REG - Residential Secure - 1st Quarter 2022 NAV and Corporate Update

Jefferies FinancialAnnouncement

27/01/2022 08:05

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RNS Number : 7743Z  Residential Secure Income PLC  27 January 2022

 

27 January 2022

Residential Secure Income plc

 

Net Asset Value & Corporate Update

 

Residential Secure Income plc (LSE: RESI), which invests in independent
retirement living and shared ownership to deliver secure, inflation-linked
returns, is pleased to announce its unaudited first quarter net asset value
("Net Asset Value" or "NAV") as at 31 December 2021 and to update
on recent corporate activity for the period.

 

Income/Dividends

 ●    Dividend of 1.29p paid out in line with increased target 1  of 5.16p per share
      to be paid in FY22 and a second dividend of 1.29p declared today
 ●    Dividend 98% covered by recurring income during the quarter
      ○                                         in line with target(1) to be at least fully covered for the year (with
                                                majority of rental income increases typically in second half of ReSI's
                                                financial year)
      ○                                         inflation linked rental income provides ongoing platform for dividend
                                                progression
 ●    99% rent collection maintained, in line with historic and pre-pandemic levels

 

Resilient Financial Position

 ●    EPRA Net Tangible Assets total return for the quarter of 1.7% (1.8 pence per
      share)
 ●    Total property portfolio of 3,050 homes with a value of £351 million 2  up
      0.4% or £1.4 million on a like-for-like fair value basis
      ○                                        the portfolio has an average EPRA NIY of 3.9% driven by increasing rent as
                                               shared ownership portfolio becomes fully occupied
      ○                                        portfolio is focused on £216 million of independent retirement living and
                                               £104 million shared ownership homes
      ○                                        valuation movement driven by like-for-like rental growth from ReSI's
                                               inflation-linked leases
 ●    ReSI continues to maintain a robust balance sheet with a loan to value ratio
      of 47%. Total debt was £169 million at 31 December 2021 with a long average
      22 year maturity and low weighted average cost of 2.3%

 

Further operational delivery

 ●    Retirement voids continue to be maintained at pre-pandemic average of 7%
 ●    20 occupied shared ownership homes acquired (£1.9 million), out of total of
      46 committed at year end
 ●    Rent roll increased by 2.9% during the quarter, driven by
      ○                                        completions on shared ownership homes and
      ○                                        like for like rental growth of 2.8% due to inflation linked rent reviews on
                                               514 properties in the quarter (20% of rent roll).

 

NAV Movement

The movement in NAV since 30 September 2021 is as follows:

                                      IFRS NAV                EPRA NTA
                                      £'m    Pence per share  £'m    Pence per share
 Net Asset Value at 30 Sept 2021      182.4  106.6            184.7  107.9
 Net Income for period                2.2    1.3              2.2    1.3
 Valuation change *                   0.0    0.0              1.1    0.6
 Revaluation of trading properties    n/a    n/a              -0.2   -0.1
 Purchase Costs / Transfer tax        n/a    n/a              0      0
 Total Return                         2.2    1.3              3.1    1.8
 Dividend paid                        -2.2   -1.3             -2.2   -1.3
 Net Asset Value at 31 December 2021  182.4  106.6            185.6  108.4

 * Valuation change for EPRA NTA excludes the movement in fair value of
 financial instruments

 

Outlook

 

 ●    Inflation-linked dividend and capital growth supported by stable, resilient
      cash-generative assets, including shared ownership leases of over 100 years
 ●    Strong governance through our wholly owned Registered Provider of Social
      Housing
 ●    Ongoing shortage of UK affordable housing, creating attractive investment
      opportunities
 ●    Strongly positioned for further growth and to meet the housing market's two
      biggest problems
      ○                                        inability to access home ownership, which is getting worse; and
      ○                                        growing elderly population requiring affordable, independent later living

 

Ben Fry, Head of Housing Investment at Gresham House, commented:

 

"ReSI plc has delivered another resilient quarter, with increasing income
continuing to support our increased inflation-linked dividend. Rent
collections, at 99% of rents, remain as robust as during and before the
pandemic.

 

"The secular tailwinds remain strong. As the nation continues to adapt to
post-pandemic working and living patterns, the ageing population and rising
house prices continue to drive demand for high quality retirement property and
affordable homes.

 

"With our portfolio of inflation-linked rental housing continuing to deliver
both inflation-protected income and meet homeowners' needs for affordable
rents, ReSI plc is well placed for future capital, income and portfolio
growth."

 

 

For further information, please contact:

 

 ReSI Capital Management Limited / Gresham House Housing

 Ben Fry                                                  +44 (0) 20 7382 0900

 Alex Pilato

 Jefferies International Limited

 Stuart Klein                                             +44 (0) 20 7029 8000

 Tom Yeadon

 KL Communications                                        gh@kl-communications.com (mailto:gh@kl-communications.com)

 Charles Gorman                                           +44 (0) 20 3995 6673

 Will Sanderson

 Millie Steyn

 

Notes to Editors

Residential Secure Income plc (LSE: RESI) is a real estate investment trust
(REIT) focused on delivering secure, inflation-linked returns with a focus on
two resident sub-sectors in UK residential - independent retirement rentals
and shared ownership - underpinned by an ageing demographic and untapped and
strong demand for affordable home ownership.

 

ReSI plc targets(1) a secure, long-dated, inflation-linked dividend of 5.16
pence per share p.a. (paid quarterly) and a total return in excess of 8.0% per
annum. Including recently committed acquisitions, ReSI's portfolio comprises
3,050 properties, with an (unaudited) IFRS fair value as at 31 December 2021
of £351m i .

 

ReSI's purpose is to deliver affordable, high quality, safe homes with great
customer service and long-term stability of tenure for residents. We achieve
this through 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 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 five
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 19 members and growing,
with an average of 18 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
(http://www.resi-reit.com/) , and further information on Gresham House is
available at www.greshamhouse.com (http://www.greshamhouse.com)

 

 

 1  This is a target only and not a profit forecast. There can be no
assurance that this target will be met.

 2  Excluding the finance lease gross up and including £7m of committed
acquisitions

 

 i  excluding the finance lease gross up and including £7m of committed
acquisitions

 

 

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