds Banking Group and GBP100m with Scottish
Widows.
The facility with Lloyds is a revolving credit facility for an
initial term of two years, which can be extended further for up to
two years. Interest is based on three month LIBOR plus applicable
margin and the loan is secured over assets allocated to Lloyds
Banking Group.
The facility with Scottish Widows is a term loan of 15 years,
which will be drawn in two equal instalments fixed for March and
April 2019. Interest was fixed at the 15 year swap rate of 1.588%
plus applicable margin and the loan is secured over assets
allocated to Scottish Widows.
Key performance indicators
The Group's key performance indicators include:
June 2018
-- Rental income GBP1,765,000
-- Average rent per month GBP760
Rental costs as a percentage of gross rent
-- (gross to net) 15.5%
-- Fair value uplift on investment property GBP5,515,000
-- Operating profit GBP2,667,000
Dividends paid per share in relation to the
-- period 5p
-- Number of properties available to rent 405
As this is the Company's first period of trading there are no
comparisons for a prior period.
MARKET OVERVIEW
Demand for high quality rental housing, particularly for
families, across the UK's major urban centres remains very strong.
There are a number of factors driving this demand, including
population growth, house price inflation and mortgage
constraints.
In 2016, the UK population was nearly 66m, with approximately
27.8m households. Over the next eight years, the population is
widely forecast to grow by 5.4% or 3.5m people, and the number of
households is expected to increase by 8.1% or an extra 2m
households.
Since the mortgage market review in 2014, the onus on lenders to
ensure that borrowers can afford their loan commitments has
increased. Accordingly, mortgage providers may lend no more than
15% of new mortgage contracts, in a given quarter, at a
loan-to-income ratio of over 4.5 times. However after a prolonged
period of house price inflation, the median household income to
median house price stands at 7.6 times. Mortgage deposits have also
become a hurdle to ownership, with deposits now approximately 19%
of the purchase price. This represents over 60% of annual household
income. In the 1990's, buyers typically needed a 5% deposit,
representing approximately 12% of household income.
Government and policy makers are now prioritising the supply of
new homes and seeking to reform the housing market. The
Government's Housing White Paper, published in February 2017, set
out such plans and identified PRS as an important mechanism to help
accelerate overall housing supply. As we have previously commented,
mixed-tenure development typically enables the delivery of housing
at a considerably faster rate than market-for-sale developments.
The Government's revised National Planning Policy Framework
("NPPF") and Planning Practice Guide, published in July 2018, also
recognised Build to Rent as its own tenure type that should be
prescribed on certain sites where the need is apparent. This
recognition should help to unlock further opportunity for the
Company and its construction partners.
According to research by Savills, there are only approximately
22,500 completed build-to-rent units currently in the UK, over half
of which are in London. The pipeline of units under construction is
higher at approximately 37,500, 60% of which are in the regions. We
estimate that the Company accounts for nearly 10% of this regional
delivery. However, it important to note that most activity is in
high-rise flatted development, while the PRS REIT's focus is on
houses, providing a clear point of difference.
POST PERIOD REVIEW
The PRS REIT continues to make good progress, as announced in
the Company's first quarter update covering the first three months
of the new financial year to 30 June 2019.
As at 30 September 2018, a total of approximately GBP756m of
funding has been either deployed or is committed to deployment.
This equates to c. 5,100 new rental homes when completed. Of this
total, c. GBP384m has funded or is funding development that is now
either complete or currently under construction, equating to c.
2,130 new family homes. The balance of c. GBP372m is committed
under forward contracts to qualified sites yet to start the
construction phase.
The Company's annualised rental income at 30 September 2018
increased to c. GBP5.7m from 595 completed homes and, at the same
date, completed and contracted development amounted to c. GBP384m
of GDC, with the ERV of the sites when fully completed at c.
GBP21.0m p.a.. A further c. GBP372m of funding is committed to
developments, which when fully built-out will provide an ERV of c.
GBP23.0m p.a. In addition, a further c. GBP689m pipeline of
qualified development opportunities has been identified, and is
contractually controlled in Framework or Collaboration Agreements
with partners.
