REG - PRS REIT PLC (The) - Interim Results
31/03/2025 07:15
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RNS Number : 7918C PRS REIT PLC (The) 31 March 2025
PRSR.L
The PRS REIT plc
("the PRS REIT" or "the Company")
Interim Results
and
Update on the Strategic Review & Formal Sale Process
Largest UK portfolio of single-family rental homes
Delivery is nearly complete and the portfolio continues to perform excellently
Strategic Review and Formal Sale Process Under Way
Highlights
Financial
Six months ended Six months ended Change
31 December 31 December
2024 ("H1 2025") 2023 ("H1 2024")
Revenue £32.9m £28.1m +17%
Net rental income £26.6m £22.9m +16%
Adjusted earnings* £21.6m £18.7m +16%
Operating profit £56.3m £39.2m +44%
Profit before tax £46.2m £30.3m +52%
Basic earnings per share 8.4p 5.5p +53%
EPRA earnings per share 2.1p 1.8p +17%
* Operating profit excluding changes in the fair value of investment
properties
· Profitability in line with management expectations; the year-on-year increase
reflected a combination of revenue growth and the difference in gains from
fair value adjustments on investment property between the two periods, with
£34.7m recognised in the period under review compared to £20.5m in the
comparative period in the prior year. The valuation movements are non-cash
items
.
At 31 Dec At 30 Jun Change
2024 2024
Net assets £767m £731m +5%
IFRS NAV and EPRA NTA per share 139.6p 133.2p +5%
· The increase in net asset value reflected healthy ERV growth while the average
net investment yield remained unchanged at 4.6%.
Operational
Portfolio delivery At At At
31 Dec 30 Jun 31 Dec
2024 2024 2023
No. of completed homes 5,437 5,396 5,264
Estimated Rental Value ("ERV") per annum £68.6m £65.1m £60.3m
No. of contracted homes 41 180 312
ERV per annum £0.4m £1.4m £3.1m
Completed and contracted sites 71 72 72
ERV per annum £69.0m £66.5m £63.4m
No. of completed and contracted homes 5,478 5,576 5,576
· An option to purchase a completed site of 98 units with an ERV of £1.0m was
not exercised after the Board considered net returns to the Company. As a
result, the total number of contracted and completed sites has reduced by one,
from 72 as at 30 June 2024, to 71 at the end of 31 December 2024, and the
total ERV and total number of homes have correspondingly decreased (by £1.0m
of ERV and 98 units respectively).
· A total of 41 new homes were added to the Company's portfolio in H1 2025 (H1
2024: 184) taking the portfolio to 5,437 completed homes with an ERV of
£68.6m p.a. at 31 December 2024. A final tranche of 41 homes were under way
at 31 December 2024; their completion is due by 30 June 2025, marking the
completion of the current delivery programme.
Portfolio performance At At At
31 Dec 30 Jun 31 Dec
2024 2024 2023
Gross to net 19.1% 18.8% 18.5%
Rent collection(1) 99% 99% 99%
Annual like-for-like rental growth (based on average rent per unit for 10.8% 11.7% 11.1%
stabilised sites)
Average yield on assets in the portfolio 4.6% 4.6% 4.5%
· Completed assets performed strongly over the period:
o occupancy at 96% (or 97% including homes reserved for applicants who had
passed referencing and paid deposits) (H1 2024: 97% and 98% respectively);
o rent collection(1)(( (#_ftn1) )) at 99% (H1 2024: 99%);
o like-for-like rental growth(2)(( (#_ftn2) )) for the year to 31 December 2024
was 10.8% (31 December 2023: 11.1%) - reflecting renewals at c.10% and lets to
new tenants at c.12%;
o total arrears net of bad debt provision remained low at c.£1.0m at the period
end (31 December 2023: £1.0m);
o net rental income increased by 16% to £26.6m (H1 2024: £22.9m) reflecting a
combination of rental growth and a full six-month contribution from units that
only partially contributed in the same period in the prior year; and
o affordability remained strong: average rent as a proportion of gross household
income was c.23% (30 June 2024: 23%) - significantly better than the Office
for National Statistics 30% upper guidance limit.
· Net asset value per share increased to 139.6p (30 June 2024: 133.2p). This was
driven by an increase in valuation of investment property to £1.18bn (30 June
2024: £1.14bn), reflecting healthy ERV growth with the average net investment
yield remaining unchanged at 4.6% (30 June 2024: 4.6%)
Increased dividend
· Q2 dividend increased, reflecting continued strong rental and earnings growth;
this takes total H1 dividends to 2.1p per share (H1 2024: 2.0p). The H1 2025
dividends are 105% covered by European Public Real Estate Association ("EPRA")
EPS in the period.
· The Company's continued earnings growth provides the Board with the
opportunity to consider raising the total dividend payout target for the
financial year while also maintaining full dividend cover on a recurring
earnings per share basis. This is continuing to be considered alongside the
Strategic Review and Formal Sale Process.
Board changes, Strategic Review and Formal Sale Process
· The composition of the Board was changed, and a Strategic Review and Formal
Sale Process was launched in the period.
o As announced on 11 February 2025, the Company received several non-binding
proposals in connection with the acquisition of the Company, the majority of
which were pitched within a price range representing a premium to the then
share price and a discount to the June 2024 published NAV.
o Following this, the Company invited a select number of parties to undertake
due diligence. Discussions with a number of parties are ongoing.
o Alongside this, and as part of the wider Strategic Review, the Board continues
to explore all the options available to the Company, with a view to maximising
value for the Company's shareholders.
o Further updates will be made in due course, and by no later than the end of
calendar Q2 2025.
Current trading and outlook
· Latest available data for housing delivery and portfolio performance (1
January - 28 February 2025) confirms that the balance of delivery remains on
track to complete by 30 June 2025 and that the portfolio continues to perform
strongly.
o Just 41 homes with an updated ERV at 28 February 2025, of £0.5m p.a. are left
to be completed.
o At completion, the portfolio is expected to comprise 5,478 homes with an
updated overall ERV of c.£70m p.a.
o Rent collection 1 January - 28 February 2025 was 101% (reflecting a post
calendar year-end catch up).
o Physical occupancy at 28 February 2025 was at 96%.
o Total arrears net of bad debt provision at 28 February 2025 was £1.0m, which
is low as a proportion of the enlarged portfolio.
o Affordability (average rent as a proportion of gross household income) remains
strong at 23% (2023: 22%) and is significantly better than the Office for
National Statistics 30% upper guidance limit.
· Rental demand for quality family homes remains very high nationally and is
expected to grow against a background of structural under supply, continued
high interest rates, cost-of-living pressures and rising population.
Geeta Nanda, Non-executive Chair of The PRS REIT plc, said:
"Interim results are excellent, reflecting the continued strong performance of
the Company's portfolio of rental homes, the largest of its kind in the UK.
The final tranche of new homes is now due by the end of June, at which point
the PRS REIT's portfolio will amount to 5,478 completed homes with an
estimated rental value of around £70m per annum.
"The shortage of high-quality family rental homes in the UK combined with
rising demand continue to favour prospects for the PRS REIT.
"The Strategic Review and Formal Sale Process remain in process and further
updates will be made in due course, and by no later than the end of calendar
Q2 2025."
For further information, please contact:
The PRS REIT plc Tel: 020 7496 3000 (c/o Singer Capital Markets)
Geeta Nanda, Non-Executive Director Chairwoman
Sigma PRS Management Ltd Tel: 0333 999 9926
Graham Barnet, Mike McGill
Singer Capital Markets Tel: 020 7496 3000
James Moat, James Maxwell, Asha Chotai
G10 Capital Limited (AIFM and part of IQ-EQ group) Tel: 0207 397 5450
Maria Baldwin
KTZ Communications Tel: 020 3178 6378
Katie Tzouliadis, Robert Morton
NOTES TO EDITORS
About The PRS REIT plc
https://www.theprsreit.com/ (https://www.theprsreit.com/)
The PRS REIT plc is a closed-ended real estate investment trust established
to invest in the Private Rented Sector ("PRS") and to provide shareholders
with an attractive level of income together with the potential for capital and
income growth. The Company is investing over £1bn in a portfolio of
high-quality homes for private rental across the regions, having raised a
total of £0.56bn (gross) through its Initial Public Offering, on 31 May
2017 and subsequent fundraisings in February 2018 and September 2021.
The UK Government's Homes England has supported the Company with direct
investments. The Company is listed on the Closed-ended investment funds
category of the FCA's Official List and its Ordinary Shares are traded on
the London Stock Exchange's Main Market. It is a constituent of
the FTSE 250 Index. With 5,437 new rental homes as at 31 December 2024,
the Company believes its portfolio is the largest build-to-rent single-family
rental portfolio in the UK.
LEI: 21380037Q91HU97WZX58
About Sigma PRS Management Ltd
Sigma PRS Management Ltd is a wholly-owned subsidiary of Sigma Capital Group
Limited and is Investment Adviser to The PRS REIT plc. It sources investments
and operationally 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
AIFM is G10 Capital Limited. Sigma PRS Management Ltd is an appointed
representative of G10 Capital Limited, which is authorised and regulated by
the Financial Conduct Authority (FRN:648953).
About Sigma Capital Group Limited (formerly Sigma Capital Group plc)
www.sigmacapital.co.uk (http://www.sigmacapital.co.uk/)
Sigma Capital Group Limited ("Sigma") is a build-to-rent ("BTR") regeneration
specialist, with offices in Edinburgh, Manchester and London. The Company's
principal focus is on the delivery of large-scale housing schemes for the
private rented sector and Sigma is the UK's leading provider of BTR homes for
the single family sector. The Company also has extensive experience in the
delivery of multi-family apartment schemes and 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.
