Prs Reit Share Discussion Threads

[jonwig] 19/10/2022 13:40

Sounds good, but when you factor in can't pays and won't pays the landlord needs to be prudent.

[giltedge1] 19/10/2022 13:36

Data provided to i by estate agents Barrows and Forrester show that average rents have increased in Manchester by 17.1 per cent from £817 in August 2021 to £958 in August 2022.

Other cities across the UK have seen similar increases, including Glasgow (18.3 per cent), London (17.3 per cent), Newcastle (16.7 per cent) and Birmingham (15.1 per cent).

[jonwig] 17/10/2022 07:31

hindsight - correct calculation, but is the current discount a recognition of that risk?

[jonwig] 17/10/2022 07:00

Chairman buys 80,000 @ 88.4p.

[hindsight] 14/10/2022 13:26

If take the nav 116.4p, then allow for 20% property price fall with 31% gearing, get to 82.7p nav

[jonwig] 14/10/2022 07:10

NED buys 25,000 @ 85.5p.

[jonwig] 13/10/2022 07:25

Telegraph Questor -

Matthew Norris, Gravis Capital ...

first invested in the fund, which describes itself as “the largest portfolio of single‑family rental homes in the UK”, in September last year in the belief that it benefits from what he calls the “generation rent” megatrend: an acceptance among younger people that they are unlikely to be able to buy a property for some time and that they will instead seek high‑quality rental accommodation.

He says PRS Reit’s annual results, published on Tuesday, illustrated the robust performance of generation rent assets. It said its portfolio was performing strongly and rental demand continued to grow.

It added that rising interest rates were expected to reduce mortgage affordability and “drive demand in the rental sector as prospective homeowners turn to rental alternatives”, while “high‑quality, well located homes combined with customer service remain highly attractive to prospective renters”.

While the overall rise in rents during the year was 5.1pc, it achieved 10pc increases on properties let to new tenants, compared with about 4pc on renewals with existing ones. Rent arrears were just £600,000 at the end of the financial year in June, compared with net rental income for the year of £34.3m. The portfolio grew by 20pc from 3,984 homes to 4,786 over the year.

Despite all these promising facts, we must acknowledge the continuing dangers of the wider economic environment. As we wrote above, rising interest rates and bond yields tend to push up yields on other assets – and hence push down their prices.

We don’t know where interest rates will peak so downward pressure on the valuation of the assets of this and other property funds is possible. Equally, markets look ahead so some of the expectation of higher rates will already be “in the price”. We also have the buffer of a 28pc share price discount to the portfolio’s net asset value.

Norris notes that many Reits are currently trading at discounts of nearer 50pc but says his research suggests that buying “quality”; Reits at either a more modest discount or even a premium has tended to produce better returns than simply buying those on the widest discounts.

“PRS’s discount of 28pc to the last reported net asset value is not the widest around but the trust is certainly among the highest‑quality portfolios of assets, especially in the private rental sector,” he says.

[davebowler] 11/10/2022 08:47

Liberum;
Robust occupier demand drives performance

Mkt Cap £486m | Share price 88.5p | Prem/(disc) -23.8% | Div yield 4.5%

Event

PRS has delivered a good set of results in the 12 months to 30 June 2022, with EPRA NTAps up +18% to 116.4p on strong NRI growth (+60% y/y). Performance has been driven by robust occupier demand as rising interest rates make home ownership more unattainable for some yet leave room to increase rents on affordable dwellings. LfL blended rental growth over the year was 5.1% with re-lets to new tenants achieving c.10% uplifts in rents and the average tenant spending 25% of their income on rent, down from 29% last year. Adjusted EPS increased +150% from 1.2p to 3.0p and the group’s gearing ratio remains low at c.31% with 62.5% fixed at an average rate of 2.9%. Notwithstanding affordability pressure from the cost of living crisis, increasing mortgage rates will continue to boost demand within the UK rental market. Management guide for the portfolio to reach 5k homes by the end of CY22 with completed assets performing strongly.

Liberum view

We continue to see value on the occupier demand for UK rental market as increasing mortgage rates make home ownership increasingly unattainable for some. While we would expect rental growth to moderate from here due to increasing utility cost pressures, rental homes remain a more affordable option than ownership, which should help to somewhat support residential values in the face of rising interest rates.

[jonwig] 11/10/2022 06:42

The answer would be "because they can raise the rents and therefore the dividend". But this of course raises the question of arrears and defaults.

A shame, but virtually every investment decision these days has to refer back to politics, which is a toxic situation.

[nickelmer] 11/10/2022 06:30

I have been considering these, but am worried that down valuations in UK property values will have a negative impact on NAV, also the cost of capital is increasing and with 2 year bonds yielding over 4% why take an equity risk?

[jonwig] 11/10/2022 06:28

I've been looking at the FY results (I don't hold):



The debt profile looks very good, and I see around 95% of their homes look likely to be built by Vistry (now that it's taken over Countryside). I don't think the concentration will cause any problems, but who knows, in the current environment.

Rent collection at 99% looks great, but are there headwinds, and how strong?

My only concern is that buying anything in the UK looks a gamble right now.

