REG - Residential Secure - 3Q22 NAV & Corporate Update

Kenedix Residential Next InvestmentAnnouncement

27/07/2022 08:15

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RNS Number : 8371T  Residential Secure Income PLC  27 July 2022

27 July 2022

 

 

Residential Secure Income plc

 

Net Asset Value and corporate update

 

Residential Secure Income plc (ReSI plc) (LSE: RESI), which invests in
independent retirement living and shared ownership to deliver secure,
inflation-linked returns, is pleased to announce its unaudited third quarter
net asset value ("Net Asset Value" or "NAV") as at 30 June 2022 and to update
on recent corporate activity for the period.

 

Income/dividends

 ●    Quarterly interim dividend of 1.29p paid out, in line with FY22 target( 1 
      (#_ftn1) ) of 5.16p per share, and a further 1.29p quarterly interim dividend
      declared today
 ●    Dividend 97% covered by recurring income during the quarter
      ○                                         Dividend cover is stable after factoring in the February share issuance, with
                                                at least 96% expected for the full year(1)
      ○                                         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 (NTA) total return for the quarter of 2.0% (2.2p)
 ●    Total property portfolio of 3,291 homes with a value of £389 million( 2 
      (#_ftn2) ) up 0.9% or £3.2 million on a like-for-like fair value basis in the
      quarter
      ○                                         Movement driven by inflation-linked rental reviews growth of 6.1% on 1,142
                                                properties in the quarter (36% of rent roll), driving 2.3% like-for-like
                                                rental growth
      ○                                         Portfolio is focused on £223 million of independent retirement living and
                                                £135 million shared ownership homes
 ●    ReSI plc continues to maintain a robust balance sheet with a loan-to-value
      ratio of 44%. Total debt was £185 million at 30 June 2022 with a long average
      22-year maturity and low-weighted average cost of 2.2% (92% fixed or hedged)

 

Operational and deployment highlights

 ●    59% of directly rented EPC D-rated properties upgraded to C in nine months, in
      line with target of achieving minimum EPC ratings of C for all directly rented
      properties by 2025
 ●    £15 million equity raise in February 2022, fully committed to £28 million of
      shared ownership

      o Over 180 occupied shared ownership homes acquired (£21 million) in April,
      with a further 39 committed in May (£7 million) to complete in a staggered
      manner over the next few months
 ●    Occupancy increased to 96% as at June 22 (June 21: 95%)
      ○                                         Shared ownership portfolio now 100% occupied as at April 2022
      ○                                         Retirement void loss is slightly below pre-COVID average at c.6% on a
                                                trailing-twelve-month basis, following successful transfer of property
                                                management in-house

 

 

 

NAV movement

The movement in NAV since 31 March 2022 is as follows:

 

                                   IFRS NAV                          EPRA NTA
                                       £'mn      Pence per share         £'mn          Pence per share
 Net Asset Value at 31 March 2022  200.7         108.4               200.6             108.4
 Net income for period             2.3           1.3                 2.3               1.3
 Property valuation change         2.9           1.6                 2.8               1.5
 Debt valuation / indexation(3)    3.3           1.7                 -1.0              -0.6
 Dividend paid                     -2.4          -1.3                -2.4              -1.3
 Net Asset Value at 30 June 2022   206.8         111.7               202.3             109.3
 Total return                      8.5           4.6                 4.1               2.2

(3) The Group has elected to carry its USS debt at fair value through profit
and loss in the IFRS NAV. Debt market conditions have been very volatile since
31 March 2022 and the 30 June 2022 non-audited fair value represents the Fund
Manager's estimated valuation based on its assessment of current market
conditions. In accordance with the EPRA Best Practice Recommendations, EPRA
NTA reflects the amortised cost of indebtedness, rather than its fair value,
and thus the EPRA NTA movement reflects the indexation of USS debt.

 

Outlook

 

 ●    ReSI plc is strongly placed to meet the acute need for further expansion of
      the UK's affordable housing stock, worsened by recent strong house price
      growth
 ●    Particular shortage of affordable homes for home ownership and suitable
      accommodation with growing elderly population requiring suitable accommodation
      for independent later living
 ●    Committed to delivering securely covered and growing dividends, and capital
      growth, backed by 97% inflation-linked income and supportive government policy

 

Ben Fry, Managing Director, Housing at Gresham House, commented:

 

 "We're pleased with progress over the last quarter. Rising occupancy,
contractual inflation-linked rent increases and growing dividend cover
continue to underpin our dividend progression. Despite rising inflation, rent
collection rates remain steady, highlighting the affordability of ReSI plc's
rents. We're committed to continuing to meet the country's affordable housing
needs through our well-governed and scalable platform, while investing in
energy efficiency improvements to mitigate cost of living pressures for our
residents."

 

 

For further information, please contact:

 

 Gresham House Real Estate

 Ben Fry                    +44 (0) 20 7382 0900

 Brandon Holloway

 Peel Hunt LLP

 Luke Simpson               +44 (0) 20 7418 8900

 Huw Jeremy

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

 Charles Gorman             +44 (0) 20 3995 6673

 Charlotte Francis

 Millie Steyn

 

 

 

About ReSI plc

 

Residential Secure Income plc ("ReSI 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 a secure, long-dated, inflation-linked dividend of 5.16 p per
share p.a. i  (#_edn1) (paid quarterly) and a total return in excess of 8.0%
per annum. As at 30 June 2022, including committed acquisitions, ReSI plc's
portfolio comprises 3,291 properties, with an (unaudited) IFRS fair value of
£389mn ii  (#_edn2) .

 

ReSI plc'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 plc'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.

 

 

About Gresham House and Gresham House Real Estate

 

Gresham House 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.

 

Gresham House Real Estate has an unparalleled track record in the affordable
housing sector over 20 years, with senior members having an average of c.30
years' experience.

 

Gresham House Real Estate offers long-term equity investments into UK housing,
through listed and unlisted housing investment vehicles, each focused on
addressing different areas of the affordable housing problem. Each fund aims
to deliver stable and secure inflation-linked returns whilst providing social
and environmental benefits to its residents, the local community, and the
wider economy.

 

Further information on ReSI plc 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  (#_ftnref1) ) This is a target only and not a profit forecast. There can
be no assurance that this target will be met.

( 2  (#_ftnref2) ) Excluding the finance lease gross up and including £15m of
committed acquisitions

 i  (#_ednref1) The dividend target and total return target are targets only
and are not profit forecasts. There can be no assurance that either target
will be met, and they should not be taken as an indication of the Company's
future results.

 

 ii  (#_ednref2) excluding the finance lease gross up and including £15mn of
committed acquisitions

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