PRSR.L
The PRS REIT
plc
("the PRS
REIT" or "the Company")
Investment Advisory &
Development Management Agreements
New Terms
Signed
The PRS REIT, the closed-ended real
estate investment trust that invests in high-quality, new build,
family homes in the private rented sector, is pleased to announce
that it has extended its existing Investment Advisory Agreement and
Development Management Agreement (together, the "Agreements") with
Sigma PRS Management Ltd, the Company's Investment Adviser and
Development Manager (together, the "Investment Adviser"). At the
same time, it has agreed improved fee structures in both the
Agreements. The amendments to the Agreements have been signed
following a consultation with the Company's major shareholders. The
contract changes apply from 1 July 2024. The terms of the
Investment Advisory Agreement have also been agreed with the
Alternative Investment Fund Manager, G10 Capital
Limited
The Investment Adviser operates the
largest build-to-rent platform in the UK and has established a
leading position in the single family homes market, which is
further underpinned by a substantial pipeline of development
opportunities. Its 'Simple Life' rental brand is award-winning and
has helped to set new standards of customer care in the private
rented sector, especially the single family homes
segment.
Both Agreements have been
extended to 30 June 2029, an extension of 2.5 years from the
end of the previous term, and the revised fee rates are set out
below and, as stated, take effect from 1 July 2024. On a pro forma
basis, they are expected to result in immediate cost savings for
The PRS REIT of approximately 0.1 pence per annum on EPRA EPS, or
c.£0.46 million per annum, based on the Company's last published
Net Asset Value as at 31 December 2023. Save as outlined below, no
other terms of the Agreements have been changed.
Extension of Agreements
The Agreements took effect from 1
January 2021 and provided for a minimum contracted term of five
years to 31 December 2026 (inclusive of a one-year notice period).
In connection with the reduction in the Investment Adviser and
Development Management fees, the contracted term for the Agreements
has been extended by 2.5 years, to 30 June 2029 (inclusive of a
one-year notice period).
Revised Investment Adviser & Development Management
Fees
(a) The Investment
Adviser fee has been revised as follows and remains payable monthly
in arrears:
(i)
|
0.90 per cent. (previously 1.00%) per
annum of the Adjusted Net Asset Value up to, and
including, £250 million;
|
(ii)
|
0.85 per cent. (previously 0.90%) per
annum of the Adjusted Net Asset Value in excess of £250
million and up to, and including, £500
million;
|
(iii)
|
0.70 per cent. (previously 0.75%) per
annum of the Adjusted Net Asset Value in excess of £500
million and up to, and including, £1 billion;
|
(iv)
|
0.40 per cent. (previously 0.50%) per
annum of the Adjusted Net Asset Value in excess of £1
billion and up to, and including, £2 billion;
and
|
(v)
|
0.30 per cent. (previously 0.40%) per
annum of the Adjusted Net Asset Value in excess of £2
billion.
|
(b) The Development
Management fee has been reduced to 3% on land and to 3.5% on
construction (previously 4% on both land and construction)
components of the Development Cost. The fee remains payable monthly
in arrears, with 50% of the fee used to subscribe for ordinary
shares in the Company bi-annually as previously.
Related party transaction
The amendments to the Agreements
constitute a related party transaction to which the modified
requirements for smaller related party transactions in the FCA's
Listing Rules apply (LR11.1.10R). The Investment Adviser is
defined as a related party of the Company under the Listing
Rules. Under the smaller related party transaction rules,
there is no requirement for shareholders to vote on the new terms
to the Agreements that have been agreed.
Summary
Having consulted with the Company's
major shareholders, the Board believes that the amendments to the
Agreements are in the best interests of shareholders. They result
in immediate cost savings for the Company as well as providing
additional certainty regarding the Company's arrangements with its
Investment Adviser.
The Board believes that the
Investment Adviser is singularly well-placed to support the
delivery of the Company's strategy and investment objectives, and
that this relationship has been effective and remains central to
the ongoing successful management of the existing portfolio and to
unlocking further attractive investment opportunities in the
future.
Steve Smith, Chairman of The PRS REIT plc,
said:
"I
am pleased to announce these new terms with Sigma PRS Management
Ltd, the Company's Investment Adviser and Development Manager. They
extend the relationship and reduce costs, generating around £0.46m
of annual cost savings.
"Over the last seven years, Sigma has established the largest
portfolio of new-build family rental homes in the UK on our behalf,
pioneering a highly efficient delivery model and a new rental brand
at the same time. The portfolio has performed extremely well and,
with the huge undersupply of high-quality family homes in the UK,
the Company is well positioned for further
success.
"These new terms lay the foundation for the next phase of our
growth. If, as we anticipate, interest rates reduce in the coming
period, I expect the Company's investment proposition to become
increasingly attractive to investors.
