FY2021 Results - strong income, dividend covered

Measure	Explanation	Relevance to Strategy	Result
Percentage of shared ownership homes occupied	The number of empty shared ownership properties in ReSI's portfolio. For each empty property, ReSI is unable to collect rent, must pay service charges and council tax and is exposed to maintenance costs.	ReSI requires its shared ownership homes to be sold to shared owners to generate rental and staircasing proceeds, in order to deliver full dividend coverage.	495 of ReSI's 498 completed shared ownership homes were sold, reserved or moving to completion to shared owners as of 30 September 2021, equivalent to 99% (30 September 2020: 125 of 196 (64%). The final 3 homes were reserved post year end. This results in ReSI's shared ownership portfolio being almost entirely occupied, stabilised and de-risked
Void loss from retirement properties	The number of empty retirement properties in ReSI's portfolio. For each empty property, ReSI is unable to collect rent.	ReSI requires its retirement portfolio to perform in order to deliver full dividend coverage.	The void loss as at 30 September 2021 was 6% (30 September 2020 10%), back to pre-COVID 19 levels
Capital deployed	ReSI measures the rate at which it has deployed capital since IPO as this drives the timing of income production.	ReSI's strategy is to invest in high quality social housing assets; hence the total capital deployed into such assets reflects ReSI's ability to source suitable investments.	Since 30 September 2020 ReSI has committed approximately £40 million[33] into high-quality shared ownership schemes which is 20% higher than the £32 million target announced in December 2020. These take ReSI to full capital deployment with £351 million deployed (including £10m committed acquisitions) by 30 September 2021 (30 September 2020: £302m).
EPRA NTA per share	ReSI measures its EPRA NTA per share, consistent with its financial statements, with a target to achieve capital appreciation in line with inflation without reliance on gains from asset sales.	A higher EPRA NTA per share compared to ReSI's NTA of 98p per share immediately following IPO, reflects capital appreciation on its portfolio.	EPRA NTA of 107.9p per share (30 September 2020: 105.1p), shows growth of 10% since IPO.
Dividend per share	Targeting 5.0p per share in respect of the annual period to 30 September 2021, growing in line with inflation.	ReSI seeks to provide stable rental income to its investors through regular consistent dividend payments in line with its target. Measuring dividend payments per share reflects ReSI's ability to meet this target, with performance constrained by available cash and the income generated from ReSI's assets.	In line with target: four equal dividends paid of 1.25p per share during the period under review (declared in December 2020 and February, May and July 2021) totalling 5.0p per Ordinary Share (FY 2020: 5.0p). Now that the dividend is fully covered, ReSI plans to increase dividends in line with inflation, to reflect ReSI's inflation linked rental income.
Dividend Cover	Dividend Cover express the ratio of annualised recurring profit before valuation movements to dividend paid over the period.	Dividend coverage of at least 100% is required to pay for the dividend over the long term	With the portfolio fully invested and the ongoing operational improvements, ReSI reached full dividend cover in the fourth quarter of the year.
Ongoing charges ratio	Ongoing charges express the ratio of annualised ongoing expenses to average Net Asset Value over the period.	ReSI measures the ongoing charges ratio to demonstrate that the running costs of the Company are kept to a minimum without impacting on performance. A lower ongoing charges ratio will improve ReSI's financial performance.	1.6% (FY 20: 1.6%), from 1 October 2020 to 30 September 2021, of which 1.0% relates to the Fund Management fee and the remainder being general and administrative expenses. See note 8

Companies

Residential Secure Income (RESI)

UK 100

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

All directors dealings today

	£m	per share (p)
EPRA Net Tangible Assets as at 30 September 2020	179.7	105.1
Net Income for period	7.1	4.2
Valuation change	7.7	4.5
One-off costs	(0.9)	(0.6)
Dividend paid	(8.5)	(5.0)
Revaluation of trading properties	(0.4)	(0.3)
EPRA Net Tangible Assets as at 30 September 2021	184.7	107.9