Sigma has created an unrivalled property delivery and management platform,
which has delivered or is in the process of delivering over 12,500 homes
across the UK to date. The Company has a significant pipeline of development
opportunities, which currently stands at over £3 billion in gross development
cost. Sigma manages the letting of completed homes through its property
platform, which includes its award-winning rental brand 'Simple Life'. The
Company's subsidiary, Sigma PRS Management Ltd, is Investment Adviser to The
PRS REIT plc.
Chair's Statement
OVERVIEW
I am pleased to present The PRS REIT plc's (the "Company" or "PRS REIT")
financial results for the six months ended 31 December 2024.
As reported in the second quarter trading update, the Company's portfolio of
build-to-rent ("BTR") family homes has continued to perform excellently and,
at the end of the first half, just 41 homes were left to be completed. It
should also be noted that the Board took the decision not to proceed with an
option over a completed site of 98 homes, with an estimated rental value
("ERV") of £1.0m after considering net returns and taking into account
prevailing interest rates. When delivery is complete therefore, the portfolio
is expected to total 5,478 homes with an ERV of c.£70 million over 71 sites.
With net rental income rising, the Company is in a position to increase the
dividend while keeping it fully covered by EPRA earnings. Accordingly, the
interim dividend for the second quarter was raised to 1.1p per share. The
Board will consider the opportunity of raising the total dividend payout
target for the financial year while also maintaining full dividend cover on a
recurring earnings per share basis, in due course, alongside the Strategic
Review and Formal Sale Process.
The Company's portfolio of family homes remains the largest of its kind in the
UK and the Board remains confident about prospects for continued strong
performance across all major metrics. Details of housing delivery and the
portfolio's performance over the first half are provided in the Investment
Adviser's Report, which also comments on our ESG activity over the period.
Requisition event, Board changes, Strategic Review and Formal Sale Process
As previously reported, after the receipt of a Requisition Notice on 29 August
2024 and subsequent consultation process with shareholders and Requisitioning
Shareholders, a number of important changes were agreed in the first half of
the financial year. Firstly, regarding the composition of the Board and
secondly with the commencement of a review of the Company's strategic options,
including a potential sale of the Company (the "Formal Sale Process")
(together the "Strategic Review").
· Board changes
o Steve Smith retired as Non-executive Chairman at the Company's AGM on 3
December 2024 and I stepped into the role of Chair, and
o Robert Naylor and Christopher Mills joined the Board on 8 October 2024 as
non-executive Directors, with their appointments confirmed at the AGM.
· Strategic Review and Formal Sale Process
o On 23 October 2024, the Board commenced upon a Strategic Review and Formal
Sale Process.
o As announced on 11 February 2025, the Company received several non-binding
proposals in connection with the acquisition of the Company, the majority of
which were pitched within a price range representing a premium to the then
share price and a discount to the June 2024 published NAV.
o Following this the Company invited a select number of parties to undertake
due diligence. Discussions with a number of parties are ongoing.
o Alongside this, and as part of the wider Strategic Review, the Board
continues to explore all the options available to the Company, with a view to
maximising value for the Company's shareholders.
There can be no certainty that an offer will be made from any of the
interested parties, nor as to the terms on which any offer will be made.
Further updates will be made in due course, and by no later than the end of
calendar Q2 2025.
As previously communicated, the Panel has granted a dispensation from the
requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any
interested party participating in the Formal Sale Process will not be required
to be publicly identified under Rules 2.4(a) or 2.4(b) and will not be subject
to the 28-day deadline referred to in Rule 2.6(a) of the Code for so long as
it is participating in the Formal Sale Process.
Meanwhile, the Board continues to explore all the options available to the
Company under the Strategic Review, with a view to maximising value for the
Company's shareholders.
Amendment to Investment Advisory Agreement ("Agreement")
Following the Board's decision to commence a Strategic Review, the Investment
Advisory Agreement with Sigma PRS Management Ltd, the Company's Investment
Adviser ("Investment Adviser") has been amended. A 'change of control'
provision (the "Amendment") was added to the Agreement, so that in the event
of a change of control of the Company, both the Company and the Investment
Adviser have the right to serve notice to terminate the Agreement on 12
months' notice. While the Amendment was not considered to be necessary, it has
added further flexibility as to how any potential sale of the Company might be
implemented.
THE MARKET BACKDROP
The portfolio's excellent asset performance to date reflects continued strong
market fundamentals for high-quality family rental homes.
Rightmove's latest Rental Trends Tracker report, which is the largest
quarterly dataset of UK rental activity(3)(( (#_ftn3) )) and was published in
January 2025 for the last quarter of 2024, reported that rents outside London
were 4.7% higher than the same period in the prior year although this
represents the slowest annual growth rate since 2021. The average number of
applications per property was at 10, which is double pre-pandemic levels, but
lower than recent peaks.
Rightmove's property expert, Colleen Babcock, noted that while supply and
demand are improving overall, many local markets remain highly competitive.
Yorkshire and the Humber for instance experienced notable increases in average
rents. The average rental property still receives significant interest,
reflecting ongoing challenges for tenants in some areas.
Private Rented Sector Reform
The Renters (Reform) Bill is proceeding through Parliament and is expected to
become law after Easter 2025, with Royal Assent likely to be received by July
2025 if there are no significant delays during its passage through Parliament.
The Bill introduces significant reforms to the private rental market in
England. A key proposal is the abolition of Section 21 ("Housing Act 1988)
"No-fault" Evictions. Landlords will no longer be able to evict tenants
without providing a valid reason. Another key provision is the abolition of
fixed-term tenancies, including Assured Shorthold Tenancies, which will be
replaced with open-ended periodic tenancies. Other provisions include limiting
rent increases to once per year, with increases aligning with market rates.
Tenants will have the right to challenge excessive increases through an
independent tribunal. Rental bidding wars will also be banned. Other measures
include applying The Decent Homes Standard to private rentals, ensuring that
properties meet minimum safety and quality requirements, and timely action on
health hazards such as mould and damp.
We are in favour of proposals that support the rights of tenants to a decent
home while also supporting responsible landlords. As a professional landlord,
the PRS REIT is in the market for the long-term and does not view current
proposals as likely to materially adversely impact the Company's operations.
FINANCIAL RESULTS
Revenue, which is derived entirely from rental income, increased by 17% to
£32.9 million against the same period last year (H1 2024: £28.1 million).
This reflected growth in the number of completed and let homes as well as
increased rental levels. After non-recoverable property costs, the net rental
income for the period was £26.6 million, a 16% rise on the first half of 2024
(H1 2024: £22.9 million). Other income of £0.1 million (H1 2024: £0.1m)
related to compensation payments arising from delayed housing delivery across
development sites.
Operating profit increased by 44% to £56.3 million (H1 2024: £39.2 million),
with the increase reflecting a combination of the growth in net operating
income and the difference in gains from fair value adjustment on investment
property between the two periods. In H1 2025, there were gains of £34.7
million from fair value adjustments on investment property, which compared to
gains of £20.5 million in H1 2024. These are non-cash items and were driven
by the increase in ERV, while the net investment yield remained unchanged on
the yield at 30 June 2024.
Profit from operations is stated after total expenses, which amounted to £5.1
million (H1 2024: £4.4 million). This figure includes £0.6 million of
professional fees in relation to the Requisition Event and the ongoing
Strategic Review and Formal Sale Process announced in October 2024, and
reflects the benefit of the reduction in fee levels payable to the Investment
Adviser from 1 July 2024.
Profit before tax increased by 52% to £46.2 million (H1 2024: £30.3
million). Basic earnings per share increased by 53% to 8.4p (H1 2024: 5.5p).
Of this, 2.1p represented recurring earnings per share in line with the EPRA
EPS (H1 2024: 1.8p). Dividends of 2.0p per share were paid in the first half
(H1 2024: 2.0p), and dividend cover was 105%.
Net assets increased over the year by 13% to £767 million as at 31 December
2024 (31 December 2023: £679 million and 30 June 2024: £731 million). This
equates to a NAV of 139.6p per share on both an International Financial
Reporting Standards ("IFRS") basis and on the EPRA Net Tangible Asset ("NTA")
basis (30 June 2024: IFRS and EPRA NTA both 133.2p).
NAV movement: Six months ended Six months ended Year
31 December 2024
31 December 2023
ended
30 June 2024
Opening NAV 133.2p 120.1p 120.1p
Valuation and development 6.3p 3.7p 13.4p
Earnings 2.1p 1.8p 3.7p
Dividends paid (2.0)p (2.0)p (4.0)p
Closing NAV 139.6p 123.6p 133.2p
The movement in the NAV position, from 133.2p to 139.6p between 30 June 2024
and 31 December 2024, is after total dividend payments of 2.0p per share
(£11.0 million).
Six months ended Six months ended Year
31 December 2024 (unaudited)
31 December 2023 (unaudited)
ended
30 June 2024 (audited)
IFRS EPS (pence per share) 8.4p 5.5p 17.1p
EPRA EPS (pence per share) 2.1p 1.8p 3.7p
As at As at As at
31 December 2024 (unaudited)
31 December 2023 (unaudited)
30 June 2024 (audited)
IFRS NAV (pence per share) 139.6p 123.6p 133.2p
EPRA NTA (pence per share) 139.6p 123.6p 133.2p
DEBT FACILITIES
As at 31 December 2024, the Company had £460 million of committed debt
facilities. This comprised £427 million of investment debt facilities and
£33 million of development debt facilities. Our lending partners are:
· Scottish Widows (£250 million);
· Legal and General Investment Management (£102 million);
· The Royal Bank of Scotland plc (£75 million); and
· Barclays Bank PLC (£33 million).
