Residential Secure Income Share Discussion Threads

[davebowler] 10/5/2021 11:28

Liberum-
Dividend cover improved in Q1

Mkt Cap £166m | Share price 97.0p | Prem/(disc) -8.0% | Div yield 5.2%

Event

Residential Secure Income's NAV at 31 March 2021 was 105.1p, representing a 1.3% total return over the quarter. NAV performance in the period was driven by a combination of net income (+1.0p) and a like-for-like valuation increase on the portfolio (+0.5p). At the end of March, the property portfolio was valued at £325.2m, representing a 0.4% like-for-like fair value increase.

Rent collection in the quarter remained secure, with 99% collected, which is unchanged throughout the pandemic. Net income in Q1 was 32% higher than in Q4 2020, which resulted in improved dividend cover of 82% for the period, slightly ahead of the 2021 target cover of 80%. The quarterly dividend has remained unchanged at 1.25p, in line with the 5.0p target for FY 2021. The company expects full dividend cover to be achieved in July 2021.

[cwa1] 10/5/2021 07:36

From this morning's update:-

"We are delighted to report an im proved earnings position , with dividend maintained and dividend cover continuing to rise. This results from swiftly occupying recently acquired shared ownership homes, and improving occupancy of the retirement portfolio, where voids have decreased and are now approaching pre-pandemic levels of around 7%. Combined with becoming fully invested at the end of March, this puts ReSI firmly on the path to full dividend coverage."

[makinbuks] 28/4/2021 18:42

I don't see it as a bond proxy. Once covered the income is flowing from actual rent paid by tenants. Its therefore an alternative income stock offering an diversification from the bond bubble.

[pyufak] 28/4/2021 17:24

Nice; I mentioned dividend cover a fair amount in recent posts and seems the market is re-rating because RESI on track to achieve it.

Comparable ‘safe’ REITs with RPI linked assets underlying are trading 4-4.5% dividend yield area which implies if dividend cover confirmed and maintained we could see 110-125p area medium term. I’ve held as a bond proxy for a long time and will continue to do so.

[panshanger1] 28/4/2021 16:40

New 52 week high today @98

[panshanger1] 07/4/2021 17:25

Sticking with the manager reallyVery experienced and respected but relative performance has been disappointing and still on a large discount Things ( and sentiment) can change quickly though and I generally don't trade much

[raptor_fund] 07/4/2021 14:27

Panshanger. What's your thoughts on SLI? I have RESI and RGL as well. I can understand why RGL trades on a discount, given its gearing and the uncertainty about the assets it holds, but a larger part of SLI is in industrials and the gearing is quite reasonable. They have been doing big buy backs, but the price doesn't budge.

[panshanger1] 07/4/2021 11:30

Thanks for posting- should help sentiment One of the steadier REITS over the last yearStill underwater SLI and RGL !!

[davebowler] 07/4/2021 10:13

Liberum;
Residential Secure Income

Full dividend cover expected in Q3 2021

Mkt Cap £157m | Prem/(disc) -11.3% | Div yield 5.4%

Event

Residential Secure Income expects to reach full dividend cover from July 2021. The improved earnings position is largely a result of the deployment of additional capital in shared ownership properties in recent months. RESI is now fully deployed with a gross LTV ratio of 47%.

RESI - net rent less interest by asset type (excludes fund management and operating costs)



£m

Pence per share

Retirement Living

6.3

3.6

Shared Ownership

2.2

1.3

Local Authority

1.4

0.8

Total

9.9

5.7



Source: Liberum, Company data

The shared ownership portfolio now comprises 549 homes (including 85 committed acquisitions). Of the 464 acquired properties, 418 are occupied, 31 are reserved and 15 are available for occupation.

Retirement living properties accounted for 69% of the portfolio (based on December 2020 valuations). Void levels have reduced to 8% across the retirement living portfolio from a peak of 11% in July 2020. The local authority assets (11% of portfolio) continue to perform well with 100% rent collection in the period.

Liberum view

The expectation of full dividend cover by July is ahead of the previous guidance of October 2021. The dividend cover issue has been addressed through shared ownership acquisitions and reducing voids in the retirement living portfolio. It will be almost four years from IPO by the time full dividend cover is achieved. This is partly due to the strategy of focusing on shared ownership assets in recent years, rather than immediate income-producing properties. We expect a gradual re-rating in the shares as the improvement in recurring EPS comes through from acquisitions.

[davebowler] 31/3/2021 09:17

Liberum;
Event

Residential Secure Income has acquired 191 shared ownership homes from Orbit for £16m. The portfolio comprises 180 houses and 11 apartments, spread across 18 counties in England. All of the homes are occupied and income generating (acquisition yield not disclosed).

