TIDMRESI
RNS Number : 8551J
Residential Secure Income PLC
24 December 2020
24 December 2020
Residential Secure Income plc
Acquisition of 85 new build homes for shared ownership
Homes acquired from Brick By Brick, the development company set
up by Croydon Council
Residential Secure Income plc ("ReSI") (LSE: RESI), which
invests in affordable shared ownership, retirement and local
authority housing, has exchanged contracts for GBP29 million to
acquire up to 85 newly completed homes for delivery as shared
ownership. The properties are being acquired from Brick By Brick,
the housing development company set up to deliver a large programme
of high quality and affordable homes for local people across the
London Borough of Croydon.
The transaction will allow Brick By Brick to offer these homes
as shared ownership, accelerating the delivery of much-needed
affordable homes and returning the proceeds of the sale to the
London Borough of Croydon to be spent on frontline services. The
homes will be held by ReSI's wholly owned registered provider of
social housing, ReSI Housing, and part financed by government
grant.
The acquisitions will be completed in a staggered manner to
align with when purchasers are ready to occupy the properties. This
is expected to happen rapidly, as 90% of Brick By Brick's available
homes for sale are already reserved.
The portfolio consists of one, two and three-bedroom apartments
in new developments in Upper Norwood, Thornton Heath and South
Croydon in South London, designed by outstanding architects,
including RIBA Stirling Prize-winning Mikhail Riches. The homes
have been developed to a high specification, with timber parquet
flooring, Silestone worktops, Bosch appliances and private
balconies. The homes meet or exceed ReSI's sustainability criteria
and include secure cycle storage, solar energy, electric vehicle
charging points, and have an energy efficiency Environmental
Performance Certificate rating of B or higher.
Shared ownership allows a purchaser to buy a property with a
lower deposit requirement and lower annual costs, making the
apartments more affordable and allowing local individuals and
families to get onto the housing ladder. The homes will follow
ReSI's best practice approach, as set out in its shared ownership
customer and environmental charters and will be available starting
at 25% shared owner stakes on 250-year shared ownership leases.
The deal brings ReSI's total shared ownership portfolio to 281
homes and will be funded through the GBP300m 45-year debt facility
ReSI put in place in July. Upon occupation, each home will be fully
income generating, with an expected inflation-linked leveraged
yield which supports ReSI's 8% total return and c. 5% dividend
targets. Assuming that the shared owners each acquire approximately
25% of their asset from ReSI on occupation, the acquisition commits
more than half of the GBP32m capital still required to reach ReSI's
target 50% leverage.
Earlier this month, ReSI reported resilient rent collection, at
more than 99% for the year to September. This is in line with
normal performance and was unchanged through the Covid-19 pandemic,
supporting virtually flat investment valuations for the year.
ReSI's recent shared ownership deals include the July 2020 purchase
of the final 73 apartments at Clapham Park, London, from
Metropolitan Thames Valley Housing, and 39 houses from Step
Forward, in Cheshire, Lancashire and Yorkshire, also in July.
Ben Fry, investment manager of ReSI Capital Management and head
of housing at Gresham House, said:
"We are delighted to help Brick By Brick increase its delivery
of affordable homes, while generating a return for the London
Borough of Croydon. These homes exemplify the sort of high-quality
assets we seek, delivering value and housing security to first-time
homeowners, and meeting the pressing housing needs of London and
the rest of the UK. We see this as the start of a long-term
partnership with Brick By Brick to facilitate its delivery of much
needed affordable homes.
"This investment further diversifies our portfolio and is a key
step to reaching full dividend cover by the beginning of October
2021. We look forward to updating shareholders on further progress
in 2021."
Colm Lacey, Chief Executive at Brick By Brick added:
"Brick By Brick's partnership with ReSI will help us to realise
the delivery of high-quality and affordable housing in Croydon and
accelerate the returns we provide to our shareholder Croydon
Council. ReSI's approach means we are transacting with a registered
provider of social housing that delivers best-in-class shared
ownership and provides long-term housing security for Croydon's
residents."
ENDS
FOR FURTHER INFORMATION, PLEASE CONTACT:
ReSI Capital Management Limited / Gresham
House Housing
Ben Fry
Alex Pilato +44 (0) 20 7382 0900
Jefferies International Limited
Stuart Klein
Tom Yeadon +44 (0) 20 7029 8000
KL Communications gh@kl-communications.com
Charles Gorman +44 (0) 20 3995 6673
Camilla Esmund
Alex Hogan
Notes to Editors
Residential Secure Income plc (LSE: RESI)
ReSI is a real estate investment trust (REIT) listed on the
premium segment of the Main Market of the London Stock Exchange
with the objective of delivering secure inflation linked returns by
investing in affordable shared ownership, retirement and local
authority housing throughout the UK.
ReSI targets a secure, long-dated, inflation-linked dividend of
5.0 pence per share p.a. (paid quarterly) and a total return in
excess of 8.0% per annum. Including recent committed acquisitions,
ReSI's portfolio comprises 2,802 properties, with an (unaudited)
IFRS fair value of GBP322m.
ReSI aims to make a meaningful contribution to alleviating the
UK housing shortage by meeting demand from housing developers
(Housing Associations, Local Authorities and private developers)
for long-term investment partners to accelerate the development of
socially and economically beneficial new affordable housing. ReSI's
subsidiary, ReSI Housing Limited, is registered as a for-profit
Registered Provider of Social Housing, and so provides a unique
proposition to its housing developer partners, being a long-term
private sector landlord within the social housing regulatory
environment. As a Registered Provider, ReSI Housing can acquire
affordable housing subject to s106 planning restrictions and
housing funded by government grant.
Acquisitions by ReSI are limited to homes with sufficient
cashflows, counterparty credit quality and property security to be
capable of supporting long--term investment grade equivalent debt.
ReSI does not manage or operate stock and uses experienced and
credit-worthy third-party managers.
ReSI is managed by ReSI Capital Management Limited, a wholly
owned subsidiary of TradeRisks Limited which has a 19-year track
record of executing transactions within the UK social housing
sector and, to date, has arranged funding of over GBP11 billion in
the social housing, care and other specialist residential property
sectors.
TradeRisks Limited and ReSI Capital Management Limited were
acquired on 4 March 2020 by Gresham House.
About Gresham House plc
Gresham House is a specialist alternative asset management
group, dedicated to sustainable investments across a range of
strategies, with expertise across forestry, housing,
infrastructure, renewable energy and battery storage, public and
private equity.
Our origins stretch back to 1857, while our focus is on the
future and the long term. Quoted on the London Stock Exchange
(GHE:LN) we actively manage c.GBP3.3bn of assets on behalf of
institutions, family offices, charities and endowments, private
individuals and their advisers. We act responsibly within a culture
of empowerment that encourages individual flair and entrepreneurial
thinking.
As a signatory to the UN-supported Principles for Responsible
Investment (PRI), our vision is to always make a positive social or
environmental impact, while delivering on our commitments to
shareholders, employees and investors.
Further information on ReSI is available at www.resi-reit.com ,
and further information on Gresham House is
available at www.greshamhouse.com
About Brick By Brick
Brick By Brick is a development company which was set up by
Croydon Council in 2016. It was established to increase the pace
and quality of supply of new and affordable homes in Croydon by
delivering high quality new homes across the borough. Brick By
Brick is a means to ensure people in Croydon have access to high
quality and affordable housing. Their development model, as opposed
to the more traditional housebuilder model, means that the full
value of development is kept within the borough for the benefit of
borough residents.
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END
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