TIDMRESI
RNS Number : 5916U
Residential Secure Income PLC
07 April 2021
07 April 2021
Residential Secure Income plc
Corporate Update / Pre-Close Trading Update
Full deployment reached and full dividend coverage expected from
July 2021
Residential Secure Income plc ("ReSI") (LSE: RESI), which
invests in affordable shared ownership, retirement and local
authority housing, i s pleased to provide a n update on recent
corporate activity and performance ahead of its interim results for
the half-year ending 31 March 2021.
Financial Update
-- Following its GBP16 million acquisition of 191 shared ownership
homes from Orbit the Company has reached full deployment with
a GBP345 million (1) portfolio consisting of 3,061 homes
-- Passing portfolio net rent less interest grown to GBP9.9 million
-- Total Debt GBP162 million (before fair value update) as at
31 March 2021 with an average 23 year maturity and weighted
average cost of 2.3%. Gross LTV ratio (1) of 47 %
-- Improved earnings position arising from being fully invested,
as well as ongoing operational improvements, means the Company
now expects to reach full dividend coverage (on a look forward
basis and calculated on recurring profit before valuation movements)
in July 2021 (2)
Shared Ownership Portfolio
-- Net annual rent roll less interest (3) on completed shared
ownership homes increased to GBP2.2 million (1.3 pence per
share) reflecting the growing size of the portfolio as well
as further progress on occupancy over the quarter
-- Shared ownership portfolio now comprising 549 homes (including
85 committed acquisitions), of which 418 homes are occupied,
31 reserved and in sales progression and 15 remaining available
for shared owners
-- Continuing occupational progress with 17 reserved homes
becoming occupied over the quarter to 31 March 2021
-- Since 30 September 2020 the Company has committed approximately
GBP40 million (assuming shared owners in currently unoccupied
homes each acquire 25% of their asset) which is 20% higher
than the GBP32 million target announced in December 2020.
-- GBP21 million has been invested in homes which are immediately
income-generating
-- Strengthened existing partnership with Metropolitan Thames
Valley and established new ones with Orbit and Brick By Brick.
Strong partnerships with these housing associations should
provide further investment opportunities to the Company over
time
Retirement Portfolio
-- Portfolio consists of 2,222 retirement homes with a net annual
rent roll less interest (3) of GBP6.3 million (3.6 pence per
share)
-- Implemented improved marketing processes which has helped to
reduce voids across the portfolio.
-- Voids reduced to 8%. This is down from a high of 11% in July
2020, 10% in September 2020 and closing in on pre-COVID average
of c.7%
-- Transfer of the property management contract from Girlings
to a subsidiary of the Investment Manager is expected to provide
further cost efficiencies and operational improvements over
the next 12 months
Local Authority Portfolio
-- Portfolio consists of 289 homes with a net annual rent roll
less interest (3) of GBP 1.4 million (0.8 pence per share)
-- Portfolio continued to perform well with 100% rent collected
over the period
The Company expects to update shareholders further in its
upcoming Interim results which will be published in May 2021 .
Alex Pilato, head of the Housing Division of Gresham House,
commented:
"We are delighted to announce excellent progress against all our
key performance targets. During the period we have committed over
GBP40 million to new shared ownership assets and generated further
operational improvements and efficiencies across the business
including reducing voids in the retirement portfolio. All of these
help to drive earnings growth and we now have a clear pathway to
full dividend coverage.
ReSI's residential portfolio is defensively position allowing it
to weather economic stress and provide stable long dated inflation
linked returns for our investors. In building this portfolio we
have also facilitated the provision of high quality, modern and
affordable homes which make a material difference to the lives our
residents.
(1) Based on 31 December 2020 valuations plus acquisitions (included committed) at cost.
(2) This is a target only and not a profit forecast. There can
be no assurance that this target will be met.
(3) Net rent roll is stated less interest as each portfolio has
its own ringfenced debt security pool and so this reflects the
lower interest costs in the Company's shared ownership
portfolio
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
Saurav Karia
Notes to Editors
Residential Secure Income plc (LSE: 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 3,060 properties, with an (unaudited)
IFRS fair value of GBP345m.
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 managers.
ReSI is managed by ReSI Capital Management Limited, whose
immediate parent company, TradeRisks Limited, has been active
within the social housing sector for over 20 years as a funding
arranger and advisor and, over the last three years, as an investor
through ReSI.
ReSI Capital Management and its parent, TradeRisks, were
acquired by Gresham House in March 2020, further increasing the
investment expertise available to ReSI. The housing investment team
at Gresham House has 15 members and growing, with an average of 20
years' relevant experience, covering fund management, housing
investment, social housing management and financial and risk
expertise.
Gresham House plc is a London Stock Exchange quoted specialist
alternative asset manager committed to operating responsibly and
sustainably, taking the long view in delivering sustainable
investment solutions.
Further information on ReSI is available at
www.resi-reit.com
Further information on Gresham House plc is available at www.greshamhouse.com
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END
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