PRS REIT commits £75m in opening six weeks

The first listed real estate investment trust to invest in new build homes in the private rented sector, established by Sigma and the HCA, struck a steady tone in its maiden trading update since launching at the end of May.

PRS REIT told shareholders on Monday it had bought 50 completed and fully let PRS homes comprising two and three-bedroom family homes at Mackets Lane in Halewood, Knowsley from Sigma Capital Group for £7.3m. The 50 units generate an annualised rent of approximately £450,000.

The trust has entered into its first design-and-build contract with Countryside Properties, a long-term partner of Sigma, for a development of PRS homes in Middleton, Rochdale with an estimated gross development cost of approximately £16m. The first tenants are expected to take occupation in January 2018.

A further five contracts, which together provide approximately 365 PRS units and have a combined gross development cost of approximately £53m, are expected to be signed over the coming months. These sites are located in the North West and South Yorkshire.

Sigma, acting as investment adviser, is assessing “potential new sites and this is progressing very well, with additional opportunities now under review alongside the existing planned roll-out.”

The company raised £250m from the flotation, with the Government’s Homes & Communities Agency investing £25m in a 10% stake.

Steve Smith, non-executive chairman, commented: “We are very pleased with the PRS REIT’s strong start since its launch at the end of May, with the PRS REIT having hit its early milestones. The company remains very well positioned for continuing progress, with further design and build contracts in preparation and additional opportunities under review alongside the existing planned roll-out. Demand for new family rental homes, our core target market, remains buoyant and we expect our high quality, professionally managed new homes to help fulfil the growing shortage of rental housing stock.”

Shares in PRS REIT are trading slightly above the launch price of 100p at around 105p. The yield target for shares is 6%. Sigma has offices in Manchester, London and Edinburgh.