21 September 2017
Residential Secure Income plc
UPDATE ON INVESTMENT PIPELINE
Residential Secure Income plc ("ReSI") (LSE: RESI), which invests in residential asset classes that comprise the stock of UK social housing providers, is pleased to announce that significant progress on the investment pipeline has been made by ReSI Capital Management Limited (the "Fund Manager") in the period since its IPO in July 2017.
In particular, the Fund Manager is in the process of finalising terms with three Housing Associations for the acquisition of three separate Shared Ownership portfolios in Southern England for a total consideration of approximately £250 million. It is currently expected that these transactions will be contracted by the end of 2017, or shortly thereafter. The Fund Manager expects that long term investment grade equivalent debt will be raised on or shortly after each respective acquisition date in line with ReSI's investment strategy.
In addition, the Fund Manager has entered into exclusive due diligence in respect of the acquisition of, in aggregate, approximately £100 million of Rental Homes which are managed by a Housing Association and principally located in Southern England. This transaction is expected to contract during November 2017, subject to final due diligence. The Fund Manager has received long term investment grade equivalent debt funding offers for this acquisition.
The Fund Manager is also progressing a further pipeline of Shared Ownership Homes and Rental Homes with three other Housing Associations with an aggregate purchase consideration of over £200 million.
ReSI therefore expects that the net proceeds of the IPO, plus leverage, will be fully deployed well within the nine month period referred to in ReSI's IPO prospectus.
FOR FURTHER INFORMATION, PLEASE CONTACT:
ReSI Capital Management Limited Jonathan Slater, Chief Executive Ken Youngman, Chief Financial Officer Ben Fry, Investment Manager Alex Pilato, Director |
+44 (0) 20 7382 0900 |
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Jefferies International Limited Stuart Klein Gary Gould |
+44 (0) 20 7029 8000 |
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FTI Consulting +44 (0) 20 3737 1000
Richard Sunderland Email: [email protected]
Claire Turvey
Richard Gotla
NOTES:
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.
ReSI is managed by ReSI Capital Management Limited, a wholly owned subsidiary of TradeRisks Limited which has a 16 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.
ReSI is targeting, on a fully invested and geared basis, a dividend yield of 5% per annum based on the issue price of 100 pence per Ordinary Share, which ReSI expects to increase broadly in line with inflation, and a total return in excess of 8% per annum1.
1. This is a target only and not a profit forecast and there can be no assurance that it will be met.
Further information on ReSI is available at www.resi-reit.com
IMPORTANT INFORMATION:
Save to the extent otherwise defined herein, terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the prospectus published by ReSI dated 22 June 2017.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond ReSI's control and all of which are based on ReSI's board of directors' current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward looking statements reflect ReSI's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to ReSI's business, the results of operations, financial condition prospects, growth and dividend policy of ReSI and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. ReSI expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.
Each of the potential acquisitions noted in this update is subject to satisfactory completion of negotiations and due diligence by the Fund Manager and its professional advisers and there can be no certainty that the ReSI will complete any of these acquisitions.
