18 June 2025

Residential Secure Income plc

("ReSI" or the "Company") 

Interim Results to 31 March 2025

Residential Secure Income plc (LSE: RESI), which has invested in independent retirement living and shared ownership to deliver secure, inflation-linked returns and is now implementing a managed wind-down strategy, is pleased to announce its interim results for the six months ending 31 March 2025.

Commenting on ReSI's Interim results, Robert Whiteman CBE, Chairman of ReSI said:

"Interim results for the six months ended March 2025, demonstrate the Board's and Investment Manager's continued focus on driving operational performance. Top line earnings growth has been achieved through 4% like-for-like rent reviews and has been complemented by vigilance on operational expenditure, execution of the retirement asset management programme and reduced finance costs, following the full divestment of the local authority portfolio. This has culminated in the repayment of drawn floating rate debt, adjusted earnings growth of 15% and dividend coverage of 134%.

Elevated long-term gilt yields have caused a 4.8% like for like decline in property valuations, leading to a 12% decline in EPRA NTA, to 66.0p. EPRA NTA excludes realisation costs and any debt break gain. The maximum realisable NAV stands at 70.2p on 31 March 2025 - this is the hypothetical value that would be distributable to shareholders if properties were sold at their book value and debt was broken on 31 March 2025.

ReSI's retirement and shared ownership portfolios, operate in two structurally supported sub asset classes of UK property, and remain rooted in relative value, scale and long-term fundamentals. As a result, despite a challenging macro environment, Jones Lang Lasalle, our sales agent, and the Investment Manager are seeing continued appetite from a range of potential purchasers for one or both of ReSI's portfolios.

On behalf of the Board, I would like thank Ben Fry, who having advanced the wind down, is stepping down as lead fund manager of ReSI, having been involved since our IPO, upon completion of his secondment on 31 July 2025. We are pleased both Mike Adams and Sandeep Patel continue day-to-day management of ReSI and execution of the wind-down, with the support from the wider Gresham House team."

Ben Fry, Fund Manager, ReSI added:

"During H1-25 ReSI has delivered strong like-for-like rental growth of 4.0% whilst achieving record occupancy and with rent collection stable at almost 100%, reflecting our focus on individual resident contractual relationships. This flowed through to a 15% increase in adjusted earnings and 134% dividend coverage. Despite higher gilt yields continuing to impact our valuations, the fundamentals underpinning ReSI's portfolios continue to remain strong and provide substantial opportunity to drive strong operating performance.

The progress made to date on the orderly realisation of the ReSI portfolio and the continuation of an established senior executive team, allows me to step down at the end of my secondment on 31 July 2025.This means there will be limited impact on the day-to-day operation of ReSI and will ultimately leave a team well placed to maximise value from the portfolio whilst balancing the joint objectives of concluding the disposals efficiently and responsibly, maximising proceeds for our shareholders all whilst ensuring the interests of residents are protected.

Finally, I would like to thank Shareholders and the ReSI Board for their support since IPO. I am immensely proud of the high-quality retirement and shared ownership portfolios ReSI has assembled while providing inflation linked income to shareholders."

Key financial metrics

Financial highlights: 15% growth in adjusted earnings, through a combination of top line inflation linkage of rental income, continued vigilance on costs and reduced finance costs delivering 134% dividend coverage

·       4.0% rent review growth (includes shared ownership rent increases on 1 April 2025)

·       Adjusted earnings1 of £5.1 million (H1 24: £4.5 million) with strong rent growth across retirement and Shared ownership, augmented by a reduction in operating and finance costs

·       Shared ownership rents increasing by average of 3.3% on 1 April 2025, set to underpin further earnings growth in H2

·       EPRA Net Tangible Assets ("NTA") total return of (8.7)% (H1 24: (3.7)%) to give 66.0p per share NTA

o  Valuations continue to be impacted by elevated gilt yields, down 4.8% like-for-like with 32bps outwards yield shift

o  EPRA NTA adjusted for sales costs and debt breaks, representing a maximum realisable Net asset value of £130.0 million / 70.2 pence per share, at prevailing gross asset value and break gain on debt at balance sheet date

·       LTV of 50% (FY 24: 52%) supported by 21-year average debt maturity

·       Total dividends paid for the half-year of 2.06p per share (H1 24: 2.06p) with 134% dividend cover (H1 24: 117%)

Portfolio and operational highlights 

·       Diversified portfolio of 2,956 homes worth £294.5 million

o  £103 million reversionary surplus of vacant possession value compared to fair value (35% uplift)

·       Shared Ownership portfolio focused on direct leases with shared owners and part homeowners

·       Rent collection of over 99% for half year (H1 24: 99%)

·       Shared ownership portfolio 100% occupied

·       Record retirement occupancy of 97% continuing for half year (H1 24: 96%) with period-end occupancy of 98%

Retirement Asset Management Programme

·     Ongoing progress on retirement portfolio asset management initiatives, delivered via our in-house property manager, ReSI Property Management Limited including:

o  Improved re-letting times with void weeks reducing from 11.5 weeks in FY24 to 8.1 weeks in H1 25

o  Record occupancy of 97% despite the winter months generally seeing increased turnover, and allowing a focus on rent growth of 4.2% 

o  Portfolio rationalisation, delivering effective capital recycling, since programme commenced on 1 October 2023, delivering earnings accretion:

o  40 retirement properties (1% of portfolio) either sold or under offer generating a 21% premium to book value, selling at a tighter yield than portfolio valuation net yield of 6.4%

o  14 retirement properties acquired or under offer, in core areas, at a net yield on cost of 8.0%

Progress on orderly realisation

·       Local authority portfolio fully divested, in January 2025, generating £15 million of net proceeds, slightly ahead of September 2023 valuation

·       Floating rate debt fully paid down with £15 million Santander revolving credit facility fully undrawn at balance sheet and reporting date

o  Santander facility cancelled on 12 June 2025

o  Refinance of facility completed with a 2.5 yr facility with Shawbrook at a 4.20% margin

o  Secures balance sheet flexibility to facilitate accretive capital expenditure to enhance portfolio value

·       Since the managed winddown was approved in December 2024, JLL have been appointed and commenced marketing the portfolio. ReSI is currently engaged in meaningful dialogue with several potential purchasers, following receipt of initial expressions of interest and / or non-binding proposals for the portfolio

·       Further announcements will be made in due course in line with regulatory requirements

Interim Report

A copy of the pdf Interim Report is available on the Company's website at https://greshamhouse.com/real-assets/real-estate-investment/residential-secure-income-plc/ where further information on the Company can also be found. The Interim Report has also been submitted to the National Storage Mechanism and will shortly be available at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

For further information, please contact:

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.

In December 2024, shareholders voted for and accepted a new investment objective which seeks to realise all the existing assets in the Company's portfolio in an orderly manner. The Company will pursue its investment objective by effecting an orderly realisation of its assets while seeking to balance maximising returns for Shareholders against timing of disposals whilst ensuring the interests of residents are protected. Capital expenditure will be permitted where it is deemed necessary or desirable in connection to the realisation, primarily where such expenditure is necessary to protect or enhance an asset's realisable value, to comply with statutory or regulatory obligations, to protect other stakeholders, to comply with the terms of any funding arrangement or to facilitate orderly disposals.

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 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

Notes:

[1] Alternative performance measures

2 Adjusted earnings is EPRA earnings adjusted for income and costs which are not recurring and is equivalent to IFRS profit after tax before one-offs and valuation adjustments.

3 Dividend cover measured as Adjusted earnings per share divided by dividend per share

4 British Property Federation and Legal & General, 2022