Prs Reit Share Discussion Threads

[davebowler] 13/4/2021 09:09

Liberum;
Mkt Cap £463m | Prem/(disc) -1.8% | Div yield 4.3%

Event

PRS REIT has reported total completed units of 3,590 at 31 March 2021 (December 2020: 3,163), representing a 13% increase (427 units) in the quarter. The total number of completed units in the period since June 2020 is 1,508 (72% rise). PRS REIT has now achieved 70% of its target of 5,200 completed units.

The proportion of completed units has picked up considerably in recent quarters due to the number of sites now under construction and three portfolio acquisitions of completed properties. This includes a fully-let development of 123 homes from Blackrock Real Assets and 31 homes in Birmingham from Sigma Capital (the investment manager).


Rent collection and occupancy remain high. Rent collection in in H2 2020 was 100%. Total arrears are currently £0.2m (0.6% of ERV on completed units). 95.6% of the completed units are occupied and a further 2.1% are reserved. The manager also reports that 44 of the homes under construction are pre-let.

Liberum view

Today's update confirms the progress highlighted in the recent interim report. PRS REIT is on track to reach the expected 5,000 completed units by late 2021/early 2022. NAV performance has picked up as the pace of completions accelerates, resulting in an uplift from development profits. The proportion of completed units increased markedly since June 2020 and will contribute to an improvement in dividend cover.

Portfolio performance has been resilient over the last 12 months as rent collection levels have been relatively unaffected. Rental demand remains high with with rent levels holding at pre-Covid levels. The key focus for the company remains on progressing development schemes and building up the level of dividend cover (0.1x dividend cover in the six-month period to December 2020). The shares have re-rated significantly in recent weeks due to deployment progress and an improvement in income visibility.

[sphere25] 29/3/2021 13:41

And catching up with boring PRSR:

"The Company's transfer from the Specialist Fund Segment to the Premium Segment of the Main Market of the London Stock Exchange took place on 2 March. The migration will enable us to broaden the share register and facilitates our eligibility for inclusion in FTSE's EPRA and UK Index Series."

Just want to see how the buying comes in now from the trackers for the next review in June and whether it results in closing the NAV from the current price of 87.1 to the EPRA NAV of 96.2p.

Nothing of note as yet, it is early. Have to see if the wider market holds completely stable till the review in June too, but should be easy to see any whoppers being bought here because PRSR barely bats an eyelid most of the time.

All imo
DYOR

[davebowler] 24/3/2021 10:18

Liberum;
Event

PRS REIT has reported an EPRA NAV per share of 96.2p at 31 December 2020 (95.1p at 30 June 2020), resulting in a NAV total return of 4.3% in the six-month period and 5.5% overall in 2020. Revaluation gains accounted for 95% of the returns in the period.


The total number of completed and contracted units at 31 December 2020 was 5,126 (December 2019: 4,945). The portfolio is spread across 65 sites and has an ERV of £48.8m on completion (6.2% yield on cost). PRS REIT has reported total completed units of 3,163 at 31 December 2020 (June 2020: 2,082), representing a 52% increase (1,081 units) in six months. This represents 62% of the total number of completed and contracted units. The company expects completed units to rise to 5,000 by late 2021/early 2022. Net LTV has risen from 15% to 29% since June 2020 as deployment has progressed.

The proportion of completed units has picked up considerably in recent quarters due to the number of sites now under construction and three portfolio acquisitions of completed properties (175 units). This includes a fully-let development of 123 homes from Blackrock Real Assets and 31 homes in Birmingham from Sigma Capital (the investment manager).


Rent collection has remained robust with arrears unchanged at £0.2m (less than 1% of ERV). EPRA EPS in the half-year to December was 0.2p. Occupancy of completed units was 96.3% with a further 1.7% of units reserved. Like-for-like rental growth in H2 2020 was 0.5%.The company remains on track to distribute 4.0p in FY 2021 (June period end) and now expects to be able to increase the dividend in FY 2022.

Liberum view

NAV performance has picked up as the pace of completions accelerates, resulting in an uplift from development profits. The average uplift on completed assets to investment value was 9.7%. The proportion of completed units increased markedly in H2 2020 and will contribute to an improvement in dividend cover.

