Prs Reit Share Discussion Threads

[giltedge1] 09/4/2024 09:14

Portfolio large enough, no need to build more with expensive debt. Board needs to maximise cashflow, cut costs especially mgt fees & find a buyer close to NAV. NAV realistic & new builds so minimal maintenance.

[arbus5000] 08/4/2024 21:27

a capital raise for some new builds is not a bad idea, however with the share price trading at a discount larger than 50%, it does not make sense to raise equity capital at this point in time.

[smithers1] 08/4/2024 20:53

Agree. An exit anywhere close to £1.20 would be a good result. Citywire published article today noting the dividend is still only 90% covered. Unfortunately I think the Investment Adviser is pushing for a further equity raise as Investor's Chronicle reported. Sigma Capital signed an agreement with Countryside/Vistry in Feb to build a further 5,000 properties over the next 5 years. Clearly to support a conversation with the major shareholders about raising more equity. Not good for smaller shareholders given the discount to NAV

[pdosullivan] 06/4/2024 09:26

To be honest, a sale at the latest published NAV - where the shares have never traded as high as - would likely be the best outcome. Most shareholders are presumably income oriented and there are lots of companies offering stronger yields in this market. Maybe someone like LLOY's Citra would be interested in buying us

[spectoacc] 05/4/2024 14:47

Be interesting to see - they've seemingly mooted a fundraise, and perhaps been knocked back. Could be a great move to sell a portfolio of the houses, proving the NAV, and simultaneously buy more to spread out the CapEx cliff edge. I might even buy some if they did that ;)

[makinbuks] 05/4/2024 14:42

Do nothing, increase borrowing, raise capital at a discount, partner with a second fund marketed directly to the professional market, sell a portion, sell the lot and wind up

[spectoacc] 05/4/2024 14:39

But what are those options/alternatives?

[makinbuks] 05/4/2024 14:34

Well for sure it implies they consider a phase in the funds life is coming to an end. Other than that I don't think it suggests one option over another, simply that they are setting out the alternatives and consulting shareholders on what they would like.

To me the problem is the discount. Do we believe the NAV is the question. Disposing of some houses at above valuation would prove it and narrow the discount. Obviously HOME is a unique situation, nothing to do with PSR but on this point I think there is relevance to what they are seeing as market prices in comparison to modelled ones, ie they don't hold up.

[spectoacc] 05/4/2024 05:43

Out of interest, what do holders think "...Speaking to its shareholders about its next move" implies?

[asagi] 04/4/2024 18:31

reckon that's right MakinBuks? The IC doesn't outsource editorial control to subjects and would surely only amend if they acknowledged their article was erroneous or misleading to IC's readers.

But I know nothing of it.

Asagi (long PRSR)

[makinbuks] 04/4/2024 16:31

Id guess its just a simple case of not thinking the journalist has fairly quoted you and requesting a change. Sounds like the IC fought its corner and the annotated amendment is the negotiated outcome

[spectoacc] 04/4/2024 14:50

Ha, so either some shareholders kicked up a fuss, or more likely PRSR discovered it wasn't an option after all.

But still open-ended - what else could "..Speaking to shareholders.." involve?

[pdosullivan] 04/4/2024 14:39

Very interesting - the Investors Chronicle article has been amended. It now says "The company knows [it does not have cash to build more houses] and told Investors' Chronicle it is speaking to its shareholders about its next move" with a footnote adding - This article has been amended to clarify the nature of PRS REIT's discussions with shareholders

[smithers1] 03/4/2024 19:45

Also on radar likely Labour Government by end of the year. Possible rent controls given the level of recent rent rises across the country?? Political hot potato but I wouldn't rule it out

[jimbobbaby] 03/4/2024 12:36

A capital raise now would be purely in the managers interest and very detrimental to shareholders given the long term fixed nature of much of the debt.If leverage and gearing ratio are a concern they should sell some properties to reduce debt.This would have a much smaller impact on current holders.Or if issuing new capital it should be to all shareholders pro rata.Is there enough private holders to block it / cause a fuss by e-mailing investor relations setting out the concerns.

