PRS Reit Shares Jump 6.6% Amid £646.2m Portfolio Sale to Waypoint Asset Management

Strategic Insights -

PRS Reit (PRSR) shares soared to 111p after the company agreed to the sale of its portfolio of privately rented new-build homes to Waypoint Asset Management for £646.2m. The sale, which is expected to complete by the end of November, will result in net proceeds of £633.2m after tax and transaction expenses, and will also see shareholders receive a 1.1p special dividend. This deal is a significant win for Chris Mills and Rob Naylor, who joined the board in October 2024 and have been instrumental in maximizing returns from the Reit.

Key Takeaways:

  • PRS Reit (PRSR) shares jumped 6.6% to 111p after agreeing to the sale of its portfolio of privately rented new-build homes to Waypoint Asset Management for £646.2m.
  • The sale is expected to result in net proceeds of £633.2m after tax and transaction expenses.
  • Shareholders will be entitled to a 1.1p special dividend for the three months to the end of September.
  • The deal is a significant win for Chris Mills and Rob Naylor, who joined the board in October 2024 and have been instrumental in maximizing returns from the Reit.
  • The sale is at a price of 115.3p per share, equivalent to a 17% discount to net asset value (NAV) at the end of last year.
  • Waypoint Asset Management will pay for the portfolio from a fund whose underlying investors comprise leading UK local government pension funds.
  • Private equity giant KKR had entered the PRSR fray last week but failed to make a formal bid, and its involvement is "yet to be seen".
  • Acceptance of the offer sees KKR step aside for a second time this year following its failure to secure the takeover of NHS landlord Assura (AGR).
  • The Reit has suffered a tough few years as interest rates hiked the price of debt and inflation made it more expensive to build, but has still managed to rack up decent performance.
  • Over one year, the NAV was up 8.1%, and over three years it has risen 32.6%.
  • The shares have risen 12.4% and 20.4%, respectively, including dividends, and leave the trust trading at a 25% discount.

Statistics:

  • The sale price of £646.2m is equivalent to 115.3p per share.
  • The deal is expected to result in net proceeds of £633.2m after tax and transaction expenses.
  • The shares have risen 12.4% and 20.4%, respectively, including dividends.
  • The trust is trading at a 25% discount.
  • Over one year, the NAV was up 8.1%, and over three years it has risen 32.6%.

Sources:

  • PRS Reit press release
  • Deutsche Numis analyst Andrew Rees
  • Richard Williams, property analyst at QuotedData
  • Citywire trust awards in 2024