Portfolio performance has been resilient throughout 2020 as rent collection levels have been relatively unaffected. Rental demand remains high with with rent levels holding at pre-Covid levels. The key focus for the company remains on progressing development schemes and building up the level of dividend cover (0.1x dividend cover in the six-month period to December 2020). We expect the shares to re-rate in 2021 as the company approaches its target of 5,200 units and income visibility improves.

[sphere25] 12/2/2021 14:36

Just bought more.

Boring boring PRSR!

Two weeks to get to 93p?

Interested to see how the tracker funds approach the buying here.

Did I mention how boring PRSR is?

All imo
DYOR

[sphere25] 11/2/2021 10:32

Wonder how far along they are in changing listing - possibly ready for the review in June?

Nonetheless, good ole boring PRSR has almost closed that gap now so the bulk of the capital growth must be in the price now. With a minimum 4p dividend, the yield is hardly a disaster compared to cash or bonds so perhaps more of these lagging REIT's will re-rate higher as confidence in the economic recovery grows.

To my untrained eye, it looks like the NAV are stable or actually going up in the sector with not only PRSR but BREI upgrading. There is alot more interest with much heavier buying in RDI recently and separately even HWG upgraded their numbers.

Possibly a signal on the improving fundamental picture. Still, slow and boring ones have been quite good really.

All imo

DYOR

[davebowler] 10/2/2021 11:14

Liberum;
Deployment progress leading to improved performance

Mkt Cap £421m | Prem/(disc) -11.4% | Div yield 4.7%

Event

PRS REIT has reported an EPRA NAV per share of 96.1p at 31 December 2020 (95.0p at 31 December 2019), resulting in a NAV total return of 5.4% for 2020. An unchanged dividend of 1.0p has been declared for Q4 2020.

Liberum view

NAV performance has picked up as the pace of completions accelerates, resulting in an uplift from development profits. The proportion of completed units increased markedly in H2 2020 and will contribute to an improvement in dividend cover. PRS REIT reported total completed units of 3,163 at 31 December 2020 (June 2020: 2,082), representing a 52% increase (1,081 units) in six months. This represents 62% of the total number of completed and contracted units. The company expects completed units to rise to 5,000 by late 2021/early 2022.

Portfolio performance has been resilient throughout 2020 as rent collection levels have been relatively unaffected. Rental demand remains high with with rent levels holding at pre-Covid levels. The key focus for the company remains on progressing development schemes and building up the level of dividend cover (0.03x dividend cover in the year to 30 June 2020). We expect the shares to re-rate in 2021 as the company approaches its target of 5,200 units. This should be supported by the move to the Premium Segment, enabling inclusion in the FTSE UK and EPRA indices.

[sphere25] 12/1/2021 12:48

Breaking out.

Taken a few more. Been hard to buy all morning with nothing available at numerous price points and nothing now at 84p. 139,771 buy print at 84.9p showing how thin the supply has been when the offer at time of the trade was 83p.

The turtle is daring to do an FIF.

Closing the gap to 90p looks the technical play now.

All imo
DYOR

[sphere25] 11/1/2021 14:27

Added here. Heavy buying coming in at 79p and 80p. Wouldn't have added if it was the usual mediocre daily amounts so it might be setting up for a breakout with that level of interest based on a bullish statement.

Shouldn't be too much drama here compared to the majority going forward so a more steady move in a market which has many participants now wondering if we are really in some form of mania/bubble.

FCA are out today warning on crypto and even SCSW have seen enough to suggest valuations are extreme in the US and a fall in excess of 50% could be coming. Who knows when though? We need a healthy correction soon. Previous parabolic blow off tops are great on the way up but absolutely brutal when it all comes crashing apart.

Even I have caught the mania with speculative buys in AGL and SWG recently - properly pushing the boat out!

That's as blooming well far as it will be going in the near term! :-)

All imo
DYOR

[sphere25] 11/1/2021 10:23

"The Board can now confirm its intention to apply to the FCA for the Company's issued share capital to be admitted to the Premium Segment in early 2021. The transfer is expected to broaden the Company's share register and facilitate its eligibility for inclusion in FTSE's EPRA and UK Index Series."

