3Q22 NAV & Corporate Update

RNS Number : 8371T

Residential Secure Income PLC

27 July 2022

Residential Secure Income plc

Net Asset Value and corporate update

Residential Secure Income plc (ReSI 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 2022 and to update on recent corporate activity for the period.

Income/dividends

●	Quarterly interim dividend of 1.29p paid out, in line with FY22 target^[1] of 5.16p per share, and a further 1.29p quarterly interim dividend declared today
●	Dividend 97% covered by recurring income during the quarter
	○	Dividend cover is stable after factoring in the February share issuance, with at least 96% expected for the full year¹
	○	Inflation-linked rental income provides ongoing platform for dividend progression
●	>99% rent collection maintained, in line with historic and pre-pandemic levels

Resilient financial position

●	EPRA Net Tangible Assets (NTA) total return for the quarter of 2.0% (2.2p)
●	Total property portfolio of 3,291 homes with a value of £389 million^[2] up 0.9% or £3.2 million on a like-for-like fair value basis in the quarter
	○	Movement driven by inflation-linked rental reviews growth of 6.1% on 1,142 properties in the quarter (36% of rent roll), driving 2.3% like-for-like rental growth
	○	Portfolio is focused on £223 million of independent retirement living and £135 million shared ownership homes
●	ReSI plc continues to maintain a robust balance sheet with a loan-to-value ratio of 44%. Total debt was £185 million at 30 June 2022 with a long average 22-year maturity and low-weighted average cost of 2.2% (92% fixed or hedged)

Operational and deployment highlights

●	59% of directly rented EPC D-rated properties upgraded to C in nine months, in line with target of achieving minimum EPC ratings of C for all directly rented properties by 2025
●	£15 million equity raise in February 2022, fully committed to £28 million of shared ownership o Over 180 occupied shared ownership homes acquired (£21 million) in April, with a further 39 committed in May (£7 million) to complete in a staggered manner over the next few months
●	Occupancy increased to 96% as at June 22 (June 21: 95%)
	○	Shared ownership portfolio now 100% occupied as at April 2022
	○	Retirement void loss is slightly below pre-COVID average at c.6% on a trailing-twelve-month basis, following successful transfer of property management in-house

NAV movement

The movement in NAV since 31 March 2022 is as follows:

	IFRS NAV		EPRA NTA
	£'mn	Pence per share	£'mn	Pence per share
Net Asset Value at 31 March 2022	200.7	108.4	200.6	108.4
Net income for period	2.3	1.3	2.3	1.3
Property valuation change	2.9	1.6	2.8	1.5
Debt valuation / indexation³	3.3	1.7	-1.0	-0.6
Dividend paid	-2.4	-1.3	-2.4	-1.3
Net Asset Value at 30 June 2022	206.8	111.7	202.3	109.3
Total return	8.5	4.6	4.1	2.2

³ The Group has elected to carry its USS debt at fair value through profit and loss in the IFRS NAV. Debt market conditions have been very volatile since 31 March 2022 and the 30 June 2022 non-audited fair value represents the Fund Manager's estimated valuation based on its assessment of current market conditions. 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.

Outlook

●	ReSI plc is strongly placed to meet the acute need for further expansion of the UK's affordable housing stock, worsened by recent strong house price growth
●	Particular shortage of affordable homes for home ownership and suitable accommodation with growing elderly population requiring suitable accommodation for independent later living
●	Committed to delivering securely covered and growing dividends, and capital growth, backed by 97% inflation-linked income and supportive government policy

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

"We're pleased with progress over the last quarter. Rising occupancy, contractual inflation-linked rent increases and growing dividend cover continue to underpin our dividend progression. Despite rising inflation, rent collection rates remain steady, highlighting the affordability of ReSI plc's rents. We're committed to continuing to meet the country's affordable housing needs through our well-governed and scalable platform, while investing in energy efficiency improvements to mitigate cost of living pressures for our residents."

For further information, please contact:

Gresham House Real Estate

Ben Fry

Brandon Holloway

+44 (0) 20 7382 0900

Peel Hunt LLP

Luke Simpson

Huw Jeremy

+44 (0) 20 7418 8900

KL Communications

Charles Gorman

Charlotte Francis

Millie Steyn

[email protected]

+44 (0) 20 3995 6673

About ReSI plc

Residential Secure Income plc ("ReSI 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 home ownership.

ReSI plc targets a secure, long-dated, inflation-linked dividend of 5.16 p per share p.a.[i] (paid quarterly) and a total return in excess of 8.0% per annum. As at 30 June 2022, including committed acquisitions, ReSI plc's portfolio comprises 3,291 properties, with an (unaudited) IFRS fair value of £389mn[ii].

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 London Stock Exchange quoted 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, with senior members having an average of c.30 years' experience.

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, and 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] Excluding the finance lease gross up and including £15m of committed acquisitions

[i] The dividend target and total return target are targets only and are not profit forecasts. There can be no assurance that either target will be met, and they should not be taken as an indication of the Company's future results.

[ii] excluding the finance lease gross up and including £15mn of committed acquisitions

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