	30 September 2021	At 30 September 2020
Homes	3,051	2,708	See note 7 on page 111
Value of Investment Property*	£351m including £10m committed acquisitions	£302m
Unique UK property location	793	669
Net rental income for the year	£13.2m	£11.3m	See note 6 on page 107
Annualised net rental yield *	4.9%	4.7%	See note 38 on page 124
Number of counterparties	2,356	2,113

East Midlands	2%
East of England	23%
Greater London	14%
North East	1%
North West	9%
Scotland	0%
South East	24%
South West	19%
Wales	2%
West Midlands	3%
Yorkshire and The Humber	3%

Independent Retirement Rentals	£215m	61%
Shared Ownership	£105m	30%
Local Authority	£31m	9%
Total	£351m	100%

	Independent Retirement Living Housing (£215m GAV / 2,218 Homes / 61% of portfolio)	Shared Ownership Housing (£105m GAV[1] / 544 Homes / 30% of portfolio)
Driver	§ Booming and increasingly lonely older population	§ Huge untapped demand for affordable home ownership
Summary	§ Let to elderly residents with affordable rents and assured tenancies § Provides fit-for-purpose homes for retired people, allowing them to maintain their independence without care provision	§ Homebuyers acquire from ReSI a share in a residential property and rent the remainder § Helps house buyers acquire homes they would otherwise be unable to buy § Capital grant funding from government allows rent to be c.30% below market levels
Rent Growth	§ Increase with RPI each year	§ Increase contractually by RPI+ 0.5% each year
Secure income	§ Secure rental income paid from pensions and welfare	§ Subsidised rents c.30% below market § Homebuyer equity stake
ReSI origination advantages	§ Scale: UK's largest private independent retirement rentals business § Specialist in-house 30-person team with over 20-year track record	§ ReSI Housing - for-profit Registered Provider of Social Housing § Unique 45-year, 0.5% coupon, RPI linked USS debt facility providing 300bps yield pick-up
Net Yield	§ 5.3%	§ 3.4%
Levered Yield	§ 6.9%	§ 7.1%
Average customer stay / length of lease[2]	§ 6 years	§ 227 years
Annualised like for like rental growth	§ 1.5%	§ 2.2%
Occupancy	§ 94%	§ 100%[3]
Rent Collection	§ 99%	§ 100%

INCOME HIGHLIGHTS	30 September 2021	At 30 September 2020
IFRS Adjusted Earnings Per share * EPRA Adjusted Earnings Per share *	4.2p	2.9p	See note 15 on page 110
Total Return (on Opening NTA) *	7.5%	-0.1%	See note 38 on page 124
Total IFRS Return (on Opening NAV)	6.2%	13%	See note 38 on page 124
Recurring profit before change in fair value and property disposals *	£7.1m / +42%	£4.9m	See note 15 on page 110
IFRS Earnings Per Share	6.6p	1.4p	See note 15 on page 110
Dividend Per Share	5.0p	5.0p

CAPITAL HIGHLIGHTS	30 September 2021	At 30 September 2020
IFRS Net Asset Value per Share	106.6p / +1.5%	105.0p	See note 33 on page 120
Value of investment property	£351m Including £10m committed acquisitions	£302m	See note 17 on page 111
Of the total number of Shares held by the fund manager, current and founder directors of the fund manager, and directors of ReSI plc as at the date of this report	2.4% (4.1m shares)	1.9% (3.3m shares)
Loan to Value Ratio (LTV)	46%	42%	See note 37 on page 123
Weighted Average Cost of Debt	2.3%	2.6%
Weighted Average Remaining Life of Debt	22 years	23 years
EPRA Net Tangible Asset Value (NTA) per share*	107.9p/ +2.7%	105.1p	See note 33 on page 120

·	Stable, long term, inflation - linked rents
·	Supply/demand imbalance from historic undersupply - 2m shortfall in homes delivered 1
·	Incredibly diversified income stream from thousands of homes and residents
·	Reducing development appetite from Peers - 94% of affordable housing delivered by not-for-profits2
·	Nationwide shortage of affordable home ownership and independent retirement housing

·	20-year track record financing and advising social housing
·	Wholly owned Registered Provider of social housing, ReSI Housing
·	Investment Partner of Homes England and Greater London Authority
·	Unique proprietary Customer and Environmental Charters maximises social impact
·	30-strong Fund Manager's in-house property management business provides services to fund at cost
·	Long-term investment grade equivalent debt - Average 22 year maturity, unique £300m facility with 0.5% coupon