The Barclays Bank PLC debt facility is available to be drawn as development
debt, which enables a number of sites to be developed simultaneously. This
facility matures later in 2025 when assets should have been completed and
stabilised, enabling investment debt to be drawn instead.
The debt facilities are subject to the maximum gearing ratio of 45% of gross
asset value, in line with the Company's Investment Policy. Approximately £426
million of these facilities have been drawn to date, with the remainder
presently forecast to be utilised over the next few months as we finish the
current phase of construction and letting activity.
The fixed-interest, long-term investment debt facilities of £352 million have
a weighted average debt maturity of 14 years and an average weighted cost of
3.8%. This compares favourably with the average net investment yield of 4.6%.
The short-term RBS investment debt facility expires in July 2026, and the
short-term Barclays development debt facility is due to expire in September
2025.
With Board approval, Sigma PRS Management Ltd ("Sigma PRS") extended the
maturity date for the short-term RBS loan facility by 12 months to July 2026
and the amount available increased from £75.0m to £82.5m. The increase in
quantum minimises the amount of short-term debt bearing higher interest rates
while ensuring sufficient headroom to manage the business.
DIVIDENDS
Two dividend payments, together totalling 2.0p per ordinary share, were paid
in the period. They related to the last quarter of the financial year ended 30
June 2024 and the first quarter of the current financial year ending 30 June
2025. The dividends were paid respectively on 30 August 2024 and 29 November
2024.
The interim dividend relating to the second quarter of the current financial
year increased to 1.1p per ordinary share, which reflected the portfolio's
continued strong rental and earnings growth. This took total dividends
declared in the first half of the financial year to 2.1p per share (H1 2024:
2.0p). They are 105% covered by European Public Real Estate Association
("EPRA") EPS in the period. The second quarter interim dividend was paid on 7
March 2025 to shareholders on the register at 21 February 2025. It has brought
the total of dividends paid to date since the Company's inception in May 2017
to 32.1p per share.
The Board currently expects to announce the payment of an interim dividend for
the third quarter of the current financial year in April.
The Company's continued earnings growth provides the Board with the
opportunity to consider raising the total dividend payout target for the new
financial year while also maintaining full dividend cover on a recurring
earnings per share basis. This will be considered, in due course, alongside
the Strategic Review and Formal Sale Process.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") PRACTICES
The PRS REIT is a member of the UK Association of Investment Companies and
applies the Association's Code of Corporate Governance to ensure best practice
in governance.
The Board is responsible for determining the Company's investment objectives
and policy and has overall responsibility for the Company's activities. This
includes the review of investment activity and performance. The day-to-day
management of ESG matters is delegated to the Investment Adviser, Sigma PRS.
Sigma PRS is also a signatory and participant of the United Nations Global
Compact.
As a landlord with thousands of homes across the UK, the Board is very aware
of the Company's potential impact on people's lives and conscious of its
societal responsibilities. We believe that our homes and activities contribute
very positively to the communities in which we operate. We have put
significant thought into our model and proposition. Our primary aim is to
provide high-quality, energy-efficient, well-located homes that people will
enjoy living in. High customer service levels are equally important, and we
aim to set market-leading standards of care, using technological innovation to
help deliver this. At the same time, we also understand that the delivery of
new homes and new developments have an impact on the environment. The impact
can be negative as well as positive and we consider environmental
considerations very carefully. Alongside these issues, the Board places a high
priority on fostering a sense of community within developments and actively
promotes and supports resilient community bonds.
This approach informs the Group's ESG activities and policies. The Investment
Adviser's Report provides further information on this, and the Board continues
to place a high value on social and environmental initiatives and programmes
that are under way across developments. They benefit people on both an
individual and community level.
CURRENT TRADING AND OUTLOOK
The private rented sector remains supported by long-term structural factors.
There is a continuing lack of supply of high-quality property while demand is
increasing, fuelled by population growth and affordability challenges in the
housing market.
Industry forecasters expect rental prices to continue to increase in 2025.
Rightmove and other sources predict a 3-4% increase. The North of England is
expected to experience stronger rental growth compared to the South, driven by
higher demand and affordability advantages.
We believe our homes will continue to rent very well over the long-term, and
the latest data for the portfolio shows that its performance remains very
strong.
Occupancy over 1 January to 28 February 2025 was high at 96%, and rent
collection was strong - 101%. Total arrears net of provision stood at £1.0
million at the end of February 2025. Annual like-for-like blended rental
growth on stabilised sites at this point was 10%. Affordability, a critical
ratio, continues to be very healthy with average rent as a proportion of gross
household income at 23%.
We expect the outstanding balance of housing delivery (41 homes with an
updated ERV of £0.5 million at 28 February 2025) to be completed by 30 June
2025. This should take the portfolio to 5,478 homes, reinforcing the PRS
REIT's position as market leader in the provision of new single-family homes
for the private rented sector. The portfolio's total ERV at that point is now
expected to be c.£70 million per annum.
As ever, I would like to thank our Investment Adviser, Sigma PRS, as well as
all our stakeholders, including our investors, lending partners, housebuilder
partners and supporters in government. The creation of our portfolio of energy
efficient, well-maintained, and desirable rental homes is making a difference
to families and individuals up and down the country.
We will make further announcements regarding the Strategic Review and Formal
Sale Process in due course, and by no later than the end of calendar Q2 2025.
Geeta Nanda
Chair
Investment adviser's report
Sigma PRS Management Ltd ("Sigma PRS"), a wholly owned subsidiary of Sigma
Capital Group Limited ("Sigma"), is the Company's Investment Adviser. It is
pleased to provide a report on the PRS REIT's activities and progress for the
first half of the current financial year ending 30 June 2025.
INVESTMENT OBJECTIVE, POLICY 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. It is
delivering this through the establishment of a large-scale portfolio of newly
constructed residential rental homes for the private rented sector in or near
towns and cities in the UK, excluding London.
The Company's scalable business model is able to deliver new homes across
multiple regions and sites. It utilises the Investment Adviser's PRS property
delivery and management platform (the "Platform").
The Company's portfolio of homes is targeted at the family market, which is
the largest segment within the private rented sector. The Company has
concentrated on traditional housing, with broad appeal, and its portfolio
comprises differing house types, built to standardised specifications. They
cater for most life stages, including smaller houses for young couples and
retirees, and larger houses for growing families. The Company has also
invested in some low-rise flats (all below 18m and with no cladding) to
broaden its rental offering.
The Company's homes are located across multiple sites in the UK, outside
London, with the largest proportion sited in the Midlands and the North. Their
locations have been carefully chosen for their accessibility to main road and
rail links, good primary schooling, and proximity to centres of economic
activity, which promote long-term employment prospects. The new-build nature
of the assets means that they benefit from a 10-year building warranty,
typically from the NHBC (National House Building Council), and manufacturers'
warranties. Homes are let on Assured Shorthold Tenancies (as defined in the
Housing Act 1988) to qualifying tenants. The sourcing of assets is undertaken
by Sigma PRS and the Company has been building its portfolio in two ways.
· In the first instance, Sigma PRS selects suitable development
sites, obtains detailed planning permission and agrees a fixed-price design
& build contract with one of its construction partners. Thereafter, Sigma
PRS manages the delivery process on behalf of the Company.
Assets are always acquired with detailed planning consent and fixed price
design & build contracts, thereby minimising the Company's exposure to
development risk. Construction risk has been further mitigated with standard
fixed-price design & build contracts, containing liquidated damages
clauses for non-performance, financial retentions for one year after
completion, and a parent company guarantee ensuring the satisfactory
performance by the contractor and an indemnity for losses incurred. Over 80%
of the Company's assets have been sourced through this way.
· In the second instance, assets are acquired by entering into
forward purchase agreements with Sigma, the holding company of Sigma PRS. The
assets are only acquired once fully completed and let. Typically, they have
been constructed by the same construction partners and supply chain as other
assets whose development is described above, thereby ensuring homogeneity of
the Company's housing stock. Completed and stabilised developments may also be
purchased from other third parties using approved construction partners.
In both instances, assets are acquired at the valuation provided by an
independent valuer. The PRS REIT retains the "right of first refusal" to
acquire and develop any sites sourced by Sigma PRS that meet the Company's
investment objective and policy subject to the availability of funding.
The Sigma PRS Platform
The Investment Adviser has been utilising Sigma's well established PRS
property delivery and management platform to scale the PRS REIT's portfolio
and to minimise development and operational risks.
Dedicated Sigma teams manage legal due diligence, corporate debt provision,
site identification, development management, accounting and financial
reporting, brand representation, and leasing and property management.
The efficacy of the Platform is well established, and its scale brings
significant financial and operational benefits to the PRS REIT. These include
the Platform's relationships with development partners, which support the
identification and acquisition of new homes, the award-winning 'Simple Life'
lettings brand, which has widespread consumer recognition, and the Platform's
substantial economies of scale. These elements have helped to facilitate
growth opportunities, and support income growth and cost control.
Dedicated finance team
Sigma has a dedicated PRS REIT accounting and financial reporting team, which
covers all aspects of the Company's finances. This includes: site acquisition;
funding; board, management and statutory reporting; performance monitoring;
forecasting; debt covenant compliance; and taxation.
