Prs Reit Share Discussion Threads

[fidra] 20/8/2023 08:35

Thanks for the good replies.

What have the cost of dividends been compared to earnings.

I had thought we were quite well covered.I have obs been mistaken in this.

[pdosullivan] 20/8/2023 06:25

The dividend has been uncovered up to now. It should be covered in FY 2024 but the scope for a dividend increase this side of FY 2025 is likely small.

[jonwig] 20/8/2023 06:21

fidra - bing a REIT, they have to pay out at least 90% of net rent as dividends, so the dividend should be rising anyway.

[pdosullivan] 19/8/2023 16:31

I wonder if LLOY might consider bidding for PRSR as a nice fit for its buy to rent unit.

[fidra] 19/8/2023 12:24

Fallen back quite a lot here .

Assume NAV still way above share price.circa £1.20 (?)

Do they have room for a divi rise ?,I was expecting one.

Or will this fall to a 7% yield ,which means further down to go?

Anyone any thoughts.

I have a few ,and thought there could be an offer for the entire estate,as appears pretty good value rent wise going forward.

[makinbuks] 10/8/2023 11:00

Its a great point hindsight, attention seeking journalists at the BBC or The Mail only ever focus on the rent rises

[hindsight] 10/8/2023 10:41

Amazing its only 63%
Rents have to rise and prices fall. I make real btl net rents 3.5% and cost of capital 5.5%

[jimbobbaby] 10/8/2023 09:16

Quote form independent article today: "Property professionals' expectations that rents will rise in the next few months are at the strongest levels seen so far this century, said the Royal Institution of Chartered Surveyors (Rics) on Thursday.Some 63 per cent of professionals expect rental prices to increase over the three months ahead, marking a fresh record high in records going back to the second quarter of 1999, Rics said."Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost-of-living crisis," said Rics chief economist Simon Rubinsohn.

[davebowler] 25/7/2023 21:18

Liberum;The company published an update to its performance for the quarter ending 30 June 2023. It reported continued strong asset performance with 444 homes contracted in the quarter and increasing the total number of completed homes to 5,080 (+6.1% YoY). Estimated rental value per annum has increased 15% YoY to £55.0m and like-for-like rental growth has been 7.5%. Rent collection remains strong at 99% and affordability, measured as average rent relative to gross household income remains good at 25%, well below Home England's guidance of less than 35%.On 10 July the company refinanced its £150m RCF (previously reported) with a 15-year fixed rate debt for £102m and a £75m floating-rate debt for two years with an interest rate cap. Approximately 82% of debt is now covered by long-term fixed rate facilities. The average maturity of the company's debt portfolio has increased from 10.9 years at the end of 2022 to 13.7 years now and if the floating-rate RCF is fully drawn the average blended interest rate would be 4.3%.Liberum viewPRS REIT is hard to compare to the other companies in its sector due to its unique focus on the private rented sector rather than social housing or student homes. But it is this focus on the PRS sector that makes PRS attractive from a structural point of view since there is a persistent shortage of homes in the UK and with mortgage rates at 30-year highs, the demand for rental properties is only going to increase in coming quarters.?And while we are not specialists in the PRS market, it is clear that PRS Reit is able to increase its rents at a substantially higher rate than the average in England. The latest ONS data to March 2023 shows an average rent increase in England of 1.5% vs. PRS Reit's 7.5%.

[jonwig] 25/7/2023 06:11

Q4 update (link in header). Summary -

The business model remains firmly supported by market fundamentals, most significantly, a rapidly expanding rental sector, population growth, changing household formation and grossly insufficient new housing volumes. Reflecting this and the general lack of supply of good quality rental homes, demand for the Company's homes - single-family rental housing - remains very high.

The performance of the portfolio continues to be outstanding. Occupancy levels and rent collection are high, whilst arrears are low and, over the 12 months to 30 June 2023, rental growth was at 7.5% across the portfolio.

The PRS REIT remains in a very strong market position, and the Board is confident about prospects, with affordability (being average rent as a proportion of gross household income) at 25% and the Company's costs substantially fixed following the recent debt refinancing.

[giltedge1] 22/7/2023 13:22

Private rents in Great Britain have soared to all-time highs and the average amount being asked for outside London is now a third higher than four years ago, figures from Rightmove show.

[spectoacc] 17/7/2023 08:45

A former Bank of England economist.

