TIDMRESI
RNS Number : 8307G
Residential Secure Income PLC
29 July 2021
29 July 2021
Residential Secure Income plc
Net Asset Value & Corporate Update
Residential Secure Income plc ("ReSI") (LSE: RESI), which
invests in affordable shared ownership, retirement and local
authority housing, i s pleased to announce its unaudited third
quarter net asset value ("Net Asset Value" or "NAV") as at 30 June
2021 and to update on recent corporate activity for the period.
Ongoing Earnings Growth
-- Net Recurring Income for the period of GBP1.9m or 1.1p a share,
up 10% on the quarter (31 March 2021: GBP1.7m or 1.0p a share)
driven by
-- GBP19m of income generating shared ownership acquisitions
in March;
-- Continued occupancy ramp-ups in retirement and the pre-existing
shared ownership portfolio; and
-- Like for like rental growth from ReSI's inflation linked
long leases
-- Total portfolio rent collection continues to be secure, with
99% of rent collected in the quarter, unchanged throughout
the Covid-19 crisis and in line with normal performance, demonstrating
the secure nature of ReSI's cashflows
-- Dividend cover of 90% for the quarter, up from 82% for the
second quarter and ahead of the 80% full year target (1) (calculated
on recurring profit before valuation movements)
-- Full dividend cover continues to be on track to be achieved
for the fourth quarter, i.e. from 1 July 2021 [1] (on a look-forward
basis)
-- Interim dividend maintained at 1.25 pence per Ordinary Share
for the quarter ended 30 June 2021, in line with the target
of 5.0 pence per Ordinary Share for the current financial
year (1)
Resilient Financial Position
-- IFRS NAV per share of 105.5 pence [2] (31 March 2021: 105.1
pence)
-- Total property portfolio of 3,059 homes with value of GBP348
million [3] up 1% or GBP3.5 million on a like-for-like fair
value basis
-- the portfolio has an average EPRA NIY of 4.5%
-- the valuation movement reflects a small amount of yield compression
driven by increased occupancy (and hence de-risking) combined
with like-for-like rental growth over the quarter
-- ReSI continues to maintain a robust balance sheet with a gross
loan to value ratio of 48%. Total debt was GBP169 million
at 30 June 2021 with a long average 23 year maturity and low
weighted average cost of 2.3%
Delivery of 2021 occupancy and deployment targets
-- Retirement voids now back to pre-pandemic average of c.7%
-- Shared ownership portfolio now 96% occupied, with a further
3% reserved
-- Post the quarter end, ReSI completed the first 34 of the 85
shared ownership homes with Brick By Brick (which are all
reserved with occupiers already moving in) funded by drawing
down on ReSI's existing Universities Superannuation Scheme
debt facility and existing cash reserves
-- The remainder of the Brick by Brick acquisitions are expected
to complete by the end of the calendar year
-- Transfer of the property management function from Girlings
to a subsidiary of the Investment Manager completed on schedule
on 1 July and expected to deliver further cost efficiencies
and operational improvements
NAV Movement
The movement in NAV since 31 March 2021 is as follows:
IFRS NAV EPRA NTA
-----------------------------------
GBP'm Pence GBP'm Pence
per share per share
------ ----------- ------ -----------
Net Asset Value at 31 March
2021 179.7 105.1 181.7 106.2
------ ----------- ------ -----------
Net Income for period 1.9 1.1 1.9 1.1
------ ----------- ------ -----------
One-off costs -0.4 -0.2 -0.4 -0.2
------ ----------- ------ -----------
Valuation change * 1.4 0.8 3.2 1.9
------ ----------- ------ -----------
Dividend paid -2.1 -1.3 -2.1 -1.3
------ ----------- ------ -----------
Revaluation of trading properties n/a n/a -0.2 -0.1
------ ----------- ------ -----------
Net Asset Value at 30 June
2021 180.5 105.5 184.1 107.6
------ ----------- ------ -----------
* Valuation change for EPRA NTA excludes the movement in fair
value of financial instruments
Outlook
-- Acute need continues for further expansion of UK's affordable housing stock
-- Continuing to see interesting investment opportunities in the
share ownership space which have been introduced to ReSI via the
Investment Manager's relationships with various housing
associations, including from existing partners
-- ReSI is strongly placed to meet the two biggest problems in the housing market:
o Inability to access home ownership, which has been made worse
by recent strong house price growth; and
o Growing elderly population requiring suitable accommodation
for independent later living
-- Full dividend cover on track to be achieved in July 20 21 (1)
Ben Fry, Head of Housing Investment at Gresham House,
commented:
"ReSI has had another good quarter, with income up 10%, driving
increased dividend cover, and we've again collected 99% of rents,
proving the security of our underlying inflation-linked
tenancies.
"The secular tailwinds remain strong. A growing need for high
quality affordable housing in the UK has been reinforced by recent
increases in house prices and the disruption that the Covid-19
pandemic has caused to working patterns. Meanwhile the nation's
ageing population continues to drive demand for affordable
retirement housing. ReSI's portfolio is well positioned to meet
these needs and provide shareholders with stable inflation-linked
income.
"With ongoing operational efficiencies, and our dividend on
track to be fully covered from this month, we are encouraged by the
outlook for the rest of the year".
FOR FURTHER INFORMATION, PLEASE CONTACT:
ReSI Capital Management Limited / Gresham
House Housing
Ben Fry
Alex Pilato +44 (0) 20 7382 0900
Jefferies International Limited
Stuart Klein
Tom Yeadon +44 (0) 20 7029 8000
KL Communications 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) listed on the premium segment of the Main
Market of the London Stock Exchange with the objective of
delivering secure inflation linked returns by investing in
affordable shared ownership, retirement and Local Authority housing
throughout the UK.
ReSI targets a secure, long-dated, inflation-linked dividend of
5.0 pence per share p.a. (paid quarterly) and a total return in
excess of 8.0% per annum. Including recent committed acquisitions,
ReSI's portfolio comprises 3,059 properties, with an (unaudited)
IFRS fair value of GBP348m [i] .
ReSI aims to make a meaningful contribution to alleviating the
UK housing shortage by 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 new 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 four 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 15 members and growing, with an average of 20
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
Further information on Gresham House is available at
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] Reflecting an independent valuation of the property portfolio prepared on an IFRS basis
[3] Excluding the finance lease gross up and including committed acquisitions
[i] excluding the finance lease gross up and including committed
acquisitions
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