Debt and legal teams
The debt and legal teams at Sigma use their extensive knowledge of the PRS
REIT and their longstanding relationships with funders within the sector to
secure bespoke, competitively priced debt facilities. These are used to ensure
sufficient ongoing support for assets throughout their lifecycles. The legal
teams have also built-up strong working relationships with funders' advisers
and this helps to ensure a streamlined and efficient legal process when
transferring assets across debt pools, which drives optimum use of capital
within the business.
Development team
Sigma has well-established relationships with construction partners, central
government, and local authorities. Key construction partners include: Vistry
Group including Countryside Partnerships; Kellen Homes; Springfield
Properties; Lovell; Telford Homes; and Persimmon. Homes England, an executive
non-departmental public body sponsored by the Department for Levelling Up,
Housing and Communities, works closely with Sigma towards the common goal of
accelerating new housing delivery in England.
Marketing team
The PRS REIT's homes are marketed under Sigma's 'Simple Life' brand, which is
widely recognised as a leader in the single-family rental sector. The number
of enquires received from Simple Life's marketing channels during lease up
periods is now consistently greater than those received from traditional
property portals.
Lettings management team
A specialist Sigma team of leasing and property management professionals
manage the pricing and the release of new homes and oversee the customer
experience across all properties. Sigma has also developed an award-winning,
bespoke tenant app., which supports high customer service levels. It continues
to be enhanced with new functionality.
Asset management team
The asset management team is responsible for detailed reviews of tenancies,
and income and asset management, which are undertaken on a weekly basis. This
underpins the orderly management of both tenancy renewals and new lets,
supporting optimal income predictability and cash generation. The scale of
Sigma's broader operations outside the PRS REIT, means that the Platform
benefits from significant wider economies of scale, including considerable
purchasing power, which reduce costs and provide greater long-term visibility
of costs.
Geographic diversification
The PRS REIT's concentration risk has been reduced by creating assets across
multiple locations and in different regions. Certain locations demonstrate
higher yielding profiles (predominantly those in the North of England) while
others provide greater potential for capital appreciation (often in the South
of England). Proximity to good primary schools has remained a key requirement,
reflecting the Company's focus on the single-family rental sector. In
addition, no investment has been made in any single completed PRS site or PRS
development site that exceeds 10% of the aggregate value of the total assets
of the Company at the time of commitment.
'Simple Life' brand
The PRS REIT's rental homes are marketed under the 'Simple Life' brand. The
brand has created an identity for the PRS REIT's product and aims to represent
a 'gold standard' in the private rented sector, by providing high-quality,
sensibly priced rental homes that are supported by high customer service
standards. The PRS REIT's long-term approach to the ownership of its assets
also provides important reassurance to residents that their tenancies offer
longevity. The Group also actively fosters initiatives that help to create a
sense of community within the Group's developments.
OPERATIONAL REVIEW
Largest portfolio of single-family rental homes in the UK
The Company's portfolio of build-to-rent ("BTR") family homes is the largest
of its kind in the UK. It is geographically diverse, with sites located across
the major regions of England - in the North-West, North-East, Yorkshire, the
Midlands, East of England and South-East (excluding London), together with
single developments in Scotland and Wales.
Housing delivery
A total of 41 new homes were added to the PRS REIT's portfolio in the first
half of the current financial year. This took the Company's portfolio at 31
December 2024 to 5,437 completed homes with an estimated rental value ("ERV")
of £68.6 million per annum (31 December 2023: 5,264 completed homes with an
ERV of £60.3 million per annum). Also, in the period, after considering net
returns, the Board took the decision not to exercise its option to acquire a
newly completed 98-unit site with an estimated rental value of £1.0 million
per annum. Accordingly, the total number of sites, and other relevant metrics,
have reduced from the prior quarter as the table below shows.
At 31 December 2024, a further 41 homes with an ERV of £0.4 million per annum
were under way, at varying stages of the construction process. It is expected
that the final units will be completed and handed over by the end of the
current financial year. We estimate that when the current delivery programme
is complete, the portfolio will comprise 5,478 homes with an ERV of
approximately £69.0 million per annum once fully let.
The value of net assets at 31 December 2024 stood at £767 million, up by 13%
year-on-year and 5% higher than at 30 June 2024 (31 December 2023: £679
million and 30 June 2024: £731 million). This equates to a net asset value
("NAV") per share of 139.6p.
Development costs of investment property over the first half totalled £5.6
million (H1 2024: £15.5 million). The year-on-year reduction reflects the
portfolio coming towards the end of the current phase of development with all
funding fully allocated.
The table below provides a summary of development activity and shows the
cumulative number of PRS homes that have been completed since the launch of
the Company on 31 May 2017 as well as their ERV per annum and the ERV of homes
still under construction.
At 31 Dec At 30 Jun At 31 Dec
2024 2024 2023
No. of completed homes 5,437 5,396 5,264
ERV per annum of completed homes £68.6m £65.1m £60.3m
No. of contracted homes 41 180 312
ERV per annum of contracted homes £0.4m £1.4m £3.1m
Total number of sites (completed and contracted) 71 72 72
No. of completed and contracted homes 5,478 5,576 5,576
ERV per annum of completed and contracted homes £69.0m £66.5m £63.4m
The Company continues to work with one of its principal house building
partners to resolve a planning issue in respect of one of its sites. The value
of the site represents approximately 2.2% of the balance sheet investment
value of assets as at the interim date. Further details can be found in Note
5.
Portfolio performance
Demand for The PRS REIT's homes remains high, and the portfolio continued to
perform very strongly across all key measures.
· Portfolio rental income
The portfolio's growth and the excellent performance of its assets is
reflected in a 16% increase in its net rental income to £26.6 million (H1
2024: £22.9 million). Like-for-like rental growth on stabilised sites
increased by 10.8% over the twelve months to 31 December 2024 (12 months to 31
December 2023: 11.1%). Rental growth on lets to new tenants averaged
approximately 12%, and on renewals with existing tenants, rental growth
averaged approximately 10%.
The portfolio's total ERV per annum (including completed and contracted sites)
as at 31 December 2024 showed an increase of £6.6 million year-on-year to
£69.0 million (31 December 2023: £62.4 million, which excludes the 98-unit
site with an ERV of £1.0 million that was not acquired). Against the position
at the end of the last financial year, the increase in ERV per annum was
c.£3.5 million higher (30 June 2024: £65.5 million, excluding the 98-unit
site). These increases reflect buoyant demand.
· Like-for-like rental growth
Like-for-like rental growth in the 12 months to 31 December 2024 was 10.8% on
stabilised sites (31 December 2023: 11.1%).
· Occupancy levels
Occupancy remained very strong at 96% at 31 December 2024, with 5,232 of the
5,437 completed homes occupied (31 December 2023: 97%, with 5,087 of the 5,364
completed homes occupied). At 31 December 2024, a further 35 homes were
reserved for applicants who had passed referencing and paid rental deposits,
giving a total occupancy rate of 97% at that date (31 December 2023: 98%).
· Rent collection
Rent collection (measured as rent collected relative to rent invoiced in the
period) was 99% (H1 2024: 99%) with no discernible difference attributable to
prevailing economic conditions.
· Gross to net
Non-recoverable property costs were 19.1% of gross rental income during H1
2025 (H1 2024: 18.5%), reflecting a combination of seasonality and the age of
the portfolio. All other costs are also in line with management's targets.
· Affordability and arrears
Affordability, which is calculated as average rent as a proportion of gross
household income, continues to be very healthy, with the ratio at
approximately 23%. This is significantly better than Office for National
Statistics 30% upper guidance limit for what it views as affordable rent.
Total arrears net of bad debt provision at 31 December 2024 remained low as a
proportion of the enlarged portfolio, standing at £1.0 million on 5,437
completed units (H1 2024: £1.0 million on 5,264 completed units). This result
is also in the context of the Christmas period.
Key performance indicators
The Company's performance is tracked, and the major key performance indicators
("KPIs") are shown below:
Six months ended 31 Dec 2024 Six months ended 31 Dec 2023
Rental income (gross) £32.9m £28.1m
Average rent per month per tenant £1,052 £955
Number of properties available to rent 5,437 5,264
Average net investment yield 4.6% 4.5%
Non-recoverable property costs as a percentage of gross rent (gross to net) 19.1% 18.5%
Fair value uplift on investment property £34.7m £20.5m
Operating profit £56.3m £39.2m
Earnings per share ("EPS") 8.4p 5.5p
EPRA EPS 2.1p 1.8p
Dividends declared per share in relation to the period 2.1p 2.0p
Dividends paid during the period 2.0p 2.0p
All the KPIs are in line with management expectations. Gross and net rental
income increases, non-recoverable property costs, operating profit, and the
number of properties available to rent reflect the increased size of the
portfolio and the progression of development sites.
Current trading and outlook
Prospects remain very encouraging. New housing delivery is progressing well,
and the portfolio continues to perform very strongly.
The Company's portfolio of completed homes at 28 February 2025 was 5,437
homes, with an ERV at that date of £69.3 million per annum. Only 41 homes are
now left to be completed and they remain on track to be delivered by the end
June 2025.
Out of the 5,437 completed homes, 5,206 homes were let as at 28 February 2025,
and a further 58 homes were reserved to qualified applicants who had paid
deposits and passed the qualification process although not yet taken physical
residence. Including those qualified applicants, the occupancy rate at 28
February was at 97%.
Rent collection continued to be very strong, over the period 1 January to 28
February 2025, this measure was 101%. Total arrears net of provision stood at
£1.0 million at the end of February 2025. The like-for-like blended rental
growth on stabilised sites was 10%. Affordability (measured as average rent as
a proportion of gross household income), which we watch closely, was 23%. This
is a very healthy level and compares well with Office for National Statistics
30% upper guidance limit for rent in comparison to gross household income.