SUMMARY AND OUTLOOK
Demand in the rental sector continues to grow. The fundamental
imbalance between the supply of good quality rental housing and
demand remains large, and the loss of stock, as a result of
legislative changes that have made the buy-to-let sector much less
attractive to private individuals, exacerbates supply constraints.
Lack of affordability in the market-for-sale sector continues to
drive up demand for rental homes.
The family housing rented market, which according to the
Residential Landlords Association represents just under 50% of
tenants, is large and remains the focus of our approach to the
private rental marketplace.
In the draft analysis of a review into build out rates in the UK
by Rt Hon Sir Oliver Letwin, build-to-rent was cited as a key
component in a basket of measures to deliver more housing stock
more quickly. We view this as further helpful, independent
affirmation of the role that build-to-rent has in assisting in
speeding up housing delivery in the UK.
We remain confident of prospects for the Company over the new
financial year, supported by the enhanced resource that is now in
place and the volume of sites that are in the process of being
delivered or about to start construction. The Sigma PRS Platform
provides us with very strong access to site acquisition
opportunities across our target geographies and this underscores
our very positive view of the Company's long term growth
aspirations.
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the period from 31 May 2017 to 30 June 2018
31 May 2017
to
30 June
2018
GBP'000
Rental Income 1,765
Non-recoverable property costs (274)
------------
Net rental income 1,491
Administrative Expenses
Directors' remuneration (67)
Investment advisory fee (3,295)
Other administrative expenses (977)
Total administrative expenses (4,339)
Gain from fair value adjustment on investment
property 5,515
------------
Operating profit 2,667
Finance income 570
Profit before taxation 3,237
Taxation -
------------
Total comprehensive income for the year attributable
to the equity holders of the Company 3,237
============
Earnings per share attributable to the equity
holders of the Company:
IFRS earnings per share (basic and diluted) 1.0p
All of the Group activities are classed as continuing and there
were no comprehensive gains or losses in the period other than
those included in the statement of comprehensive income.
Consolidated Statement of Financial Position
As at 30 June 2018
At
30 June
2018
GBP'000
ASSETS
Non-current assets
Investment property 121,109
121,109
---------
Current assets
Trade receivables 28
Other receivables 3,786
Cash and cash equivalents 374,339
378,153
Total assets 499,262
---------
LIABILITIES
Non-current liabilities
Trade and other payables 961
---------
Current liabilities
Trade and other payables 12,296
Total liabilities 13,257
Net assets 486,005
=========
EQUITY
Called up share capital 4,943
Share premium account 244,025
Capital reduction reserve 233,800
Redeemable preference shares -
Retained earnings 3,237
---------
Total equity attributable to the equity
holders of the Company 486,005
=========
IFRS net asset value per share (basic
and diluted) 98.3p
As at 30 June 2018, there is no difference between IFRS NAV per
share and the EPRA NAV per share.
Consolidated Statement of Changes in Equity
For the period from 31 May 2017 to 30 June 2018
Attributable to equity holders of the Company
Share Capital Redeemable
Share premium reduction preference Retained Total
capital account reserve shares earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Share capital issued
in the period 4,943 495,524 - 50 - 500,517
Share capital issue
costs - (8,999) - - (8,999)
Cancellation of share
premium (242,500) 242,500 - - -
Share capital redeemed
in the period - - - (50) - (50)
Dividend paid - - (8,700) - - (8,700)
Profit for the period - - - - 3,237 3,237
--------- ---------- ----------- ------------ ---------- --------
At 30 June 2018 4,943 244,025 233,800 - 3,237 486,005
========= ========== =========== ============ ========== ========
Consolidated Statement of Cash Flows
For the period from 31 May 2017 to 30 June 2018
31 May 2017
to
30 June
2018
GBP'000
Cash flows from operating activities
Profit before tax 3,237
less Finance Income (570)
less fair value adjustment on investment
property (5,515)
------------
Cash used in operations (2,848)
Increase in trade and other receivables (3,748)
Increase in trade and other payables 1,708
Net cash used in operating activities (4,888)
------------
Cash flows from investing activities
Acquisition of subsidiaries (40,770)
Purchase of investment property at fair
value through profit and loss (63,451)
Finance income 504
Net cash used in investing activities (103,717)
------------
Cash flows from financing activities
Issue of shares 500,467
Cost of share issue (8,823)
Redeemable preference shares -
Dividends paid (8,700)
------------
Net cash generated from financing activities 482,944
------------
Net increase in cash and cash equivalents 374,339
Cash and cash equivalents at beginning
of period -
------------
Cash and cash equivalents at end of period 374,339
============
NOTES TO THE FINANCIAL STATEMENTS
1. General information
This final results announcement was approved for issue by a duly
appointed and authorised committee of the Board of Directors 9
October 2018.