Location
East Midlands	9%
East of England	20%
Greater London	46%
North West	5%
South West	13%
West Midlands	6%
Yorkshire and The Humber	1%
Grand Total	100%

1	purchases an equity stake in their new home at open market value. This is known as the "first tranche sale" and is a minimum of 25% of the value of the property;
2	pays a subsidised rent c30% below market rent on the remaining part of the home, which increases annually at RPI+0.5%.;
3	has the option to incrementally purchase additional shares in its home at the prevailing open market value (known as "staircasing");
4	typically finances their initial stake with a 90% mortgage; and
5	is responsible for maintenance, repair and insurance, creating strong alignment of interest.

	Shared Ownership 25%	Help to Buy	First Homes (30%)	Outright Purchase	Rent
Mortgage Payments	£3,230	£10,768	£9,547	£12,921	0
Rent	£5,156	£0	£0	£0	£12,207
Service Charge	£1,500	£1,500	£1,500	£1,500	0
Total annual Payments	£9,886	£12,268	£11,047	£14,421	£12,207

	Region
	East Midlands	1%
	East of England	13%
	Greater London	9%
	North East	1%
	North West	10%
	Scotland	0%
	South East	33%
	South West	23%
	Wales	3%
	West Midlands	3%
	Yorkshire and The Humber	4%
	Grand Total	100.0%

·	Local authority housing provides homes within Luton for households who are otherwise homeless, generally because they are unable to afford private rented accommodation.
·	ReSI works as a partner with Luton Borough Council and Mears who manage and maintain the portfolio, with the council taking void risk

·	The UK is facing significant demand for short-term council housing nationally - there were 95,450 households in temporary accommodation as of 31 March 2021, an increase of 3.5% from 31 March 2020[15].
·	New legislation introduced under the Homelessness Reduction Act 2017 placed additional obligations on local authorities for housing vulnerable/statutory homeless people, creating further pressures on councils looking to increase their access to emergency and temporary housing.
·	Local authorities are increasingly unable to meet demand for temporary accommodation from their own housing stock, and some authorities are seeking temporary accommodation outside their own areas. At the end of March 2021, approximately 27% of households in temporary accommodation (c. 26,000) were in accommodation in a different local authority district. London authorities make up 82% of these placements.[16]
·	There is an increasing reliance on emergency bed & breakfasts, with use by councils rising by 382%[17] in the 10 years to 31 March 2021, which are more costly than leasing from the private sector.
·	As a result, there is a shortfall between cost and support for temporary housing in London, the South East and other metropolitan areas. English local authorities spent £1.2b on temporary accommodation in 2019/20, a 55% increase in real terms from 2014/15.[18]
·	Rents at ReSI's properties are set at close to long-term market rent levels, provide a cost saving to local authorities, who often have to rely on costly pay-nightly accommodation and bed & breakfasts.
·	ReSI provides a long-term institutional landlord to replace the numerous individual landlords that local authorities currently rely upon and removes the difficulties that local authorities have with ensuring adequate standards across their rented estates.

Lender	Portfolio held against	Notional value of debt drawn less amortisation	Maturity date	Annual interest rate
				%

Universities Superannuation Scheme	Shared ownership	£57.5m	March 2065	0.513% fixed* (inflation linked)
Scottish Widows	Retirement	£93.0m	June 2043	3.46% fixed*
National Westminster Bank	Local authority	£14.3m	January 2023	1.5% + 3 month LIBOR **
Santander Bank	All assets	£1.4m	1 month rolling	2.8% + 3 month LIBOR **

Total borrowings		£166.2m

Capital Stack
	FY21	FY20
Debt	£168m	£141m
Equity	£182m	£180m
Grant Funding	£10m	£6m
Reversionary Surplus	£40m	£35m

NAV at 30/09/20	105.0
Net Income	4.2
One-off debt set up costs	-0.6
Debt Valuation	-1.5