I rest my case.

[jonwig] 17/7/2023 08:43

Reeves, an economist, surely knows all that stuff?

[spectoacc] 17/7/2023 08:37

They'll do something - it'll be popular, idiot laws like wealth taxes, rent controls etc always are - but they're being careful not so sound like they're going to rock the boat so far.

Wouldn't fancy being a renter atm - AirBnb is something they need to do something about.

[hindsight] 17/7/2023 08:31

Yep rent controls another worry

[spectoacc] 16/7/2023 14:39

With the effects of a Labour govnt still to come.

[hindsight] 16/7/2023 09:28

Speaking as a landlord who has been selling when become vacant, the government thought it had a golden goose to pluck. BTL was ok with ZIRP but at 5% not a chance

As I see it three things can and are happening to square the circle
1 Rents rise - happening
2 Property Values fall - happening
3 Interest rates fall

Pension funds buying new builds now is akin to them selling equities to buy index linked gilts in ZIRP

At least the listed BTLs like here have priced in 20% property falls if take shareprice as NAV

[jonwig] 16/7/2023 06:06

FT -

The number of UK homes available to rent has dropped to a 14-year low, piling more pressure on tenants competing to find an affordable place to live, new analysis has found.

In June, 241,000 homes were available in the private rented sector, compared with 370,000 in June 2019 — a fall of over one-third (35 per cent), according to consultancy TwentyCi.


Private BTL landlords exiting the sector.

Gives lots of scope for PRS to raise rents especially as they've a 25% affordability score vs government's 35% limit.

In longer term, insurance/pensions are being encouraged to diversify out of bonds. L&G for one is interested in BtL.

[makinbuks] 10/7/2023 14:11

hxxps://citywire.com/investment-trust-insider/news/prs-reit-refinances-as-5-yielder-aims-for-dividend-cover/a2421292?re=110859&ea=1797382&utm_source=BulkEmail_Investment+Trust+Insider+Daily&utm_medium=BulkEmail_Investment+Trust+Insider+Daily&utm_campaign=BulkEmail_Investment+Trust+Insider+Daily

Citywire say the RCF from RBS is Sonia +1.75%, I don't believe that was from the announcement

[spectoacc] 10/7/2023 13:51

Interesting, thanks @Makinbuks.

Chances of rates being 2% lower in 2 years time - hmm - not good I'd say.

[makinbuks] 10/7/2023 11:22

A very cleverly worded statement.

The Scottish Widows £250m LT facility was at 2.9%. If the blended rate is now 3.8% that makes the new L & G facility £102m at 6%

No wonder therefore that they decided to take the view that they can do better than that is two years time when the new RBS £75m facility expires but they need rates to fall by at least 2% from their current level if they are to stand a chance of maintaining that 3.9% average.

In the meantime no disclosure of the cost of the £75m or what has happened to the Barclays £40m development loan. I'm assuming that is repaid by the send of the year as all the development activity is over. So a combined £190m facility is replaced with £177m and they had £13m headroom

Not much else they could have done. They could have rolled the floating RCF for another six months but obviously saw rates increasing further in that timeframe. At least now things are more certain

[davebowler] 10/7/2023 08:50

Liberum;
Debt refinancing and trading update
Analyst: Bjorn Zietsman

Mkt Cap £444m | Share price 80.9p | Prem/(disc) -32% | Div yield 5%

Event

PRS REIT has announced its Q1 trading update and the completion of the refinancing of its £150m RCF. Q1 trading is said to be performing well and in line with management expectations, achieving 97% occupancy and 100% rent collection. Total arrears are low at 0.6% and LfL rental growth has averaged 6.5% over the 12 months ended May. The debt refinancing announcement fails to mention the rate at which the debt has been refinanced, but that £102m is fixed with a further £75m on a floating rate for two years, but that a cap will be placed on the floating rate debt to hedge against downside risk on further interest rate movements. Despite not mentioning the respective rate at which the debt refinancing took place, PRS states that they have total fixed long-term debt facilities of £352m with a blended average interest rate of 3.8%

[makinbuks] 07/7/2023 08:43

Back in December they announced an extension of the RCF from Feb to 14th July. Have I missed an update or is this running to the wire?

[hindsight] 07/7/2023 08:28

giltedge1, yes build costs gone up but land values have fallen