NEW £300 MILLION RESIDENTIAL PARTNERSHIP AGREEMENT

22 January 2019

ReSI CAPITAL MANAGMENT & MORGAN SINDALL INVESTMENTS TARGET 1,500 NEW SHARED OWNERSHIP HOMES WITH A MAJOR NEW £300 MILLION RESIDENTIAL PARTNERSHIP AGREEMENT

Residential Secure Income plc ("ReSI" or the "Company"), which invests in residential asset classes that comprise the stock of UK social housing providers, is pleased to announce that its fund manager ReSI Capital Management Ltd ("RCM") has entered into a new Housing Investment Partnership agreement ("HIP") with Morgan Sindall Investments Limited ("MSI"). The agreement aims to increase the supply of shared ownership homes, enabling more first time buyers in the UK to establish themselves on the housing ladder.

HIP creates an exclusive arrangement between RCM and MSI to provide access to a pipeline of institutional quality residential investment opportunities for its long term capital by utilising the market-leading expertise in social infrastructure and housing development of MSI and its other partners. HIP will initially target the delivery of 1,500 shared ownership homes with a value of up to £300 million.

ReSI made its first investment in shared ownership residential in October 2018, when it acquired a £16.5 million portfolio of 34 homes from Crest Nicholson, having last July become the first publicly listed investment fund, through its subsidiary ReSI Housing Ltd, to become a Registered Provider with the Regulator of Social Housing.

Having fully invested the proceeds of its IPO, ReSI intends to invest through HIP using proceeds from investment grade debt secured against the wider £240 million residential portfolio of c. 2,500 mixed tenure homes ReSI has built up since listing in July 2017.

The Government has identified the Shared Ownership model as a key initiative allowing single people, couples and families to get on the housing ladder.  Prospective buyers are able to acquire an initial 25% to 75% share of a new property, and pay rent on the rest, with the option to incrementally increase their ownership over time.

The HIP agreement also demonstrates MSI's credentials as both a partner for blue chip real estate investors and underpins its offer to current and future local authority joint venture partners who face huge challenges around housing supply.  

Lisa Scenna, Managing Director Morgan Sindall Investments said:  "HIP highlights MSI's strong investment credentials and our ability to deploy large volumes of institutional capital into the residential market across our regeneration pipeline. Our partners will benefit from this initiative as HIP will significantly lower the barriers to homeownership and will benefit people who live in the communities where we work". 

Jonathan Slater, Chief Executive of ReSI Capital Management Ltd, ReSI's fund manager, said:  "This new partnership with Morgan Sindall Investments, part of one of the UK's leading construction and regeneration groups, is a further extension of our strategy to facilitate the much needed supply of new homes in the UK and enable more first time buyers to get a foot on the housing ladder through shared ownership, while at the same time delivering a secure, long term income stream to shareholders.  This new agreement ensures a strong pipeline of units for ReSI to continue its investment programme in shared ownership through ReSI's registered provider of social housing, ReSI Housing Ltd, and further emphasises our ability to work with leading housing partners."

MSI was advised by GVA Residential Investment team which has a strong track record of transactions within the residential investment sector. 

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About Residential Secure Income plc

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 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.

Further information on ReSI is available at www.resi-reit.com 

About Morgan Sindall Investments

MSI is a division of Morgan Sindall Group, a FTSE 300 regeneration and construction business.  MSI has a strong track record of successfully partnering with Local Authorities to deliver long term regeneration and mixed tenure communities, and together with its Group companies, has a residential-led regeneration and development pipeline of £3.4bn.