Residential Secure Income PLC Corporate & Pre-Close Trading Update (5916U)

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                                   [phone] 
  Jefferies International Limited 
   Stuart Klein 
   Tom Yeadon                                    [phone] 
  KL Communications                              [e-mail] 
   Charles Gorman                                 [phone] 
   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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April 07, 2021 02:00 ET (06:00 GMT)