£53MN DEBT SECURED ON RETIREMENT FLATS PORTFOLIO
29 June 2018
£53MN DEBT SECURED ON RETIREMENT FLATS PORTFOLIO
Residential Secure Income plc ("ReSI" or the "Company") (LSE: RESI), which invests in residential asset classes that comprise the stock of UK social housing providers, is pleased to announce that, as envisaged at the time of acquisition of the Retirement Housing Partnership portfolio ("RHP") in November 2017, it has secured £53mn of 25 years fixed rate debt from an insurance company that is partially amortising and finally repayable in 2043.
The debt is priced at an all-in fixed rate of 3.4507%, is held at subsidiary level and will be secured against 1,365 retirement units representing leverage of around 50% (loan/gross assets).
TradeRisks arranged the debt for ReSI which recognising the strong credit metrics has been classified as investment grade.
The debt reached heads of terms stage with the investor before the acquisition of RHP but completion was delayed in order to manage costs of carry until the proceeds were required by ReSI. In order to mitigate interest rate exposure on the financing before completion, this was partially pre-hedged using an interest rate swap. The swap was unwound at pricing, and the resulting cashflow hedge reserve will be released over the 25 year life of the debt.
The majority of the proceeds of the debt are envisaged to be used to facilitate (with existing cash reserves making up the remainder) two acquisitions totalling £54mn where ReSI has agreed heads of terms. These transactions are subject to exclusivity and are currently undergoing detailed legal and property due diligence with a view to closing in July and August respectively.
This debt financing forms part of the strategy to target an overall level of indebtedness of 50% loan to gross asset value and a low cost of long-term funding, which together enhance the returns to equity available to ReSI shareholders.
TradeRisks and ReSI have continued to work with long term debt investors and are in discussions to put in place further long-term investment grade equivalent debt against ReSI's recent and imminent acquisitions.
FOR FURTHER INFORMATION, PLEASE CONTACT:
|
ReSI Capital Management Limited / TradeRisks Limited Jonathan Slater Ben Fry Alex Pilato |
+44 (0) 20 7382 0900 |
|
|
|
|
Jefferies International Limited Stuart Klein Gary Gould |
+44 (0) 20 7029 8000 |
|
|
|
FTI Consulting +44 (0) 20 3737 1000
Richard Sunderland Email: resi@fticonsulting.com
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 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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
Latest directors dealings
- 2 days ago Savannah Energy
- 2 days ago Buccaneer Energy PLC
- 2 days ago Savannah Energy
- 2 days ago Carclo
- 2 days ago Schroder Japan Growth Fund