24 November 2017
Residential Secure Income plc
COMPLETION OF FIRST ACQUISITION WITH PURCHASE OF £100 MILLION RETIREMENT PORTFOLIO
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 the completion of its first acquisition with the purchase of a Rental Homes portfolio comprising 1,341 retirement properties (the "Portfolio") for a total consideration of approximately £100 million.
The UK-wide Portfolio is concentrated in Southern England and comprises long-leasehold or freehold interests in primarily one and two bedroom modern, warden-assisted flats spread over more than 250 purpose-built retirement housing blocks. The Portfolio provides RPI-linked assured tenancies to retirement-aged residents, offering lifetime security of tenure.
The Portfolio is operated by Places for People group which is responsible for day-to-day management, rent collection and maintenance of the Portfolio.
ReSI Capital Management Limited (the "Fund Manager") has received a number of offers from institutional funders for long-dated investment grade equivalent debt secured on the Portfolio which will deliver equity returns in excess of ReSI's total return target. The Fund Manager is working to complete the debt transaction with its preferred funder.
The Fund Manager has also identified a number of asset management opportunities to make operational improvements within the Portfolio, which have the potential to enhance returns.
The Portfolio is immediately income producing allowing ReSI to achieve its stated intention of declaring its first dividend for the period ending 31 December 2017, and the acquisition will enable ReSI to enter the REIT regime.
The Fund Manager continues to progress the execution of approximately £250 million of Shared Ownership transactions which are now expected to be contracted in early 2018. ReSI therefore expects that the net proceeds of the IPO, plus leverage, will be fully-deployed within the nine-month period referred to in ReSI's IPO prospectus.
Ben Fry, Investment Manager of ReSI Capital Management Limited, commented:
"We are delighted to have completed our first investment with the acquisition of such a strong portfolio of properties serving the retirement sector, an important and growing segment of demand. The Portfolio is operated by one of the leading social housing providers in the Places for People group, and furthers our ambition to become the leading capital partner to social housing providers. We will now continue to progress the execution of our £250 million pipeline and remain excited by the scale of opportunities available across the sector."
FOR FURTHER INFORMATION, PLEASE CONTACT:
ReSI Capital Management Limited Jonathan Slater, Chief Executive 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:
The contents of this announcement, which have been prepared by and are the sole responsibility of ReSI, have been approved by the Fund Manager as a financial promotion solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000.
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.
This announcement may include references to potential transactions each of which 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 transactions.
