Prs Reit Share Discussion Threads

[pyufak] 30/7/2017 18:42

the risk factors for this REIT nicely summarized

[pyufak] 30/7/2017 18:42

hxxp://citywire.co.uk/investment-trust-insider/news/john-spiers-what-put-us-off-prs-reit/a1036956

[davebowler] 07/7/2017 14:14

RESI REIT raised £180m hxxps://www.resi-reit.com/documents-news

[davebowler] 07/7/2017 14:14

RESI REIT raised £180m hxxps://www.resi-reit.com/documents-news

[jonwig] 12/6/2017 11:21

DAVE - great policy! I sure would buy a new-build for 200k knowing I might have to sell it for 150k down the line.
And a builder, knowing his homes won't sell!
Labour want to build how many houses a year: half a million?

[daveofdevon] 12/6/2017 09:13

The above article highlights the political risks of Buy to Let and in particular the thinking of comrade Corbyn if he becomes PM.

" While there was no explicit mention of it in the party's manifesto, Corbyn has said if it were up to him, he would extend the Right to Buy scheme from local authority tenants to allow renters the right to buy their home from their private landlord.

This could force landlords to sell up under duress and, more than likely, at a heavy discount to open market values."

[jonwig] 12/6/2017 06:26

A new REIT to float early next month, Residential Secure Income plc:



Website:



Yield 5% (indexed). Raises questions about PRSR's 7% ... gearing, or what?

[davebowler] 02/6/2017 19:40

I was scaled back by 42%.

[jonwig] 31/5/2017 13:45

Skinny: excellent synergy there:

"Apartments to let on the shelves of distribution warehouses. Good access to motorways. No H&C, but adequate lighting and heating at no extra cost. One communal kitchen. Refrrigerated accommodation at reduced rent. 24hr termination contract if shelf is needed for storage. Would suit illegal entrant."

[skinny] 31/5/2017 13:03

From BBOX (which I hold) today :-

The Board of Tritax Big Box REIT plc (ticker: BBOX) announces that Stephen Smith, Non-Executive Director of Tritax Big Box REIT plc, has been appointed as Non-Executive Chairman of The PRS REIT plc.

[jdepp5] 31/5/2017 10:54

Does anyone know what the scale back was?
Thanks

[asagi] 25/5/2017 08:43

well, the adviser team has done it. Their reputation was on the line and they have emerged enhanced. Sigma did have the right people on board after all but you can bet your life they got told they didn't!!!

Hats off to:

N+1 Singer
James Maxwell / Liz Yong / James Hopton (Corporate Finance)

Stifel
Mark Young
Neil Winward
Tunga Chigovanyika

Solid Solutions Associates Limited (Intermediaries Offer Adviser)
Nigel Morris

KTZ Communications
Katie Tzouliadis
Emma Pearson

[jonwig] 25/5/2017 06:15

Issue was significantly oversubscribed and should get off to a good premium.

[jonwig] 21/5/2017 05:38

Asagai - thanks for comments. My motivation was mere reportage of course, but I haven't found any more comments yet on the issue (positive or negative), though there's stuff on Proactive Investors which is just a platform for the company.

The stated 7% yield involves no tax (REITs don't pay corp. tax) and is not taxable within an ISA, but an individual btl investor surely can't match that figure on a new investment today? Dunno!

[asagi] 20/5/2017 10:36

Morning jonwig, thanks for posting a fulsome article.

the implied return on each rented property is still close to 10%.

I think that much of this figure will be an assumption about house price growth, rather than a 10% rental yield. It's reasonable to build in some reckoning of this figure in marketing the IPO.

Tenants may find renting is much more expensive than buying. PRS’s target tenants are families struggling to get a mortgage, but on these figures they be better off if they could.

That's been the case for ages. Not a problem of Sigma or PRS REIT's making. It could be an issue if house prices fell significantly.

PRS is sourcing much of its portfolio from Sigma Capital, an Aim-listed developer that has built and let more than 1,100 homes in the past 30 months. Sigma also owns PRS’s fund manager, leading to a potential conflict of interest.

Agreed, BUT it wouldn't be much of an IPO if PRS REIT said "give us the money, we will spend six months finding sites and then start building". PRS REIT needs a big lump of projects pronto. These don't sit around on a shelf. PRS REIT has effectively been born out of Sigma, it's only natural that they would get the seed portfolio from Sigma. I don't think that this could have been feasibly achieved any other way.

