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Residential Secure Income Plc

0.00 (0.0%)
Share Name Share Symbol Market Type Share ISIN Share Description
Residential Secure Income Plc LSE:RESI London Ordinary Share GB00BYSX1508 ORD GBP0.01
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 71.00 178,127 08:31:53
Bid Price Offer Price High Price Low Price Open Price
70.40 71.00 71.00 71.00 71.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trust 31.79 13.33 6.90 10.14 137.85
Last Trade Time Trade Type Trade Size Trade Price Currency
15:48:51 O 500 70.40 GBX

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Residential Secure Income (RESI) Discussions and Chat

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Date Time Title Posts
15/5/202317:45::: Residential Secure Income plc :::211

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Posted at 30/3/2023 09:52 by dlp6666
Wondering what to make of recent fairly significant director purchases:

Overall: "The Non-Executive Directors, Investment Manager and its current and former directors thus hold 6,660,774 ordinary shares, c.3.6% of shares in issue (excluding shares held in treasury)"

If the directors (past and present) don't seem to be too worried about excessive costs of refinancing etc, then need we be?

Posted at 29/3/2023 11:22 by spectoacc
1% LFL rental growth on the portfolio as a whole, yet supposedly "inflation-linked" rents. Am I reading that right? RPI got over 17% in the year, and they get to enjoy a 1% overall rise, with only 15% of the income actually subject to review during the year.

They're not alone in the "inflation linked" fib - THRL managed +1.8%, vs 17% RPI.

Concern with RESI is the uncovered divi, increasingly so as the 10% floating debt cost rises, and the utility bills in retirement home shared areas increases.

They need to get to work on costs too IMO.

Any views on what a sustainable divi would be for RESI? I'd knock it back to 90% of actual earnings, if not a little lower, and not promise to grow it until bills outlook clearer say a year from now. Wouldn't be popular, but ought to be sustainable.

Posted at 26/3/2023 18:33 by pyufak
Thanks HugePants and IncomeInvestor. Yes, I’ve also been an investor for a long period II and am well underwater. Hence my confidence been a bit low to add in any real size. The discount rates applied to the two income streams do not seem crazy low - the below is before the addition 25bp increase in Feb.

‘This was driven by 4.5% like-for-like rental growth, partially offset by c. 35 bps year-over-year increase in the weighted average nominal discount rates applied to shared ownership and retirement portfolios of c.10 bps to 6.4% and c.45 bps to 8.2% respectively.’

The directors purchases, or certainly one of them, were not small which has perked my interest. I guess; my thinking is how much more bad news can we factor into the price - but I have thought this before on RESI. I accept, as you say income investor, that the divi is uncovered but it is 94% covered and it would be covered if they hadn’t raised it from 5p - personally I think they increased it too soon

Posted at 26/3/2023 17:29 by hugepants
I hold some RESI. According to the accounts(p 41);

"...ReSI’s investment portfolio is valued on a discounted cashflow basis on the value of its rental stream (rather than at vacant possession / retail value) and so has limited exposure in its valuations to house prices. Sensitivity analysis shows that investment values could fall by c. 13% before loan to value covenants breaches would arise. ReSI is also able to cash cure any loan to value covenants using liquidity across the group. ReSI’s debt on its shared ownership portfolio is fully amortising and so does not have a loan to value covenant..."

They have several loans. It is the Santander loan which has the smallest headroom but it also looks like the Santander debt is only 3.9M (p 42). The biggest loan is £94.6M and values would have to fall 22% (from end sept 22 values) for it to be under threat.

Posted at 26/3/2023 17:07 by income investor
I would be a little wary of RESI. I have been a shareholder since early 2019, and its dividend has never been covered 100%. There may be an issue on covenant- it's Annual Report 2022 refers to its "investment portfolio [which I think must be the retirement piece] is valued on a discounted cash flow basis on the value of its rental stream... Sensitivity analysis shows that investment values could fall by c13% before loan to value covenant breaches would arise."I don't find the 13% figure very reassuring and this is at end September last year. As a shareholder I hope there is not an issue but having topped up at 78p thinking it would not go lower, I was clearly wrong and if there is a covenant breach it could go lower.
Posted at 26/3/2023 13:44 by pyufak
Hmm; I have clearly called this one wrong. I’ve just re-read the literature and I’m pretty confused why we’re here.

