Blockbuster Sale Possible As £1.1B UK BTR Pioneer Put On The Block
UK listed company PRS REIT has kick-started a formal sales process, the company announced, in what could be one of the largest sales ever in the UK rented residential sector.
PRS REIT said in a stock market announcement that it was undertaking a strategic review and formal sale. It has not received any offers so far, but shares in the company rose 4% on the announcement.
The decision to sell comes after pressure from activist shareholders to increase the value of shares in the company, which had traded at an average 35% discount to net asset value in the year to September. The company’s chairman, real estate veteran Steve Smith, stepped down following calls for board changes.
PRS REIT had a portfolio of 5,425 single-family rental homes as of 30 September, according to a company fact sheet. Those homes have an estimated rental value of £67.5M. There are another 151 contracted homes in the company’s pipeline, which would take its portfolio close to 5,600 homes and its ERV to £69M.
The quarterly fact sheet for the company does not contain an updated valuation, but on 30 June, the portfolio was valued at £1.1B, PRS REIT said.
The company has £427M of investment debt and £33M of development debt, giving it a loan-to-value ratio of 36%. The investment debt is at an average interest rate of 3.8%, which is below the company’s average yield of 4.6%, it said.
The portfolio was 98% occupied as of 30 September, and like-for-like rental growth in the year to September was 11.5%. Its greatest concentration of homes is in the Greater Manchester area, where it owns 2,187 homes, and the Midlands, where it owns 1,168 homes.
The company’s average site size is 77 units, and the average rent at one of its properties is £1,005. A third of its homes are rented to households that earn £65K or more, and 9% earn less than £25K.
One of the earliest investors in the UK single-family rental sector, the company has an external manager, Sigma Capital, which was itself taken private in 2021 by PineBridge Benson Elliot, backed by Oxford Properties and other global institutional investors.