With thousands of homes still lyin lying empty in Liverpool and the average price of a terraced house not much more than £100,000, this is not an area where housing is manifestly in short supply

I think this is a red herring. These empty property sold for £1 type schemes are typically properties that immediately need a four figure sum spent to make them legally habitable and £10-£20k spent to make them pleasant. Have a pop on rightmove. You won't find many family homes for £100k and how much work do they need? Do they have off-street parking? The £100k figure is hasty.

there must be a concern that PRS will end up developing the plots that buy-to-sell builders don’t want.

there must be a concern that Housebuilder A will be developing the plots that other housebuilders don't want. The plots secured by PRS or any other builder will result from market negotiations.

The best points are made in the final paragraph. There are risks. However, on reading it I'm left to wonder if the writer has much experience buying shares, which always requires a substantial amount of pressing on through uncertainty.

Asagi (long SGM)

[jonwig] 20/5/2017 07:28

Moneyweek 19 May:


The shortage of affordable housing in the UK, especially in areas within reasonable distance of centres of employment, is a perennial issue in British politics. For decades, housebuilding has failed to keep up with demand, which has driven rents and prices ever upwards.

The reasons are complex. Planning restrictions have played a role, though the ability of local authorities to block development has lessened. Housebuilders today aim to maximise profits, not output. Following the financial crisis, banks have also toughened their lending rules, requiring significant deposits that few first-time buyers can afford. But most important has been the decline of social housing construction. All this, together with the dismantling of rent controls in 1988, has in turn led to such rapid growth in the buy-to-let market that private rentals now account for 19% of all housing.

Inevitably, there are entrepreneurs who see the imbalance of supply and demand as an opportunity. Hence the PRS Reit (private rented sector real-estate investment trust) is seeking to raise £250m to invest in new-build housing, mainly for families. The company targets a dividend yield of 6%, and total shareholder returns of 10%. These numbers sound attractive, but there are reasons for concern.

The projected net return of 10% is after costs, which include maintenance and management, as well as voids from empty properties. Low-cost debt, estimated at 35% to 40% of gross assets, raises shareholder returns, but the implied return on each rented property is still close to 10%. Tenants may find renting is much more expensive than buying. PRS’s target tenants are families struggling to get a mortgage, but on these figures they be better off if they could.

PRS is sourcing much of its portfolio from Sigma Capital, an Aim-listed developer that has built and let more than 1,100 homes in the past 30 months. Sigma also owns PRS’s fund manager, leading to a potential conflict of interest. The independent directors and the government’s Homes & Communities Agency, which is investing £25m as a cost-effective means of boosting house-building, will need to keep an eye on this.

At this stage, investors don’t know what the portfolio will look like, except the first purchase will be for 221 homes on a 60-acre regeneration site in Liverpool, comprising 829 homes. With thousands of homes still lyin lying empty in Liverpool and the average price of a terraced house not much more than £100,000, this is not an area where housing is manifestly in short supply. More generally, there must be a concern that PRS will end up developing the plots that buy-to-sell builders don’t want.

Finally, investors should worry about the constantly changing legislation covering rental property. It might seem inconceivable that a Conservative government would introduce rent controls or a freeze, but you would have said the same about utility prices until a few weeks ago. The introduction of “right-to-buy” in the sector is also a threat. Optimists should at least wait for a secondary issue in a year or two, when PRS will have an invested portfolio and a track record. Sceptics – including me – will steer clear for much longer.

Somehow I managed to read this without being a subscriber, so don't feel it's wrong to copy it.

[daveofdevon] 11/5/2017 09:12

Thanks jonwig, that explains my twitchy feeling LOL. Will give this one a miss.

[jonwig] 11/5/2017 08:30

DAVE - I've just realised, this might be the reason a lot of brokers might not be involved:

Admission of Ordinary Shares to trading on the Specialist Fund Segment of the London
Stock Exchange’s main market for listed securities

A lot of brokers don't give their clients access to the Specialist Fund segment. TDD only allows it if you are a 'sophisticated' investor.

[jonwig] 11/5/2017 06:33

LE4R - it's an intermediaries offer. You need to apply through one of the brokers involved. There's a list on the website.

[jonwig] 11/5/2017 06:32

DAVE - nor are TDD, though Chas Stanley tells me I can apply through them.

I've read only some aspects of the business model in the prospectus, and I'm not entirely happy. The initial equity will purchase a portfolio from Sigma, but further development will depend on debt funding with gearing up to 40% and maybe further equity after that.
Sigma seems to be the riskless partner here, as are the builders (apart from cost and quality clauses).
I haven't looked at the BoD yet, or remuneration.

This has to be a "safe and boring" 6% yielder, or I'll leave it alone.