Share Name Share Symbol Market Type Share ISIN Share Description
Prs Reit (the) Plc LSE:PRSR London Ordinary Share GB00BF01NH51 ORD 1P
  Price Change % Change Share Price Shares Traded Last Trade
  -0.50 -0.58% 85.00 185,879 08:47:04
Bid Price Offer Price High Price Low Price Open Price
84.00 86.00 85.50 85.00 85.50
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trusts 1.77 3.24 1.00 85.0 421
Last Trade Time Trade Type Trade Size Trade Price Currency
15:44:41 O 821 84.848 GBX

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Date Time Title Posts
08/11/201921:42:::: The PRS REIT ::::39

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15:44:4284.85821696.60O
15:23:2784.853,8553,270.97O
15:16:1184.007,0345,908.56O
14:13:5584.87186157.85O
14:13:5484.87333282.60O
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DateSubject
20/11/2019
08:20
Prs Reit Daily Update: Prs Reit (the) Plc is listed in the Real Estate Investment Trusts sector of the London Stock Exchange with ticker PRSR. The last closing price for Prs Reit was 85.50p.
Prs Reit (the) Plc has a 4 week average price of 83p and a 12 week average price of 83p.
The 1 year high share price is 102.50p while the 1 year low share price is currently 83p.
There are currently 495,277,294 shares in issue and the average daily traded volume is 858,276 shares. The market capitalisation of Prs Reit (the) Plc is £420,985,699.90.
08/11/2019
21:42
mikesmi: 17 million shares sold today at 84p in the PRS REIT. Given the ex-dividend date for the 1p div is 6 days away that is effectively a sell at 83p!! Given the volume we may find out who the seller is next week. It appears some institutions must agree with the negative outlook outlined previously by Quintus and 3ratty. Momentum is a powerful force in investing and the PRS REIT's is downward. The question now is how far will the share price fall. Don't try to catch a falling knife
23/10/2019
22:21
3ratty: Concerning points raised and noted Quintus. The fact the NAV was not meant to drop below 98p is a real worry. Presumably when this was inserted into the Prospectus it was set at a level low enough to allow some headroom so as not to be breached. Yet two years on the reported 30th June 2019 NAV was 95.8p and is most likely now sub 94p following the 2p per share final dividend paid in August given the ongoing absence of any significant rental income. That suggests things are not going to plan and has the alarm bells sounding. Following your comments Quintus I have like you focussed on the cashflow from the 2018 and 2019 year end results. Being a property REIT there are not many moving parts so it is fairly straightforward to analyse. Taking account of net funds raised, annual administrative costs (including investment management fee), dividends paid out, net rental income received, interest received on cash on deposit and debt interest paid, from the £500.5m gross raised, investable equity had reduced to £452.25m as at 30th June 2019. That was pre the deduction of the final 2p dividend which amounts to £9.91m paid out on 30th August. As per the recent first quarter update, the rental value of completed homes had increased to £12.3m from £10.7m as at 30th June 2019. Whilst slightly crude if one estimates the rental value as at 30th June 2020 by applying the same percentage increase quarter on quarter it would take it to £19m as at 30th June 2020. For sake of argument and for optimism’s sake call it £20m, so an average rental income received estimate for the current financial year of £15.5m seems reasonable enough. Perhaps generously applying the 17.5% gross to net deduction as per the 2018/19 year end results (given this had increased from 15.5% year on year so may well be higher again this current financial year) produces a net rental income for the current year of £13.2m. Keeping administrative expenses flat at £5.9m as per the 2018/19 financial year reduces cashflow to £7.3m. Interest from cash on deposit should likely be lower than the £0.8m received last year as the remaining £130m (from the original £500.5m of funds raised) is expended but for sake of argument again assume +£0.8m. However, having drawn a full £100m of debt pre 30th June 2019 at a swap rate of 1.588% plus margin (albeit not having yet spent any of it) and committed to a further £250m of debt, debt interest and charges will be significantly higher in the current financial year. If one assumes a not unreasonable margin of 2%, debt interest on the £100m would amount to £3.6m. Charges relating to the other debt will likely push this higher but again being optimistic stick with £3.6m. Including the recent dividend payment made in August, the dividend payments made in the 2019/20 financial