PRS raises divi as bid talks progress

PRS Reit’s plan to sell its portfolio of new-build homes is poised to enter the due diligence stage.

New-build home specialist PRS Reit (PRSR) has raised its quarterly dividend as it progresses with its plan to sell the portfolio, with several interested bidders lined up.

The board raised its interim dividend to 1.1p per share for the three months to the end of December – up from 1p for the same period last year. It said the increase reflected strong rental and earnings growth, with dividends for the first half of its financial year (which runs to the end of June) covered by earnings.

In December, PRS said it was in discussions with a number of potential buyers about the sale of its portfolio of new-build homes. These talks have progressed to the next stage after PRS received several non-binding proposals.

‘The majority of these proposals were pitched within a price range representing a premium to the current share price of 109.2 pence per share and a discount to the latest published net asset value [NAV] at the end of June 2024 of 133.2 pence per share,’ the board said.

The board will invite a subsection of interested parties to enter into a diligence process, which it expects to complete by the end of March.

In November, the board terminated the £600m trust’s management agreement with Sigma, which unhappy shareholders had described as a ‘poison pill’. Chair Steve Smith was ousted and replaced by Geeta Nanda on an interim basis. She was joined on the board by former Hipgnosis Songs chair Robert Naylor and former Hipgnosis Songs board member Chris Mills.

PRS’s shares are up 40.6% over the past 12 months, which compares with a 22.2% gain by the average trust in the Association of Investment Companies’ UK residential property sector.

Over three years, they are up 20.5% versus a loss of 25.6% by the sector average, reflecting the pressure the sector came under as higher interest rates increased debt costs. The trust trades at an 18% discount to NAV.