"We look forward to reporting our next quarterly trading
update towards the end of July."
Graham Barnet, Founder and CEO of Sigma Capital Group Limited,
said:
"Having founded and managed the PRS REIT since its inception,
we are delighted to be extending the relationship. We view the PRS
REIT's prospects very positively; asset performance is excellent,
rental income continues to grow, and we have improved the Company's
operational cost base. In addition, 82% of long-term debt is fixed
at an average weighted cost of 3.8% over an average term of 16
years.
"The PRS REIT will continue to benefit from our market-leading
rental brand, Simple Life, as well as our technology platform. The
Company is strongly positioned in the single family homes market,
which remains significantly undersupplied."
DEFINITIONS
Adjusted Net Asset Value
|
the Net Asset Value, less an amount
equal to the Development Cost incurred in relation to the PRS
Development Sites under construction at the relevant time by the
Company and its subsidiaries, calculated in accordance with
the Investment Advisory Agreement
|
Development Cost
|
in relation to any PRS Development
Site, the sum which is the aggregate of the costs (excluding value
added tax) incurred to acquire and develop such site including,
inter alia, land price and proper fees and expenses associated with
the acquisition, stamp duty land tax, total construction
costs.
|
For
further information, please contact:
The
PRS REIT plc
Steve Smith, Non-executive
Chairman
|
Tel: 020 3178 6378
(c/o KTZ Communications)
|
Sigma PRS Management Ltd
Graham Barnet, Mike
McGill
|
Tel: 0333 999 9926
|
Singer Capital Markets
James Maxwell, Asha Chotai
(Investment Banking) Alan Geeves, James Waterlow, Sam Greatrex
(Sales)
|
Tel: 020 7496 3000
|
Jefferies International Limited
Gaudi Le Roux, Tom
Yeadon,
Harry Randall, Ollie Nott
|
Tel: 020 7029 8000
|
G10
Capital Limited (alternative investment fund manager and part of
IQ-EQ group)
Maria Baldwin
|
Tel: 0207 397 5450
|
KTZ
Communications
Katie Tzouliadis, Robert
Morton
|
Tel: 020 3178 6378
|
NOTES TO EDITORS
About The PRS REIT plc www.theprsreit.com
The PRS REIT plc is a
closed-ended real estate investment trust established to invest in
the Private Rented Sector ("PRS" or "the Company") and to provide
shareholders with an attractive level of income together with the
potential for capital and income growth. The Company is investing
over £1bn in a portfolio of high-quality homes for
private rental across the regions, having raised a total
of £0.56bn (gross) through its Initial Public Offering,
on 31 May 2017 and subsequent fundraisings
in February 2018 and September 2021.
The UK Government's Homes England has supported the
Company with direct investments. On 2 March 2021, the Company
transferred its entire issued share capital to the premium listing
segment of the Official List of the FCA and to the London
Stock Exchange's premium segment of the Main Market. With over
5,300 new rental homes, the Company believes its portfolio is the
largest build-to-rent single-family rental portfolio in
the UK.
LEI: 21380037Q91HU97WZX58
About Sigma Capital Group
Limited (formerly Sigma Capital Group
plc) www.sigmacapital.co.uk
Sigma Capital Group
Limited ("Sigma") is a build-to-rent ("BTR") regeneration
specialist, with offices
in Edinburgh, Manchester and London. The
Company's principal focus is on the delivery of large-scale housing
schemes for the private rented sector and Sigma is the UK's leading
provider of BTR homes for the single family sector. The Company
also has extensive experience in the delivery of multi-family
apartment schemes and a well-established track record in assisting
with property-related regeneration projects in the public sector,
acting as a bridge between the public and private
sectors.
Sigma has created an unrivalled
property delivery and management
platform, which has delivered or is in the process of delivering
over 12,00 homes across the UK to date. The Company has a
significant pipeline of development opportunities, which currently
stands at over £3 billion in gross development cost. Sigma
manages the letting of completed homes through its property
platform, which includes its award-winning rental brand 'Simple
Life'. The Company's subsidiary, Sigma PRS Management Ltd, is
Investment Adviser to The PRS REIT plc.
About Sigma PRS Management Ltd
Sigma PRS Management Ltd is a
wholly-owned subsidiary of Sigma Capital Group
Limited and is Investment Adviser to The PRS REIT plc. It
sources investments and operationally manages the assets of
The PRS REIT plc and advises the Alternative
Investment Fund Manager ("AIFM") and The PRS REIT
plc on a day-to-day basis in accordance with The PRS REIT
plc's Investment Policy. The AIFM is G10 Capital
Limited. Sigma PRS Management Ltd is an appointed
representative of G10 Capital Limited, which is authorised and
regulated by the Financial Conduct Authority
(FRN:648953).