PRS REIT reports strong growth in full-year revenue, profits

PRS REIT reported a strong set of full-year results on Tuesday, driven by solid asset performance and robust rental demand.

The FTSE 250 private rented sector specialist said revenue increased 17% year-on-year for the 12 months ended 30 June, to £58.2m, with net rental income rising 18% to £47.3m.

Operating profit jumped 90%, reaching £111.7m, and profit after tax surged 120% to £93.7m.

Earnings per share also saw impressive growth, with basic earnings up 122% to 17.1p and EPRA earnings per share increasing 19% to 3.7p.

The real estate investment trust added 316 new homes to its portfolio during the year, bringing the number of completed homes to 5,396 as of 30 June, with an estimated rental value of £65.1m per annum - an 18% increase year-on-year.

Another 180 homes with an estimated rental value of £1.4m were under construction at the period's end.

Despite a slight softening in yields to 4.59% from 4.47%, the strong estimated rental value growth offset that impact, while occupancy remained high at 96%.

Rent collection was robust, with 99% of total rent invoiced collected.

The firm also reported like-for-like blended rental growth of approximately 12% on stabilised sites, with re-lets to new tenants achieving rental growth of 15%.

Affordability remained stable, with average rent as a proportion of gross household income at 23%.

The company’s net asset value rose 11% to £731m, supported by continued growth in rental demand and a structural shortage of quality family rental homes in the UK.

PRS REIT said it planned to complete a further 151 homes, which were expected to be ready by the end of the first quarter of next year, bringing the portfolio to around 5,600 homes with an estimated rental value of £69.1m per annum.

Prospects for the company were positive, the board said, with rental demand expected to stay high amid limited supply in the UK market.

“These are truly excellent numbers reflecting the efficacy of the strategy and the hard work and commitment of the board, our investment adviser Sigma, our investors, banking and housebuilding partners, and local and central government supporters,” said chairman Steve Smith.

“To be in position to deliver a set of results of this quality after so many obstructions along the way, notably Covid-19 and debt cost inflation, is a great achievement.

“The company is perfectly poised for its next phase of growth - investors are in a very strong position, with multiple options and, on a personal note, I sincerely hope that investors grasp the opportunity to enable the business to achieve its full potential.”

Smith said the board remained confident about the company’s prospects, with affordability - average rent as a proportion of gross household income - and asset performance both strong.

“In line with our announcement issued on 13 September, the newly-constituted board intends to review the company's strategy and will provide an update when appropriate.

“The company is fully focussed on maximising value for all shareholders.”

Reporting by Josh White for Sharecast.com.