REG - Residential Secure - Net Asset Value and corporate update

Residential Secure IncomeAnnouncement

01/08/2024 07:00

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RNS Number : 6775Y  Residential Secure Income PLC  01 August 2024

 1 August 2024

Residential Secure Income plc

 

("ReSI" or the "Company")

 

Net Asset Value and 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 third quarter net asset value
("Net Asset Value" or "NAV") as at 30 June 2024 and to update on recent
corporate activity for the period.

 

Strong operational performance, underpinned by recurring inflation linked rent
growth delivering ample dividend coverage

·      Portfolio focused on direct leases with pensioners and part
homeowners

·      Rent collection consistent at 99% for the quarter

·      Rental growth of 6.5% on 1,425 homes (48% of portfolio) giving
2.7% like-for-like growth

·      100% shared ownership occupancy

·      Retirement occupancy continuing at 96% vs. 94% long-term average
occupancy

·      Year-to-date dividend coverage of 123%(1)

 

10 basis points outward yield shift in the quarter, outweighing valuation
accretive inflation led rent growth, driving a 0.4% decline in like-for-like
valuations

·      Total EPRA return for the quarter of 0.8% (0.6 pence per share
("p")) to give EPRA NTA of 76.7p (£142.0mn) as at 30 June

·      Driven by 1.0p, or 0.4%, decrease in like-for-like investment
property values, as follows:

o 2.9p increase from inflation-linked rent reviews in the quarter

o 3.9p decrease resulting from a further 10 basis points outward yield shift

·      Diverse portfolio of 2,991 homes worth £315mn(2)

·      Loan-to-value ratio of 52%, down from 53% at 31 March 2024 and
reduced to 41% when including 26.3% reversionary surplus

 

Strategic initiatives, disposals and retirement asset management advancing

·      Sale of the remaining local authority asset on track and expected
to complete in H2 2024, with building control signoff for works already
complete still outstanding

·      Continuing to review options for further disposals which support
maximising shareholder value, from which we would prioritise the return of
capital. However, investment market volumes are expected to remain low until
any future interest rate cuts, we expect disposal opportunities may take time
to emerge.

·      Local authority sale will facilitate repayment of floating rate
debt, enhancing the predictability of inflation-linked earnings and
strengthening the balance sheet leaving only fixed long-term debt with a
21-year weighted average debt maturity.

·      Retirement portfolio asset management initiatives further
progressing:

o  7 properties sold and 16 under offer (total sold or under offer is equal
to 1% of the portfolio commanding a 19% premium to prevailing book value).

o  84 homes re-let to new residents in the quarter with average rent
increases of 6.2%.

 

NAV Movement

 

The movement in NAV between 31 March 2024 and 30 June 2024 (the "Period") is
as follows:

 

 

 

 

 

 

                                   EPRA NTA                         IFRS NAV
                                   £'mn   Pence per Ordinary Share  £'mn   Pence per Ordinary Share
 Net Asset Value at 31 March 2024  142.9  77.2                      154.4  83.4
 Net income for the Period         2.5    1.3                       2.5    1.3
 Property valuation change         (1.8)  (1.0)                     (1.8)  (1.0)
 Debt valuation / indexation(*)    0.4    0.2                       1.6    0.9
 Dividend paid                     (1.9)  (1.0)                     (1.9)  (1.0)
 Net Asset Value at 30 June 2024   142.0  76.7                      154.8  83.6
 Total return                      0.8%   0.8%                      1.5%   1.5%

*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.

 

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

 

"This quarter, ReSI has continued to deliver strong operational performance,
ensuring ample dividend cover. We continue to execute our retirement related
asset management initiatives to drive the future value of our retirement
portfolio and review options for further disposals which support maximising
shareholder value."

 

"The shortfall of more affordable homes remains acute, with an estimated
£34bn(3) of annual investment needed in the UK. With encouraging early steps
on planning, we expect the new Labour government's policies to be a tailwind
for the affordable housing sector. The government has set a welcome and
ambitious target of building 1.5 million new homes over the next parliament,
but this will not be possible through planning reform alone and will need to
be met with the right funding.

 

"With public finance tight established Registered Providers and retirement
platforms, like ReSI, with a long-term investment approach to deliver for both
residents and investors, are well suited to attract the necessary private
funding to meet the country's housing needs."

 

1.   Dividend cover measured as Adjusted EPRA earnings per share divided by
dividend per share for the period 1 October 2023 to 30 June 2024

2.   Excluding finance lease gross up and local authority asset which is
held for sale.

3.   British Property Federation, and Legal & General, 2022

 

 

For further information, please contact:

 

 Gresham House Real Estate

                            +44 (0) 20 7382 0900

 Ben Fry

 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

 

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 homeownership.

 

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 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.

 

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)

 

 

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