Dividend Paid	-5.0
NAV at 30/09/21	106.6

	FY21	FY20	Variance
	(£'000)	(£'000)	Variance
Net rental income*	13,176	11,345	16%
First tranche sales profits	1,008	509	98%
Net Finance Costs*	-4,232	-3,921	8%
Management fees	-1,802	-1,837	-2%
Overheads	-1,047	-1,093	-4%
Adjusted Earnings / Adjusted EPRA Earnings	7,104	5,018	42%
Adjusted EPS	4.2p	2.9p	45%
IFRS Earnings	11,221	2,449	358%
IFRS EPS	6.6p	1.4p	371%
* Net finance costs are presented excluding ground rent expense, which are finance costs under IFRS but have been included in net rental income

	FY21	FY20
Total debt net of issue costs	£166m	£141m
Total assets *	£350m	£316m
LTV (target 50%)	46%	42%
Leverage on reversion value	43%	39%
Weighted average cost	2.3%	2.6%
Weighted average maturity	22 years	23 years

Adjusted EPRA earnings/ IFRS earnings* (£m)			Net rental income (£m)			Rental growth (%)			EPRA cost ratio (%)*			Profit before tax (£m)
2019	2020	2021	2019	2020	2021	2019	2020	2021	2019	2020	2021	2019	2020	2021
£'m	£'m	£'m	£'m	£'m	£'m	%	%	%	%	%	%	£'m	£'m	£'m
4.6	5.0	7.1	11.2	11.3	13.2	2.1%	1.9%	1.5%	32%	33%	30%	13.2	2.4	11.2


KPI definition
Adjusted EPRA earnings, excluding valuation movements on investment assets and debt, and other adjustments, that are one-off in nature, which do not form part of the ongoing revenue or costs of the business.			Gross rental income after deducting property operating expenses including ground rent paid.			Like-for-like average growth of rents across the portfolio.			Administrative and operating costs (including costs of direct vacancy) divided by gross rental income.			Profit before tax is a statutory IFRS measure as presented in the Group's Consolidated Statement of Comprehensive Income.






Comment
Improved earnings driven by deployment and acquisitions			Increase of 16% delivered, including £1.5m from shared ownership investment during the year			1.5% like-for-like growth in rental income achieved in line with RPI			Improvement in cost ratio with improving performance in our retirement occupancy and further deployment in shared ownership			Improved profit before tax driven by EPRA earnings and property valuation growth somewhat offset by the increased valuation of debt




Notes
See Note 39 to the financial statements			See Note 6 to the financial statements.			See Glossary on page 136 for definition and calculation basis.			See Note 39 to the financial statements.			See Consolidated Statement of Comprehensive Income on page 98.
See Note 39 to the financial statements			See Note 6 to the financial statements.						See Note 39 to the financial statements.

EPRA NTA per share* (pence)			IFRS NAV per share (pence)			Total Return on NTA (%)*				Loan to Value (LTV) (%)			Cost of debt (average) (%)
2019	2020	2021	2019	2020	2021	2019		2020	2021	2019	2020	2021	2019	2020	2021

110.1	105.1	107.9	108.6	105.0	106.6	8.7%	(0.1) %		7.5%	30%	42%	46%	3.3%	2.6%	2.3%

KPI definition
EPRA NTA (Net Tangible Assets) is the market value of property assets, after deducting deferred tax on trading assets, and excluding intangible assets and derivatives.			IFRS NAV (Net Asset Value) per share at the balance sheet date.			Return on NTA is total return for the year, prior to payment of dividends (excluding movements in valuation of debt and derivatives), expressed as a percentage of opening NTA.				Ratio of net debt to the market value of properties on a consolidated Group basis.			Average cost of debt for the year including costs and commitment fees.




Comment
3% growth in FY21 reflecting strong trading results and resilient valuation performance under challenging market conditions.			Returns of 1.6 pence per share in FY21 reflecting strong trading results and property valuations.			Returns of 7.5% in FY21 demonstrating resilient overall returns from our property portfolio. (Equivalent to 6.2% returns on opening IFRS NAV)				Increase in LTV as ReSI's portfolio moves towards full deployment			Average cost of debt at 2.3% following ultra-long-term funding through a secured facility, with average debt maturity now at 22 years.



