PRS Reit off to a strong start

And it says something that since its flotation in May 2017, the company has been able to raise finance through the issue of new shares, the latest £250m placing coming in February after the half-year end. Together with expected gearing – £200m of credit has been arranged from Scottish Widows and Lloyds banking – PRS reckons it will have around £900m to spend.

The £250m proceeds from the flotation have been committed ahead of schedule, and will deliver around 1,720 rental homes in the north-west of England, the Midlands and south Yorkshire with an estimated rental value of £15.7m a year once fully let. But this is just the start – it has the financial resources for potentially more than 6,000 rental homes.

The current pipeline of investment opportunities represents around 3,800 new homes, which will be aimed at middle-income families. And such is the demand for more residential homes that the private rental sector is expected to make up a quarter of all households by 2020, against 19 per cent at the moment.

Building this pipeline comes through its investment adviser, Sigma PRS Management, which is part of Sigma Capital. PRS will acquire undeveloped sites as identified by Sigma, with all pre-development risks identified and underwritten by Sigma and its partners. Sigma’s delivery platform already has well-established relationships with construction partners such as Countryside Properties and several local authorities. As the houses are being built they are pre-let and occupied on completion.

Sigma PRS will receive an advisory fee in respect of each month based on 1 per cent of adjusted NAV up to £250m, and then on a sliding scale down to 0.7 per cent on any adjusted NAV in excess of £1bn.