[smithers1] 26/9/2022 20:32

Annual report for the year to June 2021 notes portfolio benefited from yield compression with an investment yield range of 4.0 - 4.75% applied. States 0.125% improvement in yield would increase NAV by £24m whilst worsening in yield by 0.125% would lower NAV by £22m. Portfolio has grown since then as funds deployed so impact would be greater either way. This time last year UK 5 year GILT negative 0.10% and 10 year UK GILT +0.18%. Currently 5 year is 4.06% and 10 year 3.83%. Would expect investment yield range of PRSR portfolio to have moved out significantly with corresponding impact on NAV

[giltedge1] 08/9/2022 19:37

PRS Reit was affected by sentiment in Commercial property sector, but is more insulated. As you correctly stated rising rents, full occupancy, new energy efficient homes & if tenants lose job, can claim housing benefit as rents in lower bracket. Obviously Commercial Landlords, do not have that safety net. I am hoping dividend next year will be raised from 4p as now portfolio almost complete. If shares stay at current level Lloyds Bank or Legal & General will swoop, probably have to pay at least £1.20 for takeover premium.

[jimbobbaby] 07/9/2022 14:15

Rents and replacement cost will both be increasing. Most debt is fixed. Work in progress is fixed price.

[jimbobbaby] 07/9/2022 14:15

Ok. What am I missing. Well insulated homes, held for letting, when they are in short supply, and the pound is likely to devalue further as Tory's switch from austerity to ballooning the national debt. I would have though this is one of the more solid places to be for a few years?

[jimbobbaby] 18/8/2022 15:55

Ain't nothing going on but the rent

[giltedge1] 29/7/2022 09:02

Hope my posts have helped a few new investors come on board, upcoming results will be excellent chronic shortage of EPC B family homes. I hope 4% Income + 5% Capital gains next few years. Done so well I am now moving to GRI as well, good luck.

[makinbuks] 25/7/2022 09:30

Starting to deliver now, spending funds and building out the promised units. The premium of 4.5% declared in the header to the Liberum note will have disappeared now in reality with the 5.1% LFL growth in rents

[davebowler] 25/7/2022 07:54

Liberum;
PRS REIT

5% like-for-like rental growth in 12m period to June 2022

Mkt Cap £600m | Share price 109.2p | Prem/(disc) 4.5% | Div yield 3.7%

Event

PRS REIT added almost 300 completed units in the six-month period to June 2022. The portfolio now comprises 4,786 completed units with a further 693 contracted. During the quarter, PRSR completed the acquisition of a contracted site in Nuneaton from Sigma Capital Group (50 completed and let homes) and a new 41-unit development site in Burton-Upon-Trent. Three further site acquisitions are expected in the period to December 2022.


PRSR achieved 100% rent collection in the 12 months to 30 June 2022. Total occupancy of the completed units is 98% and a further 1% are reserved. Like-for-like rental growth on stabilised sites over the 12 months to June 2022 was 5.1%.

Liberum view

PRS REIT has now achieved 84% of its target of 5,700 completed units. PRSR's NAV performance has improved considerably since June 2020 due to an acceleration in the pace of completions, yield compression and portfolio rental growth. The six-month period to June 2022 is also likely to show meaningful capital growth given the like-for-like rental growth achieved in the period. Operational performance has also been strong with consistently high levels of rent collection and occupancy.

[giltedge1] 15/6/2022 13:31

Think I will add before next update as good hedge against inflation which may stick around another 12 months. Found this analysis on Legal & General website.
All in all, the historical evidence suggests that the residential sector typically generates stable and long-term income streams that tend to outpace inflation. With the fundamental backdrop of continued pressures on UK housing, we expect this to continue. We believe this makes exposure to the residential sector a worthwhile complement for investors with liabilities linked to inflation.

[giltedge1] 06/6/2022 12:05

Just highlighting the positive trend for this company. PRS a solution to problem of good quality affordable family homes. As far as I can see does not set out to increase rents by inflation busting amounts, but steady increase. Remaining portfolio being currently built at fixed cost, so have saved at least 10% on build cost & portfolio all new houses at EPC B, so tenants are saving on fuel. Wish I had bought more last year!.

[makinbuks] 31/5/2022 14:45

I don’t think rent increases in private property are sustainable, or indeed desirable. If they were to continue you’d pretty soon see politicians calling for a windfall tax or legislation to reduce rent poverty.

Your other point about small landlords is well made. Transaction costs, tenant churn etc all point to scale being the only viable landlord model

[giltedge1] 31/5/2022 13:13

Small Landlords are withdrawing from Industry due to regulation, shortage of properties,rents rising, shortage of family homes. Perfect for PRS as filling gap in market
See below.
Tenants across Britain are set to face record rent increases as the cost-of-living crisis deepens. The national average rent is now 15 per cent higher than when the coronavirus pandemic started in early 2020, according to the figures published by the property listings website Rightmove.


In areas outside of London average rent was £1,088 a month for the first quarter of 2022, up 10.8 per cent from the same time last year. This is the first time annual growth has exceeded 10 per cent, Rightmove said.

The largest increases were in Wales and the South West and North West of England, which all had rises of 18 per cent since early 2020.

[apollocreed1] 12/5/2022 18:29

Grainger released excellent results today. I think you can read those over to PRS and they should also do well.

[giltedge1] 03/3/2022 12:29

Port in a Storm comes to mind, one of my shares holding up in 2022. Dividend 4p hopefully rising to 5P in next 12 months, fully let at affordable rents. No ESG issues as houses brand new. Also shortage of family homes & low arrears. One to add.