after all the kerfuffle of a requisition and a strategic review its a dissappointing outcome, an increase in the divi by 0.1p and a sale below NAV. The former has been mooted for years and the latter is a kick in teeth.
If i was still a shareholder in this, i'd be dissappointed. |
Dividend increased. Offer expected before the end of March. Sound like they're conducting a professional process. Full marks to Christopher Mills.
Having said that I still don't want to see an outright sale. I think this portfolio can deliver 8% total returns for a decade or more. If you want to expand it, work in JV with some of the companies that are looking to buy it. I'd be happy to participate in a rights issue to fund our share of the equity required |
From todays announcement:
"In the period, after considering net returns, the Board decided not to exercise the PRS REIT's option to acquire a previously contracted site once it became completed and fully let."
That looks like the influence of the new directors. I wonder what the developer did with it? I also wonder what it cost us in option fees and other costs? Its a pretty strong market signal that this doesn't work at short term marginal interest rate cost.
On the other hand, 11% rental growth must be the envy of any other property sector, particularly with 96/7% occupancy and 99% rent collection.
Its going to be another great shame for private investors if this is sold completely even if we do make a short term gain |
Indeed it would make no sense of selling the entire portfolio. Better just realise enough to pay down the expensive floating rate debt and secure the dividend |
Should be ok as PRSs developments are forward funded acquisitions So the development activity sits with the seller and PRS should be treated as just buying an investment property(Not 100% sure on that of course - but given how far advanced PRS are to selling the whole REIT it would be very poor form not to report any tax liabilities in NAV - ASLI did this; though EBOX didn't) |
Thanks. Did not know this. |
@Jimbo re#325 |
What's relevant about the 3 year age mark? |
Amendment to Investment Advisory Agreement.
"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."
Might reduce potential takeover costs; enabling a fuller price to be offered. |
It is a pity that we have not yet been provided with a schedule of the age of the whole portfolio so we can precisely work out the tax implications for selling the newer parts. That way we could work out the fair discount to NAV - a discount that will narrow every month as more houses pass the three year age mark. |
great- a chance the company may be sold nearer to NAV and we can escape the wretched management contract, well done Naylor and Mills thus far! |
apparently received an opportunistic bid during the year, according to Citywire,
wasn't communicated to the shareholders.... |
Sold out yesterday at £1.05, still a good company I like, but can see short term opportunities elsewhere. Can't complain paid £0.76 4 months ago as posted on purchase date, so 40% gain also biggest holding so plenty of cash to reinvest. looking at SREI, SHED & GRI (same rental business as prs but hasn't appreciated last 4 months, so looks good value). |
Thanks for that explanation, still a surprising phenomenon given that they have so many tenants. Also still a concern that the underlying figure is up 30% on the previous year |
In the statement PRSR says the end June figure was higher due to the year end falling on a weekend hence the fall in arrears from GBP1.7m at end-June to GBP1.3m at end-July. |
NAV up to €1.33 Q1 div increase 2025, assume 4.5p surprised if they go to 5p in one go. All good rental growth 12% like for like. Main problem overhead costs of Sigma as posted previously double dipping, once to Sigma & then to local agents. Fair enough Sigma received fee while building, but now building almost complete, can put out for tender. |
Not read the results in full yet. A new dividend policy to be announced in Q1 shows that the debate with the new board members is ongoing. Generally excellent numbers, but to be picky, arears rose from £1m to £1.7m, but bizarrely were back to £1.3m a month later. How come £400k of arrears settled like that? |
Great increase last 3 months, 33% saved my embarrassment of large loss on Nick Train's LTI. Made the right decision for once, switched at right moment. Now my largest holding by far, tempted to take profits but still rising. NAV £1.25 but I think conservative, so I will wait for now. |
Smithers1 Thanks for excellent analysis. I have also posted in the last year, my thoughts on overcharging admin fess 1% to Sigma & then second lot of fees to agents. Not equitable, agents fees should come out of Sigma,s fees otherwise put mgt of portfolio, up for tender. I would imagine a national chain can manage at a good discount to fees currently charged. Only good point is shareholder disillusionment depressed share price & I managed to pick up shares at a good entry point. Going forward with board shake up hoping for 5p div & rising!. Any thoughts on valuation of portfolio mainly new builds 3 - 4 bedrooms about £205k each on the capitalisation of interest method. Should be more like £230k imo so I think NAV on the light side, should be 10% more. |
Glad to see announcement this morning that Robert Naylor and Christopher Mills being brought onto the Board.
Checked the terms in the Prospectus. 4% is charged against the “Total Development Cost” which in the Prospectus definition includes Land (and SDLT!) & Construction costs amongst other things (valuation, title indemnity insurance, pre-dev, Employer’s Agent, CDM compliance, construction bond).
So in summary, broad agreement 4% development management fee is at the very top end of everyone’s range and is being charged against all costs including land. Milked. Unclear why the Investment Management contract was not put out to tender but hopefully Naylor & Mills will now get on top of this to focus on shareholder value |
4 is at the upper end but it's still very common I've never seen anything less than 3 Also depends on whether it covers everything bar land and interest or only hard construction costs |
I hope the former. From experience, piecemeal breakups of portfolios can take much longer than initially expected |
Boardroom battle win for Naylor and Mills, does that mean the company likely will be sold? Or will the properties be slowly realised and the company wound down? |
Yes excellent I agree
"Industry standard DM fees are not 2% - it’s more like 3.2-4" OK but Sigma were still at the very top of the range then |
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