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Rental investment trust warns of development delays ahead
The PRS REIT, a specialist listed company building and managing homes for rent, posted a large rise in first-half profits having boosted its rental income, although it warned of potential planning delays ahead.
Its pre-tax profit for the six months to the end of December amounted to £7.5m, up from £500,000 in the previous year. Rental income more than tripled to £2.3m.
The real estate investment trust (REIT), run by Sigma Capital and supported by funds from Homes England, was launched in May 2017 as an asset management arm for Sigma’s private rental portfolio.
At the end of the last half year, the company had around 2,800 new rental homes across 32 sites under construction, as well as 775 homes already completed. The gross development cost of these 3,575 properties amounted to about £530m, and their combined estimated rental value on completion is £33.2m.
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Dividends for the company in the first and second quarters totalled 2p per share. Its total dividend target for the full year was 5p per share – money which Homes England shares in.
Steve Smith, chair of PRS REIT, said the business had made “pleasing progress” during the period.
But looking ahead, the board noted that while it expects continuing good trading it is also “factoring in current political and economic uncertainties”.
“As previously reported, we experienced some delays with development activity in the third quarter of the last financial year,” Mr Smith added. “Given the current backdrop and the local elections that will take place in early May, we believe it prudent to anticipate lengthening decision-making processes at local government level.”
He said that delays in signing off development would impact site commencement schedules, leading to slower delivery, particularly of larger sites, which would reduce the company’s earnings during the development phase.
As a result more of its development profits would be utilised to support dividend payments in the coming months.
In February last year, the company raised £250m via a share placing to fund its activities.
