PRS REIT has raised £250m through a share placing with plans to launch a portfolio of more than 10,000 new-build family homes in the private rented sector.
Advised by Sigma PRS Management, the company has identified a 10,000-home pipeline through construction framework agreements with Countryside Properties, Keepmoat Homes and Engie Regeneration, and through “strong relationships” with local authorities.
A pipeline of around 3,800 new homes with a total gross development cost of around £540m has been identified and is under active appraisal.
This is in addition to the current committed investment to create around 1,720 new homes in the North West, Midlands and South Yorkshire.
Steve Smith, chairman of PRS REIT, said: “We are aiming to create a substantial portfolio of high quality new houses, mostly focused on middle-income families, and these new funds are a key step towards this objective. We believe we are the only PRS operator building new family houses to this scale across England.”
The company said it would seek to use gearing as it pursues its growth strategy, and credit-approved terms have been agreed for £200m of debt facilities.
The most recent £250m fundraise was supported by the government’s Homes England, contributing £5m. It comes eight months after its IPO, where the PRS REIT also raised £250m, which has already been fully committed.
The REIT placed 243.9m ordinary shares of £0.01 each in the company at a placing price of 102.5p per share to investors as described in the announcement released on 31 January 2018.
The company is targeting a dividend yield of 6% or more pa and net total shareholder returns of 10% or more pa following stabilisation and based on the IPO issue price of 100p per ordinary share.
Graham Barnet, founder and chief executive of Sigma Capital Group, said: “Family rental houses remain a critically undersupplied area of the rental market and we are creating well-designed, high quality houses near good schools and transport links, which will be professionally managed and offer families security of tenure.”
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