Residential Secure Income plc Interim Report 2018

The Company today announces its interim results for the period 12 July 2017 to 31 March 2018:

Financial highlights

  • Successful admission to the main market of the London Stock Exchange in July 2017, raising £180mn

  • 3% valuation increase on the Retirement Housing Partnership portfolio (“RHP”) which was acquired in November 2017, leading to:

  • IFRS Net Asset Value (“NAV”) of £178.1mn

  • IFRS NAV per share of 98.8p¹

  • Earnings per share of 1.8p

  • RHP produces an annualised net rent roll of £5.1mn

  • Operating profit achieved on a run-rate basis as at 31 March 2018

  • Interim dividends declared of 1.5 pence per share (‘pps’) for the period, targeting 3.0pps for the period ending 30 September 2018 and 5% per annum on a fully invested and geared basis

  • Post-period share buy-back programme – 3.4mn shares purchased at an average price of 89.3p

  • Including post period transactions, c. £155mn deployed with exclusive heads of terms in place and detailed legal, property and financial due diligence in progress on a further £54mn of investments.

Property highlights

  • £100mn acquisition of the 1,341-property RHP Portfolio, operated by the UK retirement home manager subsidiary of one of the largest UK Housing Associations:

  • 82% let on RPI linked assured tenancies offering lifetime security of tenure to residents

  • Portfolio 59% concentrated in the South of England

  • 1,225 properties are long leasehold with an average unexpired lease term of c.82 years at acquisition, with 1,003 leases extended to 150 years post-period to increase the average remaining life to 140 years

  • Post-period £53mn 25 year fixed rate partially amortising loan secured against RHP, in line with overall level of indebtedness target of 50% LTV

  • £31.2mn post-period acquisition of a retirement portfolio comprising 277 properties licensed to First Port, the UK's largest residential property management group:

  • Subject to a fully repairing and insuring licence, which provides an upwards-only RPI linked rental stream

  • £21.3mn post-period acquisition of freehold Local Authority housing containing 134 self-contained flats in the centre of Luton

  • Let on Local Authority leases with a weighted average remaining term of 7.3 years

Market outlook

  • A well-publicised lack of availability and affordability of housing in large parts of the UK which is attracting increasing policy focus

  • Local Authorities are becoming more active in the delivery of housing using a variety of structures, with private sources of capital required to help to unlock and facilitate the delivery of more housing

  • Growing imbalance between the availability and affordability of UK social housing should mean that demand for this accommodation remains high (according to The House of Commons Library research briefing paper ‘Tackling the under-supply of housing in England’ issued on 31 May 2018)

Jonathan Slater, Chief Executive of ReSI Capital Management, the Fund Manager, commented: “Whilst sourcing and acquiring portfolios has required us to be patient, we have continued to generate a strong pipeline of potential investments which are rigorously filtered before choosing to begin execution, and we have now developed good momentum in deploying ReSI’s capital. In addition to the post-period acquisitions that we have announced, we are currently undertaking due diligence to complete another £54mn of acquisitions under exclusivity.”

Robert Whiteman, Chairman of Residential Secure Income plc, added: “Since the successful IPO, we have acquired two well-located portfolios of retirement properties, and a further Local Authority-leased building, secured on strong counterparty covenants that allow us to put in place a long-term investment grade equivalent debt strategy. This criterion continues to underpin our investment strategy and we will continue to be highly selective in choosing opportunities and apply rigorous due diligence, consistent with requiring acquisitions to be capable of supporting it.”

¹ This compares to an unaudited 31 March 2018 Net Asset Value per share of 99.4p announced on 30 May 2018. A revaluation gain of approximately 0.6p per share, reflecting the previously announced extension of RHP leases, is expected to be included in the 30 June 2018 Net Asset Value update.


ReSI Capital Management Limited

Jonathan Slater

Ben Fry

Mark Rogers

Alex Pilato

+44 (0) 20 7382 0900

Jefferies International Limited

Stuart Klein

Gary Gould

+44 (0) 20 7029 8000

FTI Consulting

Richard Sunderland

Claire Turvey

Richard Gotla

+44 (0) 20 3737 1000


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