£21.3 Million Acquisition of Local Authority Housing
Residential Secure Income plc ("ReSI" or the "Company") (LSE: RESI), which invests in residential asset classes that comprise the stock of UK social housing providers, is pleased to announce that it has exchanged contracts to acquire for a total consideration of £21.3 million a freehold residential building benefitting from a lease to a local authority and used to provide housing under the local authority's statutory obligations. The acquisition is due to complete on or before 29 June 2018, from when it will immediately be income producing to ReSI.
The building has recently undergone a full refurbishment, completed in 2016, and contains 134 self-contained residential flats. The building is located in the centre of Luton and is let to the local authority on leases with a weighted average remaining term of 7.3 years, which the Company will seek to extend or renew in due course. Luton, along with many areas across the UK and especially in south-east England, has a critical shortage of both affordable and market housing, exacerbated by the impact of reforms to the Local Housing Allowance.
The leases provide a CPI-linked upwards-only rent and pass to the local authority the responsibility for repairs to the flats and all letting risk. The Company intends to leverage the acquisition with investment grade equivalent debt secured on the building to deliver equity returns at least in line with ReSI's total return target.
Following completion of this acquisition ReSI will have invested £155 million of the proceeds raised at its IPO in assembling a portfolio which now comprises 1,772 residential units.
Ben Fry, of ReSI Capital Management Ltd, ReSI's fund manager, said: "By investing capital in good quality, modern housing, we can help local authorities meet their obligations to provide accommodation without relying on expensive and short-tenure solutions such as hotels or hostels. Investments such as this provide ReSI shareholders with a local-authority backed, inflation-linked income stream underpinned by the continuing strong demand for such accommodation."
FOR FURTHER INFORMATION, PLEASE CONTACT:
ReSI Capital Management Limited / TradeRisks Limited +44 (0) 20 7382 0900
Jefferies International Limited +44 (0) 20 7029 8000
FTI Consulting +44 (0) 20 3727 1000
Richard Sunderland Email: email@example.com
Residential Secure Income plc (LSE: RESI) is listed on the premium segment of the Official List of the UK Listing Authority and was admitted to trading on the Main Market of the London Stock Exchange in July 2017.
ReSI has been established to invest in portfolios of Homes across residential asset classes that comprise the stock of Housing Associations and Local Authorities, comprising Shared Ownership Homes and Rental Homes (being Market Rental Homes, Functional Homes and Sub-Market Rental Homes) throughout the UK. To date it has deployed c. £240 million, acquiring a portfolio of 2,487 properties, comprising a mixture of shared ownership, local authority and retirement housing.
ReSI is managed by ReSI Capital Management Limited, a wholly owned subsidiary of TradeRisks Limited which has a 17 year track record of executing transactions within the UK social housing sector and, to date, has arranged funding of over £10 billion in the social housing, care and other specialist residential property sectors.
ReSI seeks to deliver secure, long-dated, inflation-linked income returns through investment in UK social housing. It aims to meet demand from Housing Associations and Local Authorities for alternative equity-like financing sources that allows them to recycle capital back into socially and economically beneficial new housing, making a meaningful contribution to the UK housing shortage.
Homes acquired by ReSI will predominantly be on a freehold or long leasehold basis (typically 99 years or more to maturity) and benefit from long term (typically 20 years plus) inflation-adjusted cash flows. Acquisitions by ReSI will be limited to Homes with sufficient cashflows, counterparty credit quality and property security that allow the Fund Manager to arrange long-term investment grade equivalent debt.