That's an interesting piece of news regarding the premium listing. This will head into the FTSE Small Cap and naturally that will mean trackers having to buy in. This share clearly isn't going to set the world on fire with share price moves but a bullish technical point of note.

[cwa1] 11/1/2021 08:11

Morning all. Seemed a reasonably solid and upbeat statement on the whole to me, so I decided to join your gang with a maiden purchase here this morning. Good fortune to you all :-)

[arbus5000] 27/12/2020 19:38

you are advertising the same alleged conflicts of interest that have plagued this REIT since its launch.

Why don't you check yourself in for the broken record syndrome?

[kingrat1] 27/12/2020 10:11

Crude using average prices that cover such a large area. Prices can vary significantly street by street. It also somewhat misses the point about the obvious conflicts of interest that have yet to be acknowledged by the Board let alone addressed. The PRS Reit launched in May 2017 and since then the share price is DOWN 23%, more if you consider the second £250 mill was raised at £1.025, and that's after a strong rebound from £0.58 at the start of the pandemic. This was supposed to be a safe and boring investment trust.... In contrast Grainger's share price is UP 19% over the same period.....

[arbus5000] 24/12/2020 14:08

the average price for first time buyers in Manchester is around 160K (April-2020), Rightmove has the average flat at 200k (last year average)

PRS has just acquired 123 homes for 19million, which comes in at 154K.

Unless these homes are in a severe state of disrepair, it looks like a bargain to me.

(retail) Letting agents typically charge 10-20% for the management of properties.

Perhaps a better peer for PRS Reit is Grainger (GRI), which has a similar sized property portfolio, further north, but was worth significantly more ! I have no idea how much their management fees are though.


Edit: GRI's estimated gross rental yield is 6.5%, but the realised dividend yield is a smidge below 2%. They have more properties, and have been established since 1912.

[wingchan] 21/12/2020 10:28

Another massive conflict. The investment advisor sigma capital sells a site it developed and managed on behalf of BlackRock to the PRS Reit who it acts on behalf on.... presumably Sigma had a financial interest on the site depending on its performance for BlackRock which will have been driven largely by the sale price but don't worry, there was an "independent" valuation by Savills who undertake all of the Reit's and Sigma's valuation services...... total lack of corporate governance! An independent party and an independent valuer should have been appointed to act for the REIT in this transaction given the obvious conflict.

Also for clarity Sigma were contractually obliged to acquire shares in the REIT. Under the terms of their development management agreement where they receive a generous 4% fee, half must be re-invested in the REIT. That they paid Investors Champion to put out a research note implying that they were buying shares of their own free will is seriously misleading. The 1.5m shares acquired by Sigma on 25th Nov were done so as a contractual obligation. What is curious given they could have issued new shares at NAV and invested the funds in their "attractive proposition", was that they instead bought them from an institution that was prepared to sell 1.5m shares at 76p. That says more about the outlook than anything. I hope the appointment of a joint broker is not a preclude to attempting to raise more equity taking the REIT back to cash drag and negative dividend cover. On every financial metric the Reit has underperformed to date. It has some way to go before DEPLOYING the £900m gross which was originally targeted in two years... The dividend yield will be sub 4% not 6%+ and that is after many more years taken to deploy the funds than was originally advised with initial sites having the benefit of rental growth. The NAV remains significantly below the initial raise price inspite of beneficial headwinds through rising house prices. Yield compression and a robust rental collection rate that compares favourably to many commercial property sectors. The NAV was meant to be growing at 10%+ per annum at this point per original marketing forecasts. The only beneficiary has been the Investment Advisor and yet the conflicts of interest continue unchallenged

[sphere25] 27/11/2020 14:27

So we know who the big buyer has been in the market. Just watching the price movement and chart here, looks set to test a breakout. It's a turtle though, boring and slow.

82p by Christmas?

Probably need to stop knocking them because of what the FIF turtle has done recently.

[davebowler] 25/11/2020 09:26

Liberum;
£1.1m share acquisitions by investment adviser

Mkt Cap £372m | Prem/(disc) -19.2% | Div yield 5.2%

Event

Sigma Capital Group, the parent company of the investment adviser to PRS REIT, has acquired 1.5m shares in the company at a price of 76p per share. Sigma Capital now owns 5.9m shares (1.2% shareholding) in PRS REIT.