[asagi] 03/4/2024 12:18

I'm expecting the share price to rise in the coming 18 months as rates fall.

couldn't agree more Makinbuks. I'm also a shareholder and the PRS REIT and think it is one of the best plays on the market for interest rates coming down.

Asagi (long PRSR)

[makinbuks] 03/4/2024 08:38

I'm expecting the share price to rise in the coming 18 months as rates fall. A capital raise now would be very badly timed

[spectoacc] 03/4/2024 05:59

Agree re fees, but I've said all along on PRSR, the business model (also applies to many others eg renewables, infrastructure) relies on a stream of new purchases. Property may be less of a wasting asset than some, but BtL needs CapEx, and it needs to not all come in a lump.

Wonder if they'll try a trick like issuing at slightly higher than current s/p, support by a few major s/holders spending OPM.

[pdosullivan] 02/4/2024 22:11

PRSR shareholder here. I would be very strongly opposed to any equity raise at a discount to NAV.

[smithers1] 02/4/2024 22:07

Investors Chronicle states today PRSR speaking to shareholders about an equity raise. Do not see shareholder value in this. Investment Manager self interest looking to increase assets under management.

PRSR launched in 2017 targeting a geared 6p dividend. Almost 7 years in dividend is 4p and still not yet fully covered and share price 21p below raise price. Do not see the attractions of equity raise based on track record and current discount to "stated" NAV when can get 5%+ interest on deposit. Given gearing risk and longer term maintenance cost risk I would be looking for 8% min. div.

Portfolio should be left to stabilise and investment advisor fees slashed given their role now is limited to overseeing a third party letting / property management company. £6m a year to do that seems excessive

[makinbuks] 20/3/2024 14:27

Look like very good results today. Positive market reaction. Surprised theres not more interest here

[spectoacc] 18/1/2024 09:10

Thanks @Makinbuks. I'd be surprised if many bathrooms/kitchens needed renewing this early. How many they've done - and when - would be a key question.

[makinbuks] 18/1/2024 08:56

Spec, whilst I share your concern over the managers motivation I don't agree that no one is prepared to discuss this. If you look back to the exchanges in October of last year here we covered this in some detail. I particularly like the input that Grainger is 34% and PRSR 36% incl admin. I also refer you to the answer given at the company meeting where they said they upgrade bathrooms and kitchens and increase rent accordingly

[spectoacc] 18/1/2024 07:32

I couldn't see it in the Notes, nor in the balance sheet, nor could one of the writers at the IC (who tipped it) tell me.

You could - possibly - argue that strong rent rises over the next say 7 years, will allow for a decent provision to be built up.

But the fact remains - if you take on a bunch of built-at-around-the-same-time property, in the thousands of units, it'll likely all need the same things doing over the same few year period. Perhaps that's 4 years, but when it comes it won't be cheap.

Could easily spend c.£15k on new kitchen and bathroom, per house, even done in bulk (but good look finding the labour). Like car insurance, it's a lot more expensive than it was.

Is clear to me that the business model, as with so many ZIRP-era ITs, is to buy - issue more shares - buy some more. Then instead of 5,000 properties, all needing CapEx at once, you'd have say 25,000, with 5,000 needing CapEx in any few years period.

There's similar arguments on lifespan of assets at some of the renewable ITs, particularly wind. PRS just seems that much more "obvious".

IMO PRS's costs/fees are much too high, and management will do very well regardless of the future.

[jonwig] 18/1/2024 07:25

Spec - In the last FY results:

Non-recoverable property costs rose slightly to 19.1% of revenue (2022: 18.2%), mainly reflecting the increasing number of assets out of warranty and marginally increased maintenance costs.

Is that where they're hidden? Maybe the NRPCs include a sinking fund? (The word depreciation doesn't occur anywhere in the results statement.)