year will be approximately £24.8m. That results in a NEGATIVE cashflow for the 2019/20 financial year of -£20.3M. Investable equity is therefore reduced from £452.3m to £432m. As per the 2018/19 year end results that figure is pre the final 2p dividend of £9.9m to maintain the 5p target likely to be paid 30th August 2020. As per Quintus the concern is around the significant reduction in investable equity and consequential impact on the amount of debt that can be drawn within the 45% gearing restriction, and ultimately on the stabilised dividend. If optimistically the PRS REIT is able to support a NAV of 94p per share that equates to £465m which would enable £380m of debt to be drawn assuming 45% gearing. £380m of debt plus the say £420m of investable equity (given the REIT is likely to remain in negative cashflow into the 2020/21 year), provides an estimated total of £800m of investable equity. As per the first quarter trading update, the £740m GDC of contracted and completed sites is stated to generate an estimated £46m of rent, so a 6.2% gross yield on cost. If that gross yield is applied to the assumed £800m of total investable equity it would generate rent of £49.6m. Applying a 17.5% rent reduction as per the 2018/19 results (albeit this could well be higher if it continues to trend upwards) reduces income to £40.9m. Administrative costs of £5.9m reduce this further to £35m. Total debt interest costs are the big unknown. £150m of debt is at a low swap rate of 1.164% plus margin and the existing £100m of debt is at 1.588% plus margin. That would leave £130m to draw from the revolving credit facility at three month libor (currently 0.8%) plus margin. A best guess but if a 2% margin is assumed that would result in annual debt interest charge on £380m of debt of £12m. It is worth noting the revolving credit facility is of a short term nature being only for two years (with an ability to extend for a further two) so it is likely the interest cost on this element of debt would go up if it were to be fixed longer term. Notwithstanding, £12m of debt interest would reduce net income to £23m. Given 495,277,294 shares currently in issue that equates to a dividend of only 4.64p per share against shares issued at £1.00 and £1.025 respectively. The uncertainties in that estimate lie in the cost of debt (which could be higher or lower as margins are unknown), the actual gross to net rental reduction against that adopted of 17.5% (which is arguably optimistic given it is trending upwards and certainly longer term will be a key variable to monitor), and rental growth. The above has not assumed any rental growth over and above a 6.2% gross yield on GDC. The 2018/19 annual report provides a portfolio analysis as does the maiden annual report. Comparing the market rental values on those sites featured in the 2017/18 report to the same sites listed in the 2018/19 report produces an aggregate annual rental growth of only 0.39%. Whilst one would hope this picks up it has certainly not been evidenced over the last year. In conclusion, there is a real possibility the stabilised dividend will be sub 5p per share and as Quintus noted the NAV is likely to remain under pressure. The REIT is currently targeting a stabilised dividend of 5.5% down from the original 6%+ but the evidence suggests this will have to be downgraded again. Given the PRS REIT will be geared to 45% and the risk that brings with it, plus significant uncertainty around the longer term gross to net reduction to the rental income and whether or not rental growth materialises, the PRS REIT is arguably not offering attractive return prospects at present. The annual report states valuations range from 4.3% - 4.8% investment yields. At these levels (which applies to the majority of REITs) any change in yields is likely to have a significant impact on NAV. Were yields to compress by only a marginal amount there could be a significant boost to NAV whilst also allowing debt drawn to increase. Equally were yields to move out marginally, NAV could fall significantly, correspondingly lowering the amount of debt that could be drawn or, if already fully drawn, requiring further equity from investors to provide sufficient security to lenders. Until the equity and debt are drawn and deployed with stabilised returns established it would be premature to raise additional equity without detrimentally impacting returns through further cash drag. Equally a raise given the current share price is significantly below the initial two raises would be dilutive to existing shareholders and is therefore unlikely.
Prs Reit share price data is direct from the London Stock Exchange
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