REG - Residential Secure - Interim Results to 31 March 2025

Residential Secure IncomeAnnouncement

18/06/2025 07:02

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RNS Number : 2751N  Residential Secure Income PLC  18 June 2025

18 June 2025

Residential Secure Income plc

 

("ReSI" or the "Company")

 

Interim Results to 31 March 2025

 

Residential Secure Income plc (LSE: RESI), which has invested in independent
retirement living and shared ownership to deliver secure, inflation-linked
returns and is now implementing a managed wind-down strategy, is pleased to
announce its interim results for the six months ending 31 March 2025.

 

Commenting on ReSI's Interim results, Robert Whiteman CBE, Chairman of ReSI
said:

 

"Interim results for the six months ended March 2025, demonstrate the Board's
and Investment Manager's continued focus on driving operational performance.
Top line earnings growth has been achieved through 4% like-for-like rent
reviews and has been complemented by vigilance on operational expenditure,
execution of the retirement asset management programme and reduced finance
costs, following the full divestment of the local authority portfolio. This
has culminated in the repayment of drawn floating rate debt, adjusted earnings
growth of 15% and dividend coverage of 134%.

 

Elevated long-term gilt yields have caused a 4.8% like for like decline in
property valuations, leading to a 12% decline in EPRA NTA, to 66.0p. EPRA NTA
excludes realisation costs and any debt break gain. The maximum realisable NAV
stands at 70.2p on 31 March 2025 - this is the hypothetical value that would
be distributable to shareholders if properties were sold at their book value
and debt was broken on 31 March 2025.

 

ReSI's retirement and shared ownership portfolios, operate in two structurally
supported sub asset classes of UK property, and remain rooted in relative
value, scale and long-term fundamentals. As a result, despite a challenging
macro environment, Jones Lang Lasalle, our sales agent, and the Investment
Manager are seeing continued appetite from a range of potential purchasers for
one or both of ReSI's portfolios.

 

On behalf of the Board, I would like thank Ben Fry, who having advanced the
wind down, is stepping down as lead fund manager of ReSI, having been involved
since our IPO, upon completion of his secondment on 31 July 2025. We are
pleased both Mike Adams and Sandeep Patel continue day-to-day management of
ReSI and execution of the wind-down, with the support from the wider Gresham
House team."

 

Ben Fry, Fund Manager, ReSI added:

 

"During H1-25 ReSI has delivered strong like-for-like rental growth of 4.0%
whilst achieving record occupancy and with rent collection stable at almost
100%, reflecting our focus on individual resident contractual relationships.
This flowed through to a 15% increase in adjusted earnings and 134% dividend
coverage. Despite higher gilt yields continuing to impact our valuations, the
fundamentals underpinning ReSI's portfolios continue to remain strong and
provide substantial opportunity to drive strong operating performance.

The progress made to date on the orderly realisation of the ReSI portfolio and
the continuation of an established senior executive team, allows me to step
down at the end of my secondment on 31 July 2025.This means there will be
limited impact on the day-to-day operation of ReSI and will ultimately leave a
team well placed to maximise value from the portfolio whilst balancing the
joint objectives of concluding the disposals efficiently and responsibly,
maximising proceeds for our shareholders all whilst ensuring the interests of
residents are protected.

Finally, I would like to thank Shareholders and the ReSI Board for their
support since IPO. I am immensely proud of the high-quality retirement and
shared ownership portfolios ReSI has assembled while providing inflation
linked income to shareholders."

 

Key financial metrics

 

 Income                                          Six months to 31-Mar 2025     Six months to 31-Mar 2024           Change in year
 Like-for-like rental reviews                    +4.0%                         +6.5%                               (38)%
 Rent collection                                 100%                          99%                                 1%
 Gross Rental Income                             £15.0mn                       £14.9mn                             1%
 Net Rental Income                               £9.4mn                        £9.4mn                              -
 Adjusted Earnings1,2                            £5.1mn                        £4.5mn                              15%
 Adjusted EPS1,2                                 2.8p                          2.4p                                15%
 Dividend paid per share                         2.06p                         2.06p                               -
 Dividend cover3                                 134%                          117%                                15%
 Changes in fair value of investment properties  £(15.5)mn                     £(7.3)mn                            122%

 Capital                                                        31-Mar 2024               30-Sept 2024  Change in period
 IFRS net assets                                                £140.8mn                  £151.0mn      (7)%
 IFRS NAV per share                                             76.0p                     81.6p         (7)%
 IFRS Portfolio Valuation                                       £294.5mn                  £310.6mn      (5)%
 EPRA NTA per share1                                            66.0p                     74.6p         (12)%
 EPRA NTA Total Return1                                         (8.7)%                    (3.7)%        (5.0)%
 Loan to Value                                                  50%                       52%           (2)%

 

 

Financial highlights: 15% growth in adjusted earnings, through a combination
of top line inflation linkage of rental income, continued vigilance on costs
and reduced finance costs delivering 134% dividend coverage

 

·       4.0% rent review growth (includes shared ownership rent
increases on 1 April 2025)

·       Adjusted earnings1 of £5.1 million (H1 24: £4.5 million) with
strong rent growth across retirement and Shared ownership, augmented by a
reduction in operating and finance costs