We expect these strong performance figures to be maintained, especially
against the backdrop of high demand, a severe lack of supply of quality family
rental homes in the UK, and continuing mortgage affordability pressures,
particularly for first-time buyers in a higher-interest rate environment.
The interim dividend payment for the three months to 31 March 2025 will be
considered and declared in the fourth quarter of the current financial year.
ESG STATEMENT
The Company's Investment Adviser, Sigma PRS, undertakes the day-to-day
management of the PRS REIT plc's ESG strategy. Sigma PRS also takes
responsibility for managing ESG priorities at Company level and at an asset
level. All the Company's assets are managed under the 'Simple Life' brand,
which is operated by Sigma PRS. The Investment Adviser reports on ESG matters
to the PRS REIT's Board on a quarterly basis, and there are regular meetings
between Sigma PRS and the Company on all matters of strategy, planning and
direction.
ESG approach
Sigma PRS has signed up to the United National Global Compact ("UN Global
Compact") as well as committing to the UN's Sustainable Development Goals
("SDG") and to SDG Ambition, which guides the UN's goals.
The UN Global Compact is the world's largest corporate sustainability
initiative and a special initiative of the United Nations Secretary-General.
It is designed to encourage business leaders to implement universal
sustainability principles, in particular, the UN Global Compact's Ten
Principles and so help to deliver the UN's SDG. The Ten Principles are derived
from the Universal Declaration of Human Rights, the International Labour
Organisation's Declaration on Fundamental Principles and Rights at Work, the
Rio Declaration on Environment and Development, and the United Nations
Convention Against Corruption.
SDG Ambition is focused on the UN's target of Land Degradation Neutrality
("LDN") and its LDN principles. Objectives include zero deforestation and
enhanced biodiversity through tree and wildflower planting programmes.
The PRS REIT is a member of European Public Real Estate Association ("EPRA"),
a not-for-profit association, which represents the publicly traded European
real estate sector. EPRA's mission is to promote, develop and represent the
European public real estate sector by, amongst other things, providing better
information to investors and stakeholders, actively engaging in public and
political debate, and promoting best practices.
The Investment Adviser regularly monitors the changing legislative and
reporting landscape, including the EU
Sustainable Finance Disclosure Regulation ("SFDR"), the UN Principles of
Responsible Investment ("PRI"), the Task Force on Climate-Related Financial
Disclosures ("TCFD"), the Taskforce on Nature-related Financial Disclosures
("TNFD"), the EU's Corporate Sustainability Reporting Directive ("CSRD"), as
well as national and city-level regulations, which are increasing.
National Government initiatives on biodiversity, including Biodiversity net
gain, and energy are closely tracked and Sigma PRS has incorporated these and
other ESG factors into investment advisory processes and operations.
The PRS REIT is also committed to supporting social and charitable activities
and these activities are funded through The PRS REIT ESG Community Fund. The
PRS REIT ESG Community Fund's activities are approved by the Board and managed
by Sigma PRS. Between 1 July 2024 and 31 December 2024, approximately
£174,000 was invested in a variety of good causes across the Company's
geographic footprint.
Processes and strategies
The PRS REIT recognises its responsibilities regarding the environment. The
new Government has introduced a number of ambitious green policies and
strategies as part of its climate and energy agenda. A primary goal is to
achieve a zero-carbon electricity system by 2030, five years earlier than the
previous government's target.
In the real estate sector, there is a continuing need for action in areas such
as energy and water consumption, non-fossil fuel heating provision and
biodiversity. In developing the Company's ESG agenda, Sigma PRS made energy
efficient homes a major priority together with adhering, as much as possible,
to green building practices. Sigma PRS has embedded best practices and has
worked closely with supply chain and construction partners to ensure that
their policies and activities comply with the PRS REIT's commitment to
legislative requirements and best practice.
Partnerships
Sigma PRS engages closely with a number of partners to deliver the PRS REIT's
ESG commitments. These partnerships prioritise energy efficiencies, the
promotion of biodiversity and 'futureproofing' assets. There is regular
dialogue with construction partners regarding these priority areas, and in
particular alternative heat provision and energy efficiency.
Data gathering and impact measurement are a focus, and Sigma PRS has partnered
with arbnco Limited ("arbnco") on a pilot data project. Arbnco is a technology
company specializing in AI-powered solutions for real estate energy efficiency
and decarbonization, and the pilot project is currently gathering operational
data on a range of assets for analysis. Sigma PRS is also in discussions with
Smartvatten, a leading supplier of water efficiency technology, to assess the
potential benefits of its products and services.
Sigma PRS's partnership with GreenTheUK Limited has continued with great
success. It has delivered wildlife and nature-related initiatives in seven
areas of the country at schools close to the Company's developments. Over 450
young people have been involved with these projects, which included tree
planting and rewilding, together with wildflower and vegetable workshops and
sessions. Sigma PRS also supports other nature and outdoor learning projects
under its Biodiversity Project. These are geared towards the schools and
communities near to the PRS REIT's developments.
Environmental impact and energy performance data
The Company is aware of the impact that its activities have on the environment
and remains highly motivated about taking actions that will minimise and
mitigate any negative aspects.
The energy efficiency of the portfolio's homes is an important aspect of their
design and construction. Approximately 88% of the portfolio's homes have an
Energy Performance Certificate ("EPC") rating in band A or B (1% in band A and
87% in band B), with 12% of homes rated in band C. This means that their
energy performance is well ahead of the both the Government's existing minimum
EPC E requirement and the future minimum energy performance target for rental
properties of EPC C by 2030.
Charities
Sigma PRS focuses on supporting charities and philanthropic organisations that
have links and connections to the areas in which the Company's developments
are located. Residents are also encouraged to participate and one way of
promoting this is to enable them to nominate the good causes they wish to see
supported.
The range of charities, clubs and groups which are beneficiaries of support
continues to grow. Support is both financial and practical, with Sigma PRS
meeting and discussing the needs of groups.
Projects
During the period, the PRS REIT sponsored the fundraising efforts of The
Joshua Tree, a charity supporting families affected by childhood cancers.
There were two higher-profile events in particular that benefited from the PRS
REIT's support in those six months: its 240-mile London Zoo to Chester Zoo
Charity Cycle Ride in September, and its Christmas Concert at Chester
Cathedral, in December.
Another cause in which the PRS REIT is involved is the Smart Works
organisation, a UK charity that helps unemployed women prepare for job
interviews. This includes career coaching and interview styling and
preparation as well as free clothing, shoes and accessories. It has centres in
Manchester and Birmingham and reports that 69% of the women supported obtain a
job.
Embassy, the homeless charity based in Greater Manchester is developing
Embassy Village, a new community in Manchester City centre that will provide
modular "pod" homes for homeless men, a village hall for community activities
and training as well as green spaces, allotments and sports facilities. The
PRS REIT is delighted to be involved with this project, which is expected to
be operational by the end of 2025.
Zoe's Place Middlesbrough is a baby hospice that provides specialised care in
a home-like environment for infants and young children with life-limiting or
life-threatening conditions. It relies heavily on fund-raising and community
support and is a charity close to the hearts of many of the Company's
residents.
The PRS REIT sponsored four track days organised by Speed of Sight, a charity
providing driving experiences to people with disabilities throughout the UK,
empowering them to try something they might not have believed possible. Over
90 people participated using Speed of Sight's specially adapted vehicles, with
dual controls.
The PRS REIT also supports local sports teams, foodbanks, school campaigns
including compassion, empathy and antisocial behaviour programmes, and
initiatives for those with neurological challenges among many others.
Social events for residents
Sigma PRS's social events for residents remain popular across the PRS REIT's
communities. These events are geared towards encouraging social interaction
and fostering a greater sense of community and neighbourliness. The PRS REIT
places great importance on the value of these events, which reflects its own
brand principles.
· Over the Summer, Sigma PRS organised its annual ice-cream event,
and ice-cream vans visited 71 communities over ten days, delivering over 4,500
ice creams to residents.
· In July and August, the Paris Olympics was marked with large
screens set up across the Company's developments, together with food and drink
stalls.
· Christmas was celebrated with a visit by Father Christmas to the
sites across the country, and a Christmas app game was launched and played by
around 1,160 Simple Life residents.
· An online fitness platform was launched for residents together
with a wellbeing library, workshops and other support programmes.
The Company's Environment, Social and Governance initiatives and policies will
be detailed in its ESG Report 2024, which is currently in production. It will
be made available in due course on the Company's website at www.theprsreit.com
(http://www.theprsreit.com) .
Human Rights
The obligations under the Modern Slavery Act 2015 (the "Act") are not
applicable to the Company given its size. However, to the best of its
knowledge, the Board is satisfied that its principal suppliers and advisors
comply with the provisions of the Act. The Company operates a zero-tolerance
approach to bribery, corruption and fraud.
Health and Safety
In order to maintain high standards of health and safety for those working on
sites, monthly checks by independent project monitoring surveyors are
commissioned to ensure that all potential risks have been identified and
mitigated. These checks supplement those undertaken by construction and
development partners. The data is reported to the Board on a quarterly basis
in the event of a nil return, and immediately in the event of an incident.
There were no reportable incidents over the period (2023: none).
Governance
Strong governance is essential to ensuring that risks are identified and
managed, and that accountability, responsibility, fairness and transparency
are maintained at all times.