~45% of portfolio is covenant free - has significant security in the equity of shared ownership buyers for price declines (minimum 25% first tranche) and one would imagine because of this the income from the owners should be very secure and stable.

~10% the local authority stuff is small and not close to covenants. The implied risk from HOME fallout here is limited by the size of the holding.

This leaves the 45% in the retirement bucket which is closest to the covenant at 30% pre- Feb revaluation due to discount rate - do we know how this was allocated across the portfolio?

Am I missing where the risk is in RESI here. I see a few areas:

Regulatory - the government limits RPI uplifts for shared ownership. It is already capped at 6% for retirement.

Fraud - seems unlikely given the shared ownership portfolio is bought from developers so price transparency should be easier. Also the fall back usage of apartments you’d imagine have more intrinsic uses.

Discount rate - could go a lot higher. But I’m looking at this as I think inflation is peaking and the recent banking stress makes it more likely interest rates will decline in coming years.

Covenant breaches on the retirement portfolio - is this where people are worried? For me personally I’d love it if they prioritised buybacks above further capital expenditure / dividends but this will not be the case. Can’t call yourself secure income and then switch it for buybacks can you.

Would be interested in others thoughts; from this valuation - how does RESI go kaboom and end up realising 30p or lower? What do people think of buying the portfolio here to lock away long term for income / growth.

Thank you

Posted at 11/3/2023 00:24 by boonkoh
Buried in the FY22 report is this: "RESI has headroom of at least 13% in its loan-to-value covenants".However, Q1 update shows that EPRA NAV declined - 9.9%. Presume, since no shares issued that book value of properties dropped c9.9% and thus were getting very close to covenant breach levels?
Posted at 10/3/2023 16:07 by hugepants
fwiw the current yield is 7.6% and the discount 28%. The share price still heading south though
Posted at 14/9/2022 09:56 by davebowler

Residential Secure Income

£50m investment in shared ownership properties and extension of RCF

Mkt Cap £212m | Share price 114.5p | Prem/(disc) 3.3% | Div yield 4.5%


Residential Secure Income (RESI) has announced a partnership with social impact real estate firm HSPG. As part of the partnership, RESI will acquire ownership of properties worth up to £50m over the next three years while HSPG will develop the properties and is responsible for letting them out to shared owners. The first transaction has already been completed. In it, RESI acquires 21 completed homes at the Laureate Fields development in Felixstowe, Suffolk for £2.7m. This acquisition brings RESI's shared ownership portfolio to 725 homes and a further 59 committed homes.

RESI also announced the extension of its existing RCF with Santander from £10m to £25m. The expansion comes with a reduction in the interest rate margin from 2.8% to 2.25% and a one-year extension of the facility to March 2025.

Liberum view

With the expansion of the RCF, RESI has now sufficient cash capacity to fully finance the £50mn partnership with HSPG. As peer the interim statement, RESI had £34.6m cash at hand. With the expanded RCF that so far has not been tapped into, that rises to £59.6m. However, tapping into the RCF would come at a material cost to RESI, since SONIA is now at 1.7% and rising. With the reduced spread, that still is an expensive source of working capital at 3.95% annual rate of interest and rising. But it will enable RESI to better manage its working capital position and complete the deal with HSPG without the need to raise additional capital in current volatile markets. It's the right thing to do at this time.

The shared ownership market also is more lucrative for RESI with rents contractually growing at RPI + 0.5% each year and a levered yield of the existing shared ownership portfolio of 7.1% vs. 6.9% for the retirement housing estate. Furthermore, there is a significant shortage of shared ownership schemes in the UK as evidenced by the 100% occupancy rate for the existing RESI shared ownership portfolio vs. 94% for the retirement housing portfolio. With the £50m partnership announced today, the portfolio of RESI is shifting more towards an even split between shared ownership and retirement living, which should improve income generation over the coming years.

Posted at 24/12/2020 11:55 by cwa1
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."



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