·       Shared ownership rents increasing by average of 3.3% on 1 April
2025, set to underpin further earnings growth in H2

·       EPRA Net Tangible Assets ("NTA") total return of (8.7)% (H1 24:
(3.7)%) to give 66.0p per share NTA

o  Valuations continue to be impacted by elevated gilt yields, down 4.8%
like-for-like with 32bps outwards yield shift

o  EPRA NTA adjusted for sales costs and debt breaks, representing a maximum
realisable Net asset value of £130.0 million / 70.2 pence per share, at
prevailing gross asset value and break gain on debt at balance sheet date

·       LTV of 50% (FY 24: 52%) supported by 21-year average debt
maturity

·       Total dividends paid for the half-year of 2.06p per share (H1
24: 2.06p) with 134% dividend cover (H1 24: 117%)

 

Portfolio and operational highlights

 

·       Diversified portfolio of 2,956 homes worth £294.5 million

o  £103 million reversionary surplus of vacant possession value compared to
fair value (35% uplift)

·       Shared Ownership portfolio focused on direct leases with shared
owners and part homeowners

·       Rent collection of over 99% for half year (H1 24: 99%)

·       Shared ownership portfolio 100% occupied

·       Record retirement occupancy of 97% continuing for half year (H1
24: 96%) with period-end occupancy of 98%

 

Retirement Asset Management Programme

 

·     Ongoing progress on retirement portfolio asset management
initiatives, delivered via our in-house property manager, ReSI Property
Management Limited including:

o  Improved re-letting times with void weeks reducing from 11.5 weeks in FY24
to 8.1 weeks in H1 25

o  Record occupancy of 97% despite the winter months generally seeing
increased turnover, and allowing a focus on rent growth of 4.2%

o  Portfolio rationalisation, delivering effective capital recycling, since
programme commenced on 1 October 2023, delivering earnings accretion:

o  40 retirement properties (1% of portfolio) either sold or under offer
generating a 21% premium to book value, selling at a tighter yield than
portfolio valuation net yield of 6.4%

o  14 retirement properties acquired or under offer, in core areas, at a net
yield on cost of 8.0%

 

 

Progress on orderly realisation

 

·       Local authority portfolio fully divested, in January 2025,
generating £15 million of net proceeds, slightly ahead of September 2023
valuation

·       Floating rate debt fully paid down with £15 million Santander
revolving credit facility fully undrawn at balance sheet and reporting date

o  Santander facility cancelled on 12 June 2025

o  Refinance of facility completed with a 2.5 yr facility with Shawbrook at a
4.20% margin

o  Secures balance sheet flexibility to facilitate accretive capital
expenditure to enhance portfolio value

·       Since the managed winddown was approved in December 2024, JLL
have been appointed and commenced marketing the portfolio. ReSI is currently
engaged in meaningful dialogue with several potential purchasers, following
receipt of initial expressions of interest and / or non-binding proposals for
the portfolio

·       Further announcements will be made in due course in line with
regulatory requirements

 

 

Interim Report

 

A copy of the pdf Interim Report is available on the Company's website at
https://greshamhouse.com/real-assets/real-estate-investment/residential-secure-income-plc/
(https://greshamhouse.com/real-assets/real-estate-investment/residential-secure-income-plc/)
where further information on the Company can also be found. The Interim Report
has also been submitted to the National Storage Mechanism and will shortly be
available at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

For further information, please contact:

 

 Gresham House Real Estate

 Mike Adams                 +44 (0) 20 3837 6270

 Sandeep Patel

 Peel Hunt LLP

                            +44 (0) 20 7418 8900

 Luke Simpson

 Huw Jeremy

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

                            +44 (0) 20 3882 6644

 Charles Gorman

 Charlotte Francis

 

 

About ReSI plc

 

ReSI plc (LSE: RESI) is a real estate investment trust (REIT) focused on
delivering secure, inflation-linked returns with a focus on two residential
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'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.

 

In December 2024, shareholders voted for and accepted a new investment
objective which seeks to realise all the existing assets in the Company's
portfolio in an orderly manner. The Company will pursue its investment
objective by effecting an orderly realisation of its assets while seeking to
balance maximising returns for Shareholders against timing of disposals whilst
ensuring the interests of residents are protected. Capital expenditure will be
permitted where it is deemed necessary or desirable in connection to the
realisation, primarily where such expenditure is necessary to protect or
enhance an asset's realisable value, to comply with statutory or regulatory
obligations, to protect other stakeholders, to comply with the terms of any
funding arrangement or to facilitate orderly disposals.

 

About Gresham House and Gresham House Real Estate

 

Gresham House is an alternative asset manager committed to operating
responsibly and sustainably, taking the long view in delivering sustainable
investment solutions

 

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/)

 

Notes:

 1  Alternative performance measures

2 Adjusted earnings is EPRA earnings adjusted for income and costs which are
not recurring and is equivalent to IFRS profit after tax before one-offs and
valuation adjustments.

3 Dividend cover measured as Adjusted earnings per share divided by dividend
per share

4 British Property Federation and Legal & General, 2022

 

 

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