Liberum view

The £1.1m share acquisition demonstrates confidence in PRSR's portfolio. Capital deployment has progressed this year, with completed units representing 51% of the portfolio at the end of September. This remains the key area of focus for the company in order to build the level of dividend cover (0.03x dividend cover in the year to 30 June 2020). Portfolio performance has been resilient throughout 2020 as rent collection levels have been relatively unaffected. Rental demand remains high with with rent levels holding at pre-Covid levels.

[pswl] 17/11/2020 13:44

As noted by others, concerns around the non-recoverable direct property costs as a percentage of gross rent are materialising. The stated Gross to Net deduction in the 6 months to 31st Dec 2019 was 18.2% per the Interim Report. For the full year to 30 June 2020 the stated Gross to Net deduction had shot up to 21.1% per the Annual Report. Whilst not stated in the Annual Report, this implies a Gross to Net deduction in the last 6 months of the financial year to June 2020 of 24%+! The absence of any comment on this in the Annual Report is alarming and the following statement contained in the Annual Report is disingenuous: “All the KPIs are in line with management expectations. Increases in rental income, 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.” The Gross to Net deduction for the full year to June 2019 was 17.6% so there has been a marked and concerning trajectory since then. In the Interim Report to Dec 2019 the following statement was made: “Currently, costs are at 1.2% over the target 17% of gross rent during the development phase. However, the Gross to Net deduction during the development phase is well below published averages, at 18.2%, reflecting the benefits of our model. All other costs are in line with management’s targets. At stabilisation we are targeting the Gross to Net deduction to be 22.5%, under the sector average of 25%.” At an implied 24% for the first 6 months of 2020, the Gross to Net deduction is now a full 7% above target during the development phase. With completed investment assets of only £231m at 30 June 2020 against a target of £900m the PRS REIT still has some years to go in the development phase. Given the infancy of the portfolio this is a major concern as the figure is only likely to increase as the portfolio achieves stabilisation and then matures, at which point rolling refurbishment programmes will be required. It brings into question one of the much touted key attractions of the PRS REIT – new build portfolios that were marketed as having both low and predictable non-recoverable direct property costs as a result of homes clustered on individual sites that had standardised layouts, designs and fittings. The notion was that terraced housing would be significantly cheaper to manage and maintain than apartment blocks. These assertions no longer appear to hold true. The rising Gross to Net deduction may also have implications on the valuation of the assets and hence Net Asset Value moving forwards given Savills valuations currently assume a long-term 22.5% to 25% which now looks unsupportable. Critically the way the issue has been brushed under the carpet given the lack of any reference or explanation in the Annual Report to follow up on the comments in the Interim Report, is both a poor reflection on the PRS REIT Board and their governance, as well as a further tarnish on the investment adviser Sigma Capital’s reputation and credibility. After allowances for the impact of Covid, the PRS REIT’s financial performance since launch has still been sub-par and the increasing Gross to Net deduction is yet another concern to add to a growing list. It is reminiscent of the issues suffered by Empiric (ESP) a few years ago where the dividend was cut and there was a lack of cost control combined with operational issues culminating in the dismissal of the CEO (hxxps://citywire.co.uk/investment-trust-insider/news/empiric-student-property-sacks-boss-after-dividend-cut/a1077128). For clarity the Gross to Net deduction referred to excludes Sigma Capital’s annual investment advisory fee (£4.34m p.a.), administrative expenses in running the REIT (£1.68m p.a.) and Directors Remuneration (£140K p.a.).

[sphere25] 12/11/2020 10:49

Is this the FIF of the REIT world?

Ticking higher but sheesh!

Come on turtle, you can push on a quarter of a pence a day. If I can get near 80p to sell by Christmas, that would be enough of a present.

RGL just went up like a rocket, as per so many other moves out there.

[sphere25] 10/11/2020 08:11

Laggard from yesterday's rally.

Chart turning up here?

