The PRS REIT deploys

The pace is set to continue. June ended with a further 3,196 homes under construction, 178 of which have since been completed. Within the next few months, as the pace of completions accelerates, PRS expects the remaining £90m of its uncommitted funds to be fully deployed.

The end destination is 5,400 new family rental homes spread across 75 sites and generating £55m in annual rents. But it is the journey that shareholders care about. Analysts at Liberum contend that despite the deployment progress, “the challenge of pursuing a development strategy in a listed structure” will have frustrated investors.

And although the drag on cash might have been expected, this year’s reduction in the covered dividend target from 6p to 5.5p for FY2022 has clearly dented sentiment. PRS has warned potential investors not to rely on the stabilised target, while Liberum reckons the possible requirement for additional equity in the medium term could raise obstacles to higher distributions within three years.

Consensus forecasts are for pre-tax profits of £7.2m and adjusted earnings per share of 0.1p in the year to June 2020, rising to £19.9m and 3.9p in FY2021.