PRS REIT PLC on Tuesday said it has extended two existing contracts and agreed new fee structures.
The Manchester, England-based real estate investment trust has extended its investment advisory agreement and development management agreement with its investment advisor and development manager Sigma PRS Management Ltd.
PRS said the contracted term for both agreements has been extended by 2.5 years to June 30, 2029, including a one-year notice period. The initial agreements took effect from the start of 2021 and provided for a minimum contracted five-year term, plus one year’s notice, to the end of 2026.
PRS also said it ‘has agreed improved fee structures’ for both contracts.
The investment advisor fee has been reduced depending on the firm’s adjusted net asset value. It now ranges from 0.90% per year of the adjusted NAV up to and including £250 million, to 0.30% per year of NAV in excess of £2 billion.
PRS was formerly paying between 1.00% of adjusted NAV up through £250 million, and 0.40% of NAV exceeding £2 billion.
The development management fee, PRS added, has been reduced to 3% on land and 3.5% on construction components of the development cost, from the previous 4% rate on both construction and land.
PRS said that as before, 50% of the fee will be used for bi-annual share subscriptions.
The company expects the revised agreements to ‘result in immediate cost savings’ of approximately 0.1 pence per year on EPRA earnings per share, or about £460,000 per annum.
This is based on PRS REIT’s last published NAV as at December 31, which was 117.1 pence per share or £643 million in total.
‘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,’ commented Chair Steve Smith. ‘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.’
Shares in PRS REIT were trading 1.2% lower at 76.60p each on Tuesday morning in London.
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