The average share of the homes already owned by the residents is 43%. RESI has funded the acquisition from its £300m debt facility and the total shared ownership portfolio now comprises 549 homes.

Liberum view

The acquisition will contribute towards an improvement in dividend cover. Previously, the company guided towards full cover from October 2021 compared to an expected level of 0.8x in the 12 months to September 2021. The manager intends to address dividend cover by through shared ownership acquisitions (£21m acquired in Q1 2021) and reducing voids in the retirement living portfolio The £324m portfolio is primarily invested in retirement living assets (69% of portfolio value vs. 19% for shared ownership) but the weighting to shared ownership properties will rise as this accounts for the bulk of new investments.

[pyufak] 07/2/2021 00:04

Earnings per share remain on track to grow to at least 4.0 pence[ii] for the year to 30 September 2021 and meet October 2021 run-rate dividend cover target

A delayed reaction to this? When I thought about it - to be ‘on track’ after lockdown 2 (Nov) and midway though lockdown 3 is promising. In addition the ‘at least’ addition I thought unusual. Maybe an income fund decided they want in ... little yield in government or corporate bond markets so why not RESI

[pyufak] 05/2/2021 17:46

someone has more faith in them getting to 4p dividend cover this year than I personally do. Good to see though

[cwa1] 05/2/2021 15:39

Unusual. Haven't seen anything specific...

[panshanger1] 05/2/2021 15:34

Large trade gone through here today and unusual price movement Have we missed anything ?

[davebowler] 28/1/2021 10:17

Liberum;
Residential Secure Income

0.8x dividend cover expected for FY 2021

Mkt Cap £151m | Prem/(disc) -16.1% | Div yield 5.7%

Event

Residential Secure Income's NAV per share at 31 December 2020 was 105.0p per share, representing a NAV total return of 1.2% in Q4 2020 and +2.1% over the prior 12 months. The portfolio valuation increased by 0.6% on a like-for-like basis, predominantly due to shared ownership assets.

Recurring EPS was 0.8p in the period, representing dividend cover of 0.6x. The manager expects recurring earnings of 4.0p for the year to 30 September 2021 (0.8x dividend cover) and projects full dividend cover on a run-rate basis by October 2021. The incremental improvement in income is expected to be driven increased occupancy across shared ownership assets.

The £305m portfolio is primarily invested in retirement living assets (c.70% of portfolio value). The weighting to shared ownership properties will rise as this accounts for the bulk of new investments. Covid-19 had impacted the company's ability to bring in new tenants but occupancy is beginning to recover. Voids have reduced from a high of 10.5% in July to 8.5% currently. Rent collection remains high at 99%.

Liberum view

The company's 2.1% NAV total return in 2020 reflects the impact one-off events including debt facility set-up costs of £2.4m and a £0.5m reduction in the retirement living portfolio valuation from a VAT change. The discount to NAV is c.18% wider than social housing peers and we believe this reflects the lower level of dividend cover. The strategy to acquire shared ownership assets, rather than immediate income-producing properties, has contributed to lower dividend cover. The manager intends to address dividend cover by deploying £32m in shared ownership properties and reducing voids in the retirement living portfolio and an improvement in cover by Q4 should lead to a re-rating of the shares.

[cwa1] 24/12/2020 11:55

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

ENDS

[badtime] 11/12/2020 15:52

But of weakness ...nearer 80 and I might top up

[pyufak] 05/12/2020 07:42

My gut agrees with you. The idea I liked; a load of safe assets which pay 5% dividend and protect my capital from inflation... good diversification for a portfolio.

Slow implementation and thin margins mean it could be sometime so probably better hunting elsewhere until it becomes apparent they’re close to hitting div cover sustainably.

[income investor] 04/12/2020 15:07

I watched the management presentation of the results. They are hoping to achieve 4p per share of rental income etc in this financial year - 100% cover at last 12 months away. I suspect it will be even longer given previous statements!!

[pyufak] 02/12/2020 17:28

i think needs to achieve dividend cover for any material move in this share price upwards; for now sideways or drift off until we get that

[badtime] 01/12/2020 20:51

The share price has as good as flatlined since recovering from the March dip...but happy to take the div

[cwa1] 11/9/2020 07:39

Sent them an email and, miraculously, the dividend appeared the day later. Just shows that you need to keep a careful eye on your broker and their dividend application.

[badtime] 11/9/2020 00:45

Likewise at Youinvest

[cwa1] 09/9/2020 07:53

Still not had mine yet, which is disappointing. Thanks rambutan2. Time to chase it up I feel...