[harrabinr] 14/9/2020 10:08

The PRS REIT announced in its interim results published 31 March 2020 £400m of committed debt facilities in place: "Our lending partners are Scottish Widows (£250 million), Lloyds Banking Group plc (£50 million) and Royal Bank of Scotland plc (£100 million), to whom we would like to express our thanks for their support." Strange that in May 2020 the Investment Advisor Sigma Capital has put in place additional debt facilities for the PRS REIT with Barclays: THE PRS REIT (BARCLAYS) MEMBERCO LIMITED, THE PRS REIT (BARCLAYS) BORROWER LIMITED & THE PRS REIT (BARCLAYS) HOLDING COMPANY LIMITED. Perhaps one of the lenders has withdrawn funding post Covid but no official announcement issued to date. No doubt this will be clarified in the next trading update.

[packoflies] 07/4/2020 22:21

Analysis of Interim Results – Improper governance by REIT Board & time to sack the Investment Advisor Sigma Capital

• Claimed £771m completed and contracted GDC + £75m “strategically deferred” spending = claimed deployable funds of £846m

• The £75m balance of funds were meant to be contracted by end of March at the latest as per the 14th Jan “2nd Quarter Update”. Over the intervening period ZERO additional funds have been committed or contracted with the figure remaining static at £771m. Given that the Coronavirus did not impact the UK until early to mid March ( it was fortuitous that the PRS REIT had been unable to commit ANY of remaining £75m prior to this and can now look to "deploy it on strategic income producing opportunities". A more cynical view would be that the funds have not been “strategically deferred” to take advantage of opportunities but that these remaining funds are not available to be drawn under the PRS REIT’s 45% maximum gearing as detailed below.

• Current NAV of £470m supports debt of £385m assuming maximum permissible gearing of 45%. Taking account of dividends paid out of equity and overall cashflow to date, estimated deployable equity of approx. £430m. Max. total deployable funds of equity and debt of £815m, not £846m as claimed. Gross yield of 6.2% on GDC of £815m equates to £50.5m gross income. Deduction of 22.5% gross-to-net, administrative expenses and debt interest at 2.72% as per interim results, leaves estimated net income of £22.8m. Stabilised geared dividend of 4.61p per share pre any coronavirus related issues………

• Lack of comment on dividend in interim results other than indefinite deferral of dividend covering the 3 months to 31st March 2020. When the stabilised dividend target is reduced AGAIN from the already reduced 5.5p per share it will be blamed on the coronavirus but in truth would have comfortably been sub 5p regardless.


• 2 years and 7 months from inception up to 31 Dec 2019, the REIT’s rental income just covers costs and debt interest but it remains significantly cashflow negative as there remains no dividend cover. The cancellation of the uncovered dividend for the 3 months to end of March 2020 and subsequent dividends is the sensible option to preserve deployable funds and NAV irrespective of resultant Coronavirus issues.

• Deployed only £487m to 31st Dec 2019, of which only £212m are completed income producing assets (Notes to the Financial Statements 4.), of £900m gross funds. Noted under “debt facilities” it will take a further 18 months to complete the current phase of construction. Once again this makes a mockery of the comments by the Investment Adviser’s chief executive Graham Barnet in September 2018 where he outlined his desire to raise a third £250m in early 2019 with a clear intention to increase assets under management irrespective of the fact it was not in the best interests of PRS REIT shareholders as was the case with the raising of second £250m in Feb 2018……… There is a clear and fact based track record of Sigma acting in its best interests and not its investors but that is for another day. The 3rd raise thankfully did not happen but it illustrates the significant and ongoing conflicts of interest between the Investment Advisor and the PRS REIT. (hxxps://www.propertyweek.com/finance/the-prs-reit-aims-for-new-year-fundraising-of-250m/5098937.article)

• Claimed that completed and contracted sites have a GDC of £771m. However, Capital Commitments outstanding as at 31st Dec 2019 were £189m (notes to the financial statement 3&8). Add to that £487m deployed to 31st Dec 2019 (see notes to financial statement 4) equates to a total GDC of £676m, £95m less than the claimed figure……..

• The Investment Advisor Sigma Capital is paid a (generously high) 4% development management fee. This is separate to the profit it makes from selling its own completed sites to the PRS REIT and the 1% annual management fee it is paid (hxxps://citywire.co.uk/investment-trust-insider/news/liberum-rental-housing-trust-pays-fund-manager-too-much/a1313075). Sigma is required under its contract with the PRS REIT to invest half of the development management fee in PRS REIT shares. Since the REIT’s inception up to 31st Dec 2019 the Investment Advisor had been paid £15.51m in development management fees alone so should have invested approx. £7.75m in PRS REIT shares. Yet as at 31st Dec 2019 Sigma had 4.39m shares……….. even allowing for bi-annual subscription of shares something is awry.


