The PRS REIT announces its second quarter update

Delivery of new homes under The PRS REIT is strong and stable, according to the recently released second quarter update.

North West England Build to Rent development by Sigma Capital - Countryside | BTR News
North West England Build to Rent development by Sigma Capital.

Closed-ended real estate investment trust that invests in new build single-family homes in the private rented sector (PRS) – The PRS REIT – releases an update on performance over the second quarter (1 October to 31 December 2023) of its current financial year ending 30 June 2024.

Homes in The PRS REIT delivery programme are now at a strong stage. During the second quarter, which included the Christmas period, a further 135 rental homes were completed, taking the number of completed homes in the portfolio at the half-year end on 31 December 2023 to 5,264 and overall delivery to approximately 95% complete.

The estimated rental value (ERV) of the 5,264 completed homes is £60.3m per annum – approximately 19% higher compared to the same time in the previous year (31 December 2022: 4,913 homes, ERV of £50.7m per annum). The ERV increase reflects both the rising number of completed homes and strong rental growth.

As at 31 December 2023, a further 312 homes with a combined ERV of £3.1m were contracted and under way at varying stages of the construction process. Once these homes have been completed, the ERV of the portfolio is expected to increase to c.£63.4m per annum (30 September 2023: £60.7m per annum).

Source: The PRS REIT | Sigma Capital | BTR News
Source: The PRS REIT

Rental demand for the company’s homes remains high, reflected in very strong rental growth and occupancy rates. Occupancy at 31 December 2023 stood at 97% with 5,087 of the 5,264 completed homes occupied. A further 47 homes were reserved for applicants who had passed referencing and paid rental deposits, giving an occupancy rate of 98%. Like-for-like rental growth for the 12 months to 31 December 2023 was 11% (2022: 6%).

Rent collection (defined as rent collected in the period relative to rent invoiced in the same period) for the quarter was extremely robust at 99%. Arrears were low at £0.6m at 31 December 2023 (31 December 2022: £0.7m).

This represents c.1% of annualised ERV on completed units. Affordability continues to be well within Homes England’s upper guidance limit of 35%. Reflecting the tenant base, where average household income has increased, the company’s homes have an affordability ratio of c.22% of gross household income at 31 December 2023 (30 September 2023: 22%).

The PRS REIT expects to announce the interim quarterly dividend, relating to the second quarter of the current financial year towards the end of the month.