PRS REIT posts 120% growth in post-tax profit amid shareholder-driven board changes

The company, which is backed by Sigma Capital, added 316 new homes to its portfolio over the year, taking it to 5,396 completed homes on 30 June. This marked an increase on the 294 homes it added in 2022-23.

The ERV for all its homes totalled £65.1m per year, while a further 180 homes – which will bring in an ERV of £1.4m per year – are under way. PRS REIT is targeting a final portfolio of around 5,600 homes with an ERV of £69.1m per year.

The company’s results come in the wake of shareholder discontent over its lacklustre share price, which has led to Steve Smith, chair of PRS REIT, stepping down.

Mr Smith said the results were “truly excellent” and added that the firm “is perfectly poised for its next phase of growth; investors are in a very strong position, with multiple options”.

“On a personal note, I sincerely hope that investors grasp the opportunity to enable the business to achieve its full potential,” he said.

“The board remains confident about prospects, with affordability – average rent as a proportion of gross household income – and asset performance both very strong,” Mr Smith said.

In late August, investment management firms Harwood Capital, Waverton, CCLA, Alder and CG Asset Management sent a requisition notice calling for the removal of two of the five non-executive directors: Mr Smith and Steffan Francis.

They asked for Robert Naylor, chief executive of Intuitive Investments, and Christopher Mills, founder of Harwood Capital, to be appointed as non-executive directors instead.

The board formed a sub-committee to deal with the notice, made up of the remaining three non-executive directors: Geeta Nanda, Rod MacRae and Karima Fahmy.

An update from PRS REIT in September acknowledged “the frustration raised by the requisitioning shareholders and other investors around the discount to [net asset value] and a share price performance that does not reflect the strong operational performance and opportunity of the business”.

“The board notes that PRS REIT is not alone in trading at such a discount with the UK REIT and UK investment trust sectors all trading at meaningful average discounts, with c. 60% of UK REITs trading at a 20% discount or more as of 28 August 2024,” the update stated.

Mr Smith later agreed to step down “to facilitate a near-term resolution” at the annual general meeting (AGM), due to be held on 3 December. Mr Francis is set to remain in his post and Ms Nanda will become interim chair at the AGM.

Sigma Capital floated PRS REIT on the London Stock Exchange in 2017 and appointed its subsidiary, Sigma PRS Management, as the investment advisor.

It claims to have the largest rental portfolio of single-family homes in the UK.

Earlier this month, Residential Secure Income announced it was selling its for-profit subsidiary as part of the company’s plans to wind down.

It is the second listed REIT to announce plans for a wind-down in the space of three months. This summer, Home REIT also revealed it would end its activities.