1Q21 NAV and Portfolio Update

28 January 2021

Residential Secure Income plc

Net Asset Value & Corporate Update

Residential Secure Income plc ("ReSI") (LSE: RESI), which invests in affordable shared ownership, retirement and local authority housing, is pleased to announce its unaudited first quarter net asset value ("Net Asset Value" or "NAV") as at 31 December 2020 and to update on recent corporate activity.

Resilient Quarter 1 2021 financial performance

·      IFRS NAV per share of 105.0 pence¹ (30 September 2020: 105.0 pence)

·      Total property portfolio value of £304.6 million

o  up 0.6% or £1.0 million on a like-for-like fair value basis

o  driven by the shared ownership portfolio as it moves towards full income generation

·      Earnings per share remain on track to grow to at least 4.0 pence² for the year to 30 September 2021 and meet October 2021 run-rate dividend cover target, with incremental income driven by:

o  the full impact of recently occupied homes and more reserved homes becoming occupied

o  ongoing deployment into ReSI's strong pipeline, including the remainder of our £32m investment target noting that over half will be met by December's Brick By Brick acquisitions

Rent collection robust, and rising

·      Net annual rent roll on completed shared ownership homes increased to £1.5 million (0.9 pence per share) reflecting the growing size of the portfolio as well as further progress on occupancy over the quarter

·      Retirement occupancy continued to improve through the quarter, with voids now at 8.5%, down from high of 10.5% in July 2020, 9.8% in September 2020 and closing in on pre-COVID average of c.7%

·      Total portfolio rent collection continues to be secure, with 99% of rent collected in the quarter, unchanged throughout the COVID-19 crisis and in line with normal performance, demonstrating the secure nature of ReSI's cashflows

Dividend in line with target

·      Interim dividend maintained at 1.25 pence per Ordinary Share for the quarter ended 31 December 2020, in line with the target of 5.0 pence per Ordinary Share for the current financial year²

Further investment progress in shared ownership portfolio

·      Contracts exchanged for the £29 million acquisition of 85 newly completed shared ownership homes from Brick By Brick, the London Borough of Croydon's housing development company, on 24 December 2020. The committed acquisition of the 85 shared ownership homes will be acquired on a staggered basis as each home is occupied

·      Drawdown of a further £10m from ReSI's ultra long-term secured Universities Superannuation Scheme debt facility to fund the above acquisition, along with existing cash

·      ReSI's shared ownership portfolio comprises 290 homes (including 85 committed acquisitions), of which 141 homes were occupied, 42 were reserved and in sales progression and 22 remained available for shared owners; since 1 October 2020 29 homes have been occupied

NAV Movement

The movement in NAV since 30 September 2020 is as follows:

Outlook

·      ReSI's defensive portfolio is positioned to weather economic stress such as the COVID-19 lockdowns with rentals underpinned by pensions, housing welfare, below market rents and shared owner stakes;

·      No impact from Stamp Duty changes, with typical shared ownership buyers below thresholds, or potential ground rent reforms, with ReSI receiving no ground rent income from occupiers

·      Significant shortfall in UK affordable housing remains, regardless of COVID-19

·      ReSI continues to focus on the three drivers to fully cover its dividend on a forward looking annualised basis from October 2021:

o  Deploying a further £32m into shared ownership (over half of which is already committed)

o  Continuing to reduce the number of void properties in the retirement portfolio

o  Progressing all shared ownership homes to full occupation

Ben Fry, investment manager of ReSI Capital Management and Head of Housing Investment at Gresham House, commented:

"While the ongoing pandemic continues to present unique circumstances, the underlying portfolio continues to trade well with strong rent collection and increased occupancy in our shared ownership homes, as well as further progress reducing retirement voids over the quarter. Our latest acquisition, from Brick By Brick, alongside additional investment opportunities which we expect to complete over the next 6 months will ensure the Company is fully deployed and well placed to meet our earnings and dividend targets for this year and beyond."

¹ Reflecting an independent valuation of the property portfolio prepared on an IFRS basis

² This is a target only and not a profit forecast. There can be no assurance that this target will be met.

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Notes to Editors

Residential Secure Income plc (LSE: RESI) is a real estate investment trust (REIT) listed on the premium segment of the Main Market of the London Stock Exchange with the objective of delivering secure inflation linked returns by investing in affordable shared ownership, retirement and Local Authority housing throughout the UK.

ReSI targets a secure, long-dated, inflation-linked dividend of 5.0 pence per share p.a. (paid quarterly) and a total return in excess of 8.0% per annum. Including recent committed acquisitions, ReSI's portfolio comprises 2,802 properties, with an (unaudited) IFRS fair value of £324m.

ReSI aims to make a meaningful contribution to alleviating the UK housing shortage by 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 new affordable housing.

ReSI'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.

Acquisitions by ReSI are limited to homes with sufficient cashflows, counterparty credit quality and property security to be capable of supporting long‑term investment grade equivalent debt. ReSI does not manage or operate stock and uses experienced and credit-worthy third-party managers.

ReSI is managed by ReSI Capital Management Limited, whose immediate parent company, TradeRisks Limited, has been active within the social housing sector for over 19 years as a funding arranger and advisor and, over the last three years, as an investor through ReSI.

ReSI Capital Management and its parent, TradeRisks, were acquired by Gresham House in March 2020, further increasing the investment expertise available to ReSI. The housing investment team at Gresham House has 15 members and growing, with an average of 20 years' relevant experience, covering fund management, housing investment, social housing management and financial and risk expertise.

Gresham House plc 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.

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

Further information on Gresham House is available at www.greshamhouse.com