The Company is subject to statutory reporting requirements and to rules and
responsibilities prescribed by the London Stock Exchange and the Financial
Conduct Authority. The Board has a balanced range of skills and experience,
and the independent Non-executive Directors provide oversight and challenge
decisions and policies as they see fit. The Board believes in robust and
effective corporate governance structures and is committed to maintaining high
standards and applying the principles of best practice.
Risk
The Board has established procedures to manage risk and oversee the internal
control framework. The PRS REIT's principal and emerging risks and
uncertainties are monitored closely and regularly by the Board.
Sigma PRS Management Ltd
PRINCIPAL RISKS AND UNCERTAINTIES
The Audit Committee, which assists the Board with its responsibilities for managing risk, considers that the principal risks and uncertainties as presented on pages 47 to 50 of the Company's 2024 Annual Report were unchanged during the period and will remain unchanged for the remaining six months of the financial year.
DIRECTORS' RESPONSIBILITY STATEMENT
In preparing the Interim Financial Report for the six month period to 31 December 2024, the Directors confirm that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" and that the Chair's statement includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Conduct Authority namely:
a) the Interim Financial Report includes a fair review of important events during the period and their effect on the Financial Statements and a description of specific risks and uncertainties for the remainder of the accounting period;
b) the Interim Financial Report gives a true and fair view in accordance with IAS of the assets, liabilities, financial position and of the results of the Company for the period and complies with IAS and the Companies Act 2006;
c) the Interim Financial Report includes a fair review of related party transactions and changes therein; and
d) the Directors believe that the Company has sufficient financial resources to manage its business risks in the current uncertain economic outlook.
The Directors have reasonable expectations that the Company has adequate resources to continue in operational existence for at least the next 12 months, therefore they continue to adopt the going concern basis of accounting in preparing the financial statements.
Geeta Nanda
Chair
CONDENSED CONSOLIDATED Statement of COMPREHENSIVE INCOME
For the six months ended 31 December 2024
Six months ended Six months ended Year ended 30 June
31 December 2024 31 December 2023 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Note
Rental income 32,891 28,148 58,231
Non-recoverable property costs (6,297) (5,208) (10,940)
Net rental income 26,594 22,940 47,291
Other income 4 100 95 194
Administrative expenses
Directors' remuneration (119) (110) (213)
Investment advisory fee (3,012) (2,975) (6,051)
Other administrative expenses (1,946) (1,299) (2,921)
Total administrative expenses (5,077) (4,384) (9,185)
Gain from fair value adjustment on investment property 5 34,650 20,533 73,412
Operating profit 56,267 39,184 111,712
Finance income 116 63 188
Finance costs (10,138) (8,969) (18,225)
Profit before taxation 46,245 30,278 93,675
Taxation - - -
Profit after tax 46,245 30,278 93,675
Earnings per share attributable to the equity holders of the Company:
8.4p 5.5p 17.1p
Basic and diluted earnings per share 7
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.
CONDENSED CONSOLIDATED Statement of financial position
As at 31 December 2024
As at 31 December 2024 As at As at
(unaudited) 31 December 2023 30 June
£'000 (unaudited) 2024
£'000 (audited)
£'000
Note
ASSETS
Non-current assets
Investment property 5 1,180,081 1,080,058 1,139,823
1,180,081 1,080,058 1,139,823
Current assets
Trade and other receivables 8,153 7,855 6,817
Cash and cash equivalents 18,669 16,063 18,053
26,822 23,918 24,870
Total assets 1,206,903 1,103,976 1,164,693
LIABILITIES
Non-current liabilities
Accruals and deferred income 192 1,789 1,073
Interest bearing loans and borrowings 6 402,247 382,117 385,003
402,439 383,906 386,076
Current liabilities
Trade and other payables 15,468 15,364 15,182
Provisions - 433 77
Interest bearing loans and borrowings 6 22,310 25,259 31,933
37,778 41,056 47,192
Total liabilities 440,217 424,962 433,268
Net assets 766,686 679,014 731,425
EQUITY
Called up share capital 5,493 5,493 5,493
Share premium reserve 298,974 298,974 298,974
Capital reduction reserve 113,092 113,092 113,092
Retained earnings 349,127 261,455 313,866
Total equity attributable to the equity holders of the Company 766,686 679,014 731,425
Net asset value per share 8 139.6p 123.6p 133.2p
As at 31 December 2024, there was no difference between NAV per share and EPRA
NTA per share.
condensed Consolidated statement of changes in equity
For the six months ended 31 December 2024
Share Share Capital reduction reserve Retained Total equity
capital premium earnings
reserve
Note £'000 £'000 £'000 £'000 £'000
At 1 July 2023 5,493 298,974 118,584 236,669 659,720
Transactions with owners
Dividends paid 11 - - (5,492) (5,492) (10,984)
Comprehensive income
Profit for the period - - - 30,278 30,278
At 31 December 2023 5,493 298,974 113,092 261,455 679,014
Transactions with owners
Dividends paid - - - (10,986) (10,986)
Comprehensive income
Profit for the period - - - 63,397 63,397
At 30 June 2024 5,493 298,974 113,092 313,866 731,425
Transactions with owners
Dividends paid 11 - - - (10,984) (10,984)
Comprehensive income
Profit for the period - - - 46,245 46,245
At 31 December 2024 5,493 298,974 113,092 349,127 766,686
condensed CONSOLIDATED STATEMENT OF Cash Flows
For the six months ended 31 December 2024
Note Six months ended Six months ended Year
31 December 2024 31 December 2023 ended
(unaudited) (unaudited) 30 June
£'000 £'000 2024
(audited)
£'000
Cash flows from operating activities
Profit before tax 46,245 30,278 93,675
Finance income (116) (63) (188)
Finance costs 10,138 8,969 18,225
Fair value adjustment on investment property 5 (34,650) (20,533) (73,412)
(Increase) / Decrease in trade and other receivables (2,407) 263 (8)
Decrease in trade and other payables (670) (2,294) (3,117)
Net cash generated from operating activities 18,540 16,620 35,175
Cash flows from investing activities
Purchase of investment property - (9,100) (9,100)
Development expenditure on investment properties (5,608) (15,528) (22,084)
5
Finance income 116 63 188
Net cash used in investing activities (5,492) (24,565) (30,996)
Cash flows from financing activities
Bank and other loans advanced 6 18,150 142,556 151,957
Bank and other loans repaid 6 (10,902) (108,839) (110,229)
Finance costs (8,696) (11,923) (19,082)
Dividends paid 11 (10,984) (10,984) (21,970)
Net cash (used in) / generated from financing activities (12,432) 10,810 676
Net increase in cash and cash equivalents 616 2,865 4,855
Cash and cash equivalents at beginning of period 18,053 13,198 13,198
Cash and cash equivalents at end of period 18,669 16,063 18,053
Notes to the Financial Statements
1. General Information
The PRS REIT plc (the "Company") is a public limited company incorporated on
24 February 2017 in England and having its registered office at Floor 3, 1 St.
Ann Street, Manchester, M2 7LR with company number 10638461.
The Company is quoted on the Main Market of the London Stock Exchange.
This interim condensed consolidated financial information was approved and
authorised for issue by the Board of Directors on 28 March 2025.
2. Basis of preparation and changes to the Group's accounting policies
Basis of preparation
The financial information for the period ended 31 December 2024 does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for the year ended 30 June 2024, has
been delivered to the Registrar of Companies. The auditor's report on those
accounts was not qualified, did not include a reference to matters to which
the auditor drew attention by way of emphasis without qualifying the report,
and did not contain statements under section 498(2) or (3) of the Companies
Act 2006.
The condensed consolidated interim financial report for the six-month
reporting period to 31 December 2024 has been prepared on a going concern
basis using accounting policies consistent with UK-adopted International
Accounting Standards, in accordance with IAS 34 Interim Financial Reporting.
The current period financial information presented in this document has not
been subject to an interim review or audited.
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the year ended 30 June 2024, which
has been prepared in accordance with UK-adopted International Accounting
Standards and the requirements of the Companies Act 2006. The Group's annual
consolidated financial statements are available on the Company's' website,
www.theprsreit.com (http://www.theprsreit.com) .
Adoption of new and revised standards
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
year ended 30 June 2024, except for the adoption of new standards effective as
of 1 July 2024.
As at the date of authorisation of these financial statements there were
standards and amendments which were in issue but which were not yet effective
and which have not been applied. The principal ones were:
· IAS 21: 'The Effects of Changes in Foreign Exchange Rates'
Accounting where there is a lack of exchangeability (effective 1 January
2025); and
· IFRS 18: 'Presentation and Disclosure in Financial Statements'
(effective 1 January 2027 - subject to endorsement by the UKEB).
With the exception of IFRS 18, the Directors do not expect the adoption of
these standards and amendments to have a material impact on the financial
statements.
In the current period, the following amendments have been adopted which were
effective for the periods commencing on or after 1 January 2023:
· IAS 1 'Presentation of Financial Statements' on the
classification of liabilities and non-current liabilities with covenants;
· IFRS 16 'Leases' on sale and leaseback arrangements; and
· IAS 7 'Statement of Cash Flows' and IFRS 7 'Financial
Instruments: Disclosures': Supplier Finance Arrangements.
The adoption of these amendments has not had a material impact on the
financial statements.
Significant accounting estimates and assumptions
The preparation of the Group's financial statements requires the Directors to
make estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities and the disclosure of contingent liabilities
at the reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
Estimates
In the process of applying the Group's accounting policies, the Directors have
made the following estimates, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
i. Fair value of investment property
The fair value of any property, including investment property under
construction, is determined by an independent property valuation expert to be
the estimated amount for which a property should exchange on the date of the
valuation in an arm's length transaction. The valuation experts use recognised
valuation techniques applying principles of both IAS40 and IFRS13.