2. Basis of Preparation
The financial information set out in this announcement does not
constitute statutory financial statements for the period ended 30
June 2018. The report of the auditor on the statutory financial
statements for the period ended 30 June 2018 was (i) unqualified;
(ii) did not include references to any matters to which the auditor
drew attention by way of emphasis without qualifying their report;
and (iii) did not contain statements under section 498(2) or (3) of
the Companies Act 2006. The statutory financial statements for the
period ended 30 June 2018 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
3. Segmental information
For the period from 31 May 2017 to 30 June 2018, the Directors
regard the Group as having just one reportable segment, property,
and the business only operates in the United Kingdom therefore
segmental information is not presented.
4. Unrealised gains on investment property
The total unrealised gains on investment property during the
period were are set out below.
Group
2017
GBP'000
Unrealised gains through profit
and loss 5,515
5,515
========
5. Taxation
As a UK REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it meets certain conditions as set out in the UK REIT regulations.
For the current period ended 30 June 2018, the Group did not have
any non-qualifying profits and accordingly there is no tax charge
in the period. If there were any non-qualifying profits and gains,
these would be subject to corporation tax.
It is assumed that the Group will continue to be a UK REIT for
the foreseeable future, such that deferred tax has not been
recognised on temporary differences relating to the property rental
business. No deferred tax asset has been recognised in respect of
the unutilised residual current period losses as it is not
anticipated that sufficient residual profits will be generated in
the future.
6. Earnings per Share
Earnings per share amounts are calculated by dividing profit for
the period attributable to ordinary equity holders of the Company
by the weighted average number of Ordinary Shares in issue during
the period. As there are no dilutive instruments, only basic
earnings per share is quoted below.
The calculation of basic earnings per share is based on the
following:
31 May 2017
to 30 June
2018
GBP'000
Net profit attributable to ordinary shareholders 3,237
EPRA adjustments:
Changes in value of investment properties (5,515)
EPRA Net loss attributable to ordinary
shareholders (2,278)
Weighted average number of ordinary shares 330,854,803
Earnings per share (pence) 1.0
EPRA loss per share (pence) (0.7)
7. Dividends
The following dividends were paid during the period:
31 May 2017
to 30 June
2018
GBP'000
Dividend of 1.5p for the 7 months to 31
December 2017 3,757
Dividend of 1.0p for the 3 months to 31
March 2018 4,943
------------
8,700
============
On 31 January 2018, the Company declared a first interim
dividend in respect of the period from 31 May 2017 to 31 December
2017 of 1.5 pence per Ordinary Share, which was paid on 16 March
2018 to shareholders on the register as at 16 February 2018. The
ex-dividend date was 15 February 2018.
On 30 April 2018, the Company declared a second interim dividend
in respect of the period from 1 January 2018 to 31 March 2018 of
1.0 pence per Ordinary Share which was paid on 31 May 2018 to
shareholders on the register as at 11 May 2018. The ex-dividend
date was 10 May 2018.
Subsequent to the period end, on 31 July 2018, the Company
declared a third interim dividend in respect of the period from 1
April 2018 to 30 June 2018 of 2.5p per Ordinary Share, which was
paid on 31 August 2018 to shareholders on the register as at 10
August 2018. The ex-dividend date was 9 August 2018
8. Availability of statutory financial statements
Copies on the full statutory financial statements will be
available from the Company's offices at 18 Alva Street, Edinburgh,
EH2 4QG no later than 31 October 2018 and are available on its
website at www.theprsreit.com
9. Annual General Meeting
The Annual General Meeting of the Company will be held the
offices of Nplus1 Singer Advisory LLP, One Bartholomew Lane,
London, EC2N 2AX on Wednesday, 28 November commencing at 11.00
am.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UGGBGUUPRGQB
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