The private rental housing developer and investor has reported “good progress” in a half-year period that saw it achieve its target of committing £900m, although it warned of a possible slowdown this year.
The PRS REIT reported rental income up by a factor of 3.8 to £2.3m, with pre-tax profit climbing from £500,000 to £7.5m. Net assets at the end of 2018 stood at £477.2m, up from £245.5m at the end of 2017 – the vehicle was launched in May of that year.
Steve Smith, chairman of the PRS REIT, said: “The PRS REIT made pleasing progress in the first half, and the growth in the number of completed rental homes is showing through in these financial results. We closed the half year with about 3,575 homes either built or under construction, with that number now at around 3,951.
“Looking over the remainder of the financial year, we anticipate short term headwinds that are likely to cause some delays to current construction schedules.We have therefore re-estimated our stabilised covered dividend target taking this into account.
“Outside these delays, the model is working well, with delivery and operational costs in line with expectations, continuing high demand for our homes, and good visibility on the deployment of the remaining tranches of our gross capital. Housing for the family rental market remains critically undersupplied and the opportunity remains substantial. Consequently, the board continues to view long term prospects with confidence.”
The PRS REIT is advised by Sigma PRS Management, and added a further four sites in January this year. It has now completed or contracted 47 sites. The company’s words of caution come amid a time of increasing political uncertainty, as Smith noted:
“As previously reported, we experienced some delays with development activity in the third quarter of the last financial year. Given the current backdrop and the local elections that will take place in early May, we believe it prudent to anticipate lengthening decision-making processes at local government level.
“This has a direct bearing on site commencement schedules, and slower delivery, particularly of larger sites, would reduce the company’s earnings during the development phase.”