The Group values its investment properties using the investment approach to
valuation. Principal assumptions and management's underlying estimations that
are used in the fair value assessment of completed assets relate to estimated
rental value, net investment yield and gross to net deductions. Principal
assumptions and management's underlying estimations that are used in the fair
value assessment of assets under construction are investment value on
completion and gross development costs, taking into account construction costs
spent and forecast costs to completion. There are inter-relationships between
the valuation inputs, and they are primarily determined by market conditions.
The effect of an increase in more than one input could be to magnify the
impact on the valuation. However, the impact on the valuation could be offset
by the inter-relationship of two inputs moving in opposite directions. Other
Special Assumptions applied in addition to the key unobservable inputs
identified above, and used since inception include: all individual site
valuations have been treated assuming part of a larger portfolio (in excess of
£50 million); and an indirect purchase of a special purpose vehicle holding
title to the asset, so stamp duty is assessed on a share purchase basis rather
than as property. Further details on the valuation of the investment
properties, including sensitivities, are disclosed in note 5.
3. Going concern
The interim condensed consolidated financial statements have been prepared on
a going concern basis. The Group had net current liabilities of £11 million
as at 31 December 2024 (30 June 2024: £22 million). The decrease in net
current liabilities reflects the reduction in development debt following
completed sites ascending into investment debt. The Company extended the RBS
facility by 12 months to July 2026 and increased it from £75.0 million to
£82.5 million to minimise the amount of short-term debt bearing higher
interest rates while ensuring sufficient headroom to manage the business. The
Group's cash balances at 31 December 2024 were £18.7 million, of which £15.1
million was readily available. The Group had debt borrowing as at 31 December
2024 of £426 million (gross of unamortised arrangement fees), and has secured
further facilities of £41.5 million. Capital commitments outstanding as at 31
December 2024 were £1.2 million. The Group's ERV as at 31 December 2024 was
£68.6 million from 5,437 completed homes and has increased to £69.3 million
from 5,437 homes as at 28 February 2025. This has increased the Company's
recurring income which at this level is more than sufficient to cover monthly
cash costs and to support dividend payments, thereby maintaining the Company's
REIT status. The Company has monitored and performed stress tests and these
have shown the Group to be in a strong position throughout.
Therefore, the Directors believe the Group is well placed to manage its
business risks successfully. After making enquiries, the Directors have a
reasonable expectation that the Group will have adequate resources to continue
in operational existence for the foreseeable future and for a period of at
least 12 months from the date of the approval of the Group's interim condensed
consolidated financial statements for the six months ended 31 December 2024.
The Board is therefore of the opinion that the going concern basis adopted in
the preparation of the interim condensed consolidated financial statements for
the six months ended 31 December 2024, is appropriate.
4. Other income
Other income represents amounts payable by partners in respect of later than
expected delivery of assets where the delay is attributable to the partner.
5. Investment property
In accordance with IAS 40 Investment Property, investment property has been
independently valued at fair value by Savills (UK) Limited, an accredited
external valuer with a recognised relevant professional qualification and with
recent experience in the locations and categories of the investment properties
being valued. The valuation basis conforms to International Valuation
Standards and is based on market evidence of investment yields, expected gross
to net income rates and actual and expected rental values.
The valuations are the ultimate responsibility of the Directors. Accordingly,
the critical assumptions used in establishing the independent valuations are
reviewed by the Board.
Completed assets Assets under construction Total
£'000 £'000 £'000
As at 1 July 2023 947,727 87,005 1,034,732
Completed property acquired on acquisition of subsidiary 9,100 - 9,100
Property additions - subsequent expenditure - 15,528 15,528
Right of use asset movement during the period 165 - 165
Change in fair value 16,968 3,565 20,533
Transfers to completed assets 12,580 (12,580) -
As at 31 December 2023 986,540 93,518 1,080,058
Property additions - subsequent expenditure - 6,555 6,555
Right of use asset movement during the period 331 - 331
Change in fair value 51,127 1,752 52,879
Transfers to completed assets 46,080 (46,080) -
As at 30 June 2024 1,084,078 55,745 1,139,823
Property additions - subsequent expenditure - 5,608 5,608
Change in fair value 31,718 2,932 34,650
Transfers to completed assets 56,935 (56,935) -
As at 31 December 2024 1,172,731 7,350 1,180,081
The historic cost of completed assets and assets under construction as at 31
December 2024 was £869.5 million (30 June 2024: £863.8 million, 31 December
2023: £856.9 million).
Fair values
IFRS 13 sets out a three-tier hierarchy for assets and liabilities valued at
fair value. These are as follows:
Level 1 quoted prices (unadjusted) in active markets for identical assets
and liabilities;
Level 2 inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly; and
Level 3 unobservable inputs for the asset or liability.
Investment property falls within Level 3. The investment valuations provided
by the external valuation expert are based on RICS Professional Valuation
Standards but include a number of unobservable inputs and other valuation
assumptions. The significant unobservable inputs and the range of values used
at 31 December 2024 and 30 June 2024 were:
Completed assets:
Type Range Average
ERV per property £11k - £23k £13k
Investment yield (net) 4.25% - 5.25% 4.59%
Gross to net assumption 22.50% - 25.00% 22.9%
Other Special Assumptions applied in addition to the key unobservable inputs
identified above, and used since inception include:
> All individual site valuations have been treated assuming part of a
larger portfolio (in excess of £50 million); and
> An indirect purchase of a special purpose vehicle holding title to the
asset, so stamp duty is assessed on a share purchase basis rather than as
property.
The PRS REIT acquired a site at Coppenhall Place, Crewe, with planning consent
during the year ended 30 June 2019. At the same time, the Company also entered
into a fixed price design and build contract with one of its principal house
building partners to complete 131 units. This represented approximately 50% of
the entire Coppenhall Place site with the balance being developed by the house
builder as market for sale units. The design and build contract contained
standard clauses making the house builder responsible for delivering the site
and doing so in compliance with the requirements of the original planning
consent.
Shortly after physical completion and letting of more than 95% of the units on
the site acquired by the PRS REIT, a dispute arose between the respective
Council and the house builder regarding compliance with the original planning
consent. After consultation between these two parties, the house builder
submitted a further planning application with a view to resolving the areas of
dispute. The submission was recommended to the Elected Council Members
("Members") by the Council Executive but a decision was deferred at the
hearing in order that the Members could obtain additional information on
viability, a peer review to clarify on-site ventilation and clarification on
queries regarding potential soil contamination in certain areas of the whole
site. The Members are comfortable as regards viability and ventilation. Work
has been ongoing to ensure that all parties are comfortable as regards the
soil quality with remedial action being undertaken where necessary. As at the
date of approval of these interim financial statements the application has now
been approved by the Planning Committee.
6. Interest bearing loans and borrowings
Current liabilities 2024 2023
£'000 £'000
Bank loans at 1 July 31,901 126,745
Loans advanced in the period 1,045 20,920
Loans repaid in the period (10,902) (108,839)
Capitalised loan costs 246 (13,599)
Bank loans at 31 December 22,290 25,227
Lease liability 20 32
Total loans and borrowings 22,310 25,259
Non-current liabilities
Bank loans at 1 July 383,358 247,432
Loans advanced in the year 17,105 121,635
Capitalised loan costs 128 11,830
Bank loans at 31 December 400,591 380,897
Lease liability 1,656 1,220
Total loans and borrowings 402,247 382,117
The Group's borrowing facilities are with Scottish Widows, Legal & General
Investment Management ('LGIM'), RBS plc and Barclays Bank PLC. At 31 December
2024, these comprised the following:
Lender Loan facility Balance drawn Loan period Interest rate
31 Dec 2024
(all in)
Maturity
Scottish Widows £100 million £100.0 million 15 years 3.14% Fixed June 2033
Scottish Widows £150 million £150.0 million 25 years 2.76% Fixed June 2044
LGIM £102 million £101.9 million 15 years 6.04% Fixed July 2038
RBS £75 million £51.4 million 2 years 6.53% Variable July 2026
Barclays Bank PLC £33 million £22.8 million 3 years 8.05% Variable September 2025
The loans are all compliant with the bank covenant level of 55% loan to value
and within the Company's Investment Policy limit of a maximum 45% loan to
value.
The maturity of the RBS facility has been extended to July 2026 and increased
to £82.5 million.
7. Earnings per share
Earnings per share ("EPS") 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, basic and diluted earnings per share are the same for
both the current and prior periods.
The calculation of basic and diluted earnings per share is based on the
following:
31 December 30 June
2024 31 December 2024
2023
£'000 £'000 £'000
Earnings per IFRS income statement 46,245 30,278 93,675
Adjustments to calculate EPRA Earnings:
Changes in value of investment properties (Note 5) (34,650) (20,533) (73,412)
EPRA Earnings: 11,595 9,745 20,263
Weighted average number of ordinary shares 549,251,458 549,251,458 549,251,458
IFRS EPS (pence) 8.4 5.5 17.1
EPRA EPS (pence) 2.1 1.8 3.7
8. Net Asset Value
EPRA Net Tangible Assets ("NTA"), is considered to be the most relevant
measure for the Group. The underlying assumption behind the EPRA NTA
calculation assumes entities buy and sell assets, thereby crystallising
certain levels of deferred tax liability. Due to the PRS REIT's tax status,
deferred tax is not applicable and therefore there is no difference between
IFRS NAV and EPRA NTA.
