REG - Residential Secure - Proposed managed realisation and return of capital

Residential Secure IncomeAnnouncement

03/10/2024 07:00

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RNS Number : 7338G  Residential Secure Income PLC  03 October 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

3 October 2024

 

Residential Secure Income plc

 

("ReSI plc" or the "Company")

 

Proposed managed realisation strategy and return of capital to shareholders

 

The Board of ReSI plc (LSE: RESI) announces that, following a thorough review
of options for maximising shareholder value, it is proposing to shareholders
that the Company adopts a managed wind-down and portfolio realisation
strategy.

 

With a market capitalisation of approximately £101 million(1) the Company
remains of a size which might deter some potential investors due to lower
share liquidity and the increasing demand from investors for larger listed
funds. In addition, the Company's shares have, since September 2022, traded at
a persistent, material discount to the Company's net asset value ("NAV"). The
Board of ReSI plc and its fund manager, Gresham House Asset Management Limited
(the "Fund Manager"), have engaged with the Company's shareholders and
advisers to consider the optimal route forward to realise shareholder value.

 

Accordingly, the Board has concluded that a proactive approach, executing a
managed wind-down and portfolio realisation strategy, which prioritises
maximisation of proceeds from portfolio sales whilst ensuring the interests of
residents are protected, and a subsequent return of capital to shareholders is
the appropriate course of action and in the best interests of the Company's
shareholders. The portfolio will continue to be actively managed to deliver
robust earnings growth.

 

To implement this proposal, the Board intends to propose resolutions to change
the Company's investment policy and will send a circular to shareholders in
due course.

 

Background

 

ReSI plc launched in 2017 with the purpose of delivering affordable,
high-quality, safe homes with great customer service and long-term stability
of tenure for its residents. Since launch, ReSI plc has assembled a
residential portfolio across the independent retirement rental, shared
ownership and local authority accommodation sub-sectors. As at 30 June 2024,
the Company's portfolio comprised 3,125 homes (2,234 independent retirement
rental homes, 757 shared ownership homes and 134 homes providing local
authority accommodation).

 

ReSI plc's sole remaining local authority asset has now exchanged for sale at
a price marginally in excess of book value, with completion scheduled to occur
by the end of 2024, enabling the full repayment of the Company's floating rate
debt. This will concentrate ReSI plc's portfolio in its two preferred
residential sub-sectors - independent retirement rental and shared ownership -
where ReSI plc's high-quality portfolios are underpinned by inflation-linked
leases and long-term leverage, supporting long-term shareholder returns.

 

ReSI plc has continued to be significantly impacted by the wider adverse
macroeconomic environment prevailing since September 2022 and the pressures
affecting the real estate investment trust sector generally. ReSI plc's shares
have traded at a persistent discount to the Company's prevailing NAV per
share, greatly restricting ReSI plc's ability to raise further capital,
develop its portfolio, and attract a wider range of investors.

 

Investment property market trading is starting to increase, with buyers
targeting the acquisition of high-quality real estate portfolios with strong
inflation-linked revenue streams, such as the ReSI plc portfolio, which should
facilitate an orderly realisation of the portfolio over time.

 

The Board remains aware of its duties to stakeholders, its obligations to pay
out distributions as a real estate investment trust and will continue to
provide updates as the process develops.

 

Rob Whiteman CBE, Chairman of ReSI plc, commented:

 

"The headwinds for smaller listed real estate businesses have been well
flagged, and there are no quick fixes. The Board and Fund Manager are focused
on maximising returns to all shareholders. Having explored a range of options
with our advisors, the Board has decided that the best course of action is a
proactive managed wind-down and portfolio realisation strategy over an
appropriate time period. We will be asking shareholders to approve this at a
general meeting in due course.

 

"On behalf of the Board, I would like to thank our shareholders for their
continued support of the Company and its portfolio, as well as Gresham House
Asset Management, our Fund Manager, for its active management of the portfolio
and focus on delivering in the best interests of our shareholders."

 

Notes:

1.     As at market close on 2 October 2024

- Ends -

 

The information contained within this announcement constitutes inside
information. The person responsible for arranging for the release of this
announcement on behalf of the Company is Charles Gorman of KL Communications.

 

LEI: 213800D24WA531LAR763

 

For further information, please contact:

 

 Gresham House Real Estate

 Ben Fry                            +44 (0) 20 7382 0900

 Sandeep Patel

 Peel Hunt LLP

 (Broker & Financial Adviser)       +44 (0) 20 7418 8900

 Luke Simpson

 Huw Jeremy

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

 Charles Gorman                     +44 (0) 20 3882 6644

 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.

 

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 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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