• Stated gross to net of 18.2% in interim results but rental income in 6 months to 31st Dec of £5.607m less non-recoverable property costs of £1.140m as per income statement represents a 20.3% gross to net. This will spike significantly over the coming months in light of coronavirus but was already on an upward trajectory and will be a key determinant of the stabilised dividend yield. Year ended 30th June 2018 gross to net of 15.5%, Year ended 30th June 2019 gross to net of 17.7%.

[farhanmartinez] 20/2/2020 18:39

Steviet1 it is far higher than the £17.9m figure stated by analyst Liberum. That only includes the development management and investment advisory fees. Sigma the investment adviser to the PRS REIT have also made considerable amounts of money selling their own developed sites to the PRS REIT. It must be great for them having a guaranteed buyer lined up. Whilst there is an "independent valuation" all valuations can be skewed upwards or downwards within a range of 20% without the valuer being liable and you can bet your bottom dollar with Sigma being both seller and acting on behalf of the buyer these have been skewed to the upper end. The conflicts of interest are quite clearly unmanageable. It is outrageous that Sigma Capital has made significantly more than the PRS REIT itself and that is assuming the investment gains recognised within the REIT have not also been skewed upwards by teh valuers given the pressure on the deteriorating NAV and hence Sigma Capital. The PRS REIT Board really need to step up to the mark here and sort out these conflicts

[steviet1] 17/2/2020 17:32

Following Invesco's continued sell-down of their holding in the PRS REIT last month, Aviva another major institutional holder have today also significantly reduced their holding. Not encouraging signs.

Worth noting that Sigma Capital, the investment Adviser to the PRS REIT, have been contractually obliged to invest half of the 4% development management fees they receive into PRS REIT stock. Assuming they have developed approx. £500m of sites for the PRS REIT to date that would equate to development management fees of approx. £20m, with half used to acquire PRS REIT stock. One can only wonder how far the PRS REIT share price would have fallen without a forced £10m buyer in the market.

Given the PRS REIT is close to deploying all funds, Sigma will shortly no longer be a forced buyer of PRS REIT stock - at this point expect the PRS REIT share price to continue its downward trajectory.

[steviet1] 17/2/2020 17:22

Liberum: Rental Housing Trust Pays Fund Manager Too Much

Government-backed real estate investment trust (Reit) PRS (PRSR) may be doing an important job rolling out much-needed homes for rent, but Liberum analyst Conor Finn believes its fund manager Sigma Capital continues to get the better end of the deal over shareholders.

Responding to PRS’ second quarter trading update, Finn criticised the property development fees paid to Sigma that he said had seen the AIM-listed fund manager make as much money as the Reit's shareholders since its flotation, or initial public offer (IPO), nearly three years ago.

‘From IPO to June 2019, PRS has generated £17.8m of earnings but the manager has received £17.9m in investment and development management fees,’ he said.

‘The company does not charge a performance fee but the 4% development management fee seems high given it is generally dealing with established developers,’ Finn said in a note to investors.

The speed of rollout is important for investors after PRS last year cut its dividend target for 2021/22 from 6p to 5.5p, blaming planning delays and political uncertainty.

Finn said investors in the £448 million trust, managed by Sigma’s Graham Barnet, had had a ‘frustrating’ year due to ‘a high level of cash drag’ and the uncovered dividend.

[davebowler] 31/1/2020 16:31

Liberum:Real Estate PRS REIT3.9% NAV total return in 2019Mkt Cap £455m | Prem/(disc) -3.3% | Div yield 5.4%EventPRS REIT's NAV per share at 31 December 2019 was 95.0p, reflecting a 3.9% NAV total return in 2019 (H2: 2.3%). NAV performance has improved slightly as deployment progresses. 1,617 homes had completed by the end of December and the company expects this to rise to 2,000 by the end of March. The total number of completed and contracted units is 4,945 (September 2019: 4,783), representing a gross development cost of £771m (86% of total capital). The expected ERV of £47.6m represents a gross yield on cost of 6.2%.