Basic IFRS NAV per share is calculated by dividing net assets in the Statement
of Financial Position attributable to ordinary equity holders of the parent by
the number of Ordinary Shares outstanding at the end of the period. As there
are no dilutive instruments, only basic NAV per share is quoted below.
Net asset values have been calculated as follows:
As at As at As at
31 December 2024
31 December 2023
30 June
2024
IFRS Net assets (£'000) 766,686 679,014 731,425
EPRA adjustments to NTA (£'000) - - -
EPRA NTA (£'000) 766,686 679,014 731,425
Shares in issue at end of period 549,251,458 549,251,458 549,251,458
Basic IFRS NAV per share (pence) 139.6 123.6 133.2
EPRA NTA per share (pence) 139.6 123.6 133.2
The NTA per share calculated on an EPRA basis is the same as the IFRS NAV per
share for all period ends.
9. Capital commitments
The Group has entered into contracts with unrelated parties for the
construction of residential housing with a total value of £712.5 million (30
June 2024: £712.5 million, 31 December 2023: £712.5 million). As at 31
December 2024, £1.2 million (30 June 2024: £6.4 million, 31 December 2023:
£11.9 million) of such commitments remained outstanding.
10. Transactions with Investment Adviser
On 31 March 2017, Sigma PRS was appointed as the Investment Adviser of the
Company. Extensions to the Investment Advisory and the Development Management
Agreements held with Sigma PRS were signed in July 2024. On 11 November 2024,
the Investment Advisory Agreement was amended by adding a 'change of control'
provision. Under the terms of the amendment, in the event of a change of
control of the Company, both the Company and the Investment Adviser have the
right to serve notice to terminate the Agreement on 12 months' notice. While
the amendment is not considered to be a necessary change, it adds further
flexibility as to how any potential sale of the Company may be implemented.
For the period from 1 July 2024 to 31 December 2024, fees of £3.0 million (1
July 2023 to 31 December 2023: £3.0 million) were incurred and payable to
Sigma PRS in respect of asset management fees. At 31 December 2024, £0.5
million remained unpaid (30 June 2024: £0.5 million, 31 December 2023: £0.5
million).
For the period from 1 July 2024 to 31 December 2024, development management
fees of £0.1 million (1 July 2023 to 31 December 2023: £0.6 million) were
incurred and payable to Sigma PRS. At 31 December 2024, £0.01 million (30
June 2024: £0.03 million, 31 December 2023: £0.1 million) remained unpaid.
For the period from 1 July 2024 to 31 December 2024, administration and
secretarial services of £35,000 (2023: £35,000) were incurred and payable to
Sigma Capital Property Ltd, a fellow subsidiary of the ultimate holding
company of the Investment Adviser. At 31 December 2024, £17,500 (2023:
£9,000) remained unpaid.
Sigma PRS's shareholding as at 31 December 2024 was 5,889,852 (2023:
5,889,852), which represents 1.07% (2023: 1.07%) of the issued share capital
in the Company. All the shares acquired were in accordance with the
Development Management Agreement between the Company and Sigma PRS.
For the period ended 31 December 2024, Sigma PRS received dividends from the
Company of £118,000 (2023: £118,000).
11. Dividends paid and proposed
Six months ended Six months ended Year
31 December 2024 (unaudited)
31 December 2023 (unaudited)
ended
30 June
2024 (audited)
£'000 £'000 £'000
Dividends on ordinary shares declared and paid:
3 months to 30 June 2023: 1.0p per share - 5,492 5,493
3 months to 30 September 2023: 1.0p per share - 5,492 5,492
3 months to 31 December 2023: 1.0p per share - - 5,492
3 months to 31 March 2024: 1.0p per share - - 5,493
3 months to 30 June 2024: 1.0p per share 5,492 - -
3 months to 30 September 2024: 1.0p per share 5,492 - -
10,984 10,984 21,970
Proposed dividends on ordinary shares:
3 months to 31 December 2023: 1.0p per share - 5,492 -
3 months to 30 June 2024: 1.0p per share - - 5,493
3 months to 31 December 2024: 1.1p per share 6,041 - -
6,041 5,492 5,493
The proposed dividend was paid on 7 March 2025, to shareholders on the
register at 21 February 2025.
12. Post balance sheet events
Dividends
On 11 February 2025, the Company declared a dividend of 1.1p per ordinary
share in respect of the second quarter of the current financial year. The
dividend was paid on 7 March 2025, to shareholders on the register as at 21
February 2025.
Strategic Review and Formal Sale Process
As announced on 11 February 2025, the Company received several non-binding
proposals in connection with the acquisition of the Company, the majority of
which were pitched within a price range representing a premium to the then
share price and a discount to the June 2024 published NAV. Following this the
Company invited a select number of parties to undertake confirmatory due
diligence. Discussions with a number of parties are ongoing.
Alongside this, and as part of the wider Strategic Review, the Board continues
to explore all the options available to the Company, with a view to maximising
value for the Company's shareholders.
Further updates will be made in due course, and by no later than the end of
calendar Q2 2025.
SUPPLEMENTARY INFORMATION
I. EPRA PERFORMANCE MEASURES SUMMARY
31 December 31 December 2023 30 June
2024 2024
EPRA earnings per share (Note II) 2.1p 1.8p 3.7p
EPRA net tangible asset value (EPRA NTA) (Note III) 139.6p 123.6p 133.2p
EPRA cost ratio (including vacant property expenses) (Note IV) 34.6% 34.1% 34.6%
EPRA cost ratio (excluding vacant property expenses) (Note IV) 34.3% 33.8% 34.4%
EPRA Net Initial Yield ("NIY") (Note V) 4.3% 4.2% 4.2%
EPRA Loan to Value ("LTV") (Note VI) 35.1% 37.1% 35.7%
The Group considers EPRA NTA to be the most relevant measure for its operating
activities and has therefore adopted this as the Group's primary measure of
net asset value.
II. INCOME STATEMENT 31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
Rental income 32,891 28,148 58,231
Non-recoverable property costs (6,297) (5,208) (10,940)
Net rental income 26,594 22,940 47,291
Other income 100 95 194
Administrative expenses (5,077) (4,384) (9,185)
Operating profit before interest and tax 21,617 18,651 38,300
Net finance costs (10,022) (8,906) (18,037)
Profit before taxation 11,595 9,745 20,263
Taxation on EPRA earnings - - -
EPRA earnings 11,595 9,745 20,263
Weighted average number of Ordinary Shares 549,251,458 549,251,458 549,251,458
EPRA earnings per share 2.1p 1.8p 3.7p
III. STATEMENT OF FINANCIAL POSITION
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
Investment properties 1,180,081 1,080,058 1,139,823
Other net assets 11,162 6,332 8,538
Borrowings (424,557) (407,376) (416,936)
Total shareholders' equity 766,686 679,014 731,425
Adjustments to calculate EPRA NTA:
- - -
EPRA net tangible assets 766,686 679,014 731,425
Ordinary Shares in issue at period end 549,251,458 549,251,458 549,251,458
EPRA NTA per share 139.6p 123.6p 133.2p
IV. EPRA COST RATIO
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
Property operating expenses 6,297 5,208 10,940
Administrative expenses 5,077 4,384 9,185
EPRA costs (including vacant property expenses) (A) 11,374 9,592 20,125
Vacant property costs (92) (67) (102)
EPRA costs (excluding vacant property expenses) (B) 11,282 9,525 20,023
Gross Rental Income (C) 32,891 28,148 58,231
EPRA Cost Ratio (including vacant property expenses) (A/C) 34.6% 34.1% 34.6%
EPRA Cost Ratio (excluding vacant property expenses) (B/C) 34.3% 33.8% 34.4%
V. EPRA NET INITIAL YIELD ("NIY")
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
Total investment property 1,180,081 1,080,032 1,139,823
Less: development properties (7,350) (93,481) (55,745)
Less: right of use asset (1,536) (1,205) (1,536)
Completed property portfolio 1,171,195 985,346 1,082,542
Allowance for estimated purchasers' costs 26,937 22,663 24,898
Gross up completed property portfolio valuation (B) 1,198,132 1,008,009 1,107,440
Annualised cash passing rental income 66,372 54,588 60,644
Property outgoings (14,934) (12,282) (13,645)
Annualised net rents (A) 51,438 42,306 46,999
Add: notional rent expiration of rent free periods or other lease incentives
- - -
Topped-up net annualised rent (C) 51,438 42,306 46,999
EPRA NIY (A/B) 4.3% 4.2% 4.2%
EPRA 'topped up' NIY (C/B) 4.3% 4.2% 4.2%
VI. EPRA LOAN TO VALUE ("LTV")
31 December 31 December 30 June
2024 2023 2024
£'000 £'000 £'000
Borrowings (net) 422,881 406,124 415,259
Net payables 9,183 10,983 9,515
Less: Cash and cash equivalents (18,669) (16,063) (18,053)
Net debt (A) 413,395 401,044 406,721
Investment properties at fair value 1,180,081 1,080,058 1,139,823
Right of use asset (1,536) - (1,536)
Total property value (B) 1,178,545 1,080,058 1,138,287
EPRA LTV (A/B) 35.1% 37.1% 35.7%
(( (#_ftnref1) ))(1) Measured as rent collected relative to rent invoiced in a
given period
(( (#_ftnref2) ))(2) Like-for-like blended rental growth on investment
property stabilised sites is defined as the annual rental growth on sites
where all units have been completed and either all or nearly all have been let
(#_ftnref3) (3)https://www.rightmove.co.uk/news/rental-price-tracker
(https://www.rightmove.co.uk/news/rental-price-tracker)
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