Build-to-rent giant PRS records double-digit profit growth as home shortage boosts rents
Overall, the group reported adjusted earnings of £18.7m, up 11 per cent and a profit before tax of £30.3m, up 106 per cent year-on-year.
PRS, the real estate investment trust focused on homes for private rent, has seen strong growth and has continued to build out its portfolio amid strong demand for rental properties.
In its interim results, published today, the firm said revenue increased 16 per cent in the six months to the end of December, with net rental income rising 17 per cent.
Overall, the group reported adjusted earnings of £18.7m, up 11 per cent and a profit before tax of £30.3m, up 106 per cent year-on-year.
The large jump in profit mainly reflected positive fair value gains on the value of the trust’s property portfolio of homes for rent. The fair value uplift represented £20.5m of the profit before tax figure, up from £5.8m reported in the first half of 2023.
Net asset value per share increased to 123.6p (30 June 2023: 120.1p).
PRS’s strong growth reflected the tight market in homes for rent in the UK. The company said that it had seen rental growth of nine per cent for existing tenant lease renewals and growth of 16 per cent for re-lets to new tenants.
The company added 184 new homes to its portfolio in the period, with a further 312 homes were underway at 31 December 2023. At the end of 2023, PRS had 5,264 completed homes with a potential annual rental value of £60.3m per annum. The company has outlined plans to build a portfolio of 5,600 homes by the summer of 2025.
The company noted that its dividend will be fully covered this year. It paid out 2p per share in the first half of its fiscal year, with a target of 4p per share for the full year.
Steve Smith, non-executive chairman of the PRS REIT plc, said: “The PRS REIT’s portfolio of high-quality, professionally managed, build-to-rent family homes has delivered another strong performance.
“Despite the continued pressure in the wider economy, I am pleased to report that occupancy levels, rent collection, affordability and demand have all remained at very high levels, whilst arrears continued to stay low.
“These factors have helped to drive the increase in cash generation and predictable income flows achieved in the period as our portfolio moves closer to completion,” Smith added.
The non-executive chairman continued: “This reflects the structural lack of supply of homes in the UK, and strong demand, which has been further fuelled by the adverse effects of higher interest rates for prospective home buyers. Industry forecasts anticipate further rental growth in 2024, which concurs with our view. “