Notes
See Note 39 for reconciliation from IFRS to EPRA performance measures			See Consolidated Statement of Financial Position			See Note 38 Supplemental financial information for calculation.				See Note 37 Supplemental financial information for calculation.			See Note 37 for further detail regarding capital risk management.

NTA at 30/09/20	105.1
Net Income	4.2
One-off costs	-0.6
Property valuation	4.5
Revaluation of trading properties	-0.3
Dividend Paid	-5.0
NTA at 30/09/21	107.9

	30-Sep-21	30-Sep-20	Variance
	£'000s	£'000s	Variance
Total Investments *	341,128	302,478	13%
Inventories - First tranche Shared Ownership properties available for sale	3,800	10,421	-64%
Cash and cash equivalents	8,370	10,365	-19%
Borrowings	-168,339	-141,101	19%
Other	-278	-2,455	-89%
EPRA Net Tangible Assets	184,681	179,708	3%
EPRA NTA per share (pence)	107.9	105.1	3%
Book value of debt	168,339	141,101	19%
IFRS NAV	182,392	179,612	1.5%
IFRS NAV per share (pence)	106.6	105.0	1.5%
Reversionary Surplus (excluded from NTA)	40,026	35,515	13%
Reversionary Surplus per share (pence)	23.4	20.8	13%

	FY21	FY20
Total debt	£166m	£141m
LTV (target 50%)	46%	42%
Leverage on reversion value	43%	39%
Weighted average cost	2.3%	2.6%
Weighted average maturity	22 years	23 years

EPC Rating	SAP Score
A	92 to 100 points
B	81 to 91 points
C	69 to 80 points
D	55 to 68 points
E (current minimum requirement for rental property)	39 to 54 points
F	21 to 38 points
G	1 to 20 points

	Average EPC Score
EPC rating of ReSI's Homes*	C
Average UK rating[26]	D
Minimum rating legally required to let out property	E

Portfolio	Total (million kWh)	Tonnes CO₂ Emissions
Retirement: communal Areas	0.08	17.4
Retirement: vacant Properties	0.13	26.8
Shared ownership: vacant properties	0.02	3.6
Total	0.22	47.8

Emissions per annum	Electricity Usage (million kWh)	Gas Usage (million kWh)	LPG + Oil Usage (KWh)	Total (million kWh)	Tonnes CO₂ Emissions (and equivalents)	Average Tonnes CO₂ per property
ReSI's portfolio (3,005 homes)	36.7	3.1	0.1	39.9	9,067	3.0

FY2021 Results - strong income, dividend covered

Strategy and Performance

Purpose

Portfolio Snapshot

Our Portfolio Focus

Financial Highlights - Income

Chairman's Statement

Investment Case

Market Drivers

ReSI's Core Drivers

Investment Portfolio

Strong Financial Position

Strategic Review

KPI Measures

Fund Manager's Report

Environmental and Social Impact

ReSI's approach to Environmental and Social Impact

Environmental Impact

Social Impact

Governance

Section 172 Statement and Stakeholder Engagement

Risk Management

Risk Management Measures

Principal Risks and Uncertainties

Going Concern and Viability Statement

GovernanceBoard of Directors

ReSI Housing Non-Executive Directors

Investment Team

Directors' Report

Corporate Governance Statement

Report of the Audit Committee

Directors' Remuneration Implementation Report

Remuneration Policy

Directors' Responsibilities

Financials

Notes to the Consolidated Financial Statements

Company Statement of Financial Position

Company Statement of Changes in Equity

Notes to the Company Financial Statements

Company Information

Companies

UK 100

Latest directors dealings

Governance

Board of Directors

	Total energy consumption per unit (KWh)		Tonnes CO₂ Emissions per property		Average SAP
	2020	2021	2020	2021	2020	2021
Shared Ownership	6,860	10,371	1.5	2.2	83.5	80.2
Retirement	14,041	14,646	3.5	3.4	75.4[29]	75.5
Local Authority	7,440	7,465	1.9	1.7	67.4	66.9
Total	12,832	13,248	3.2	3.0	75.8	75.9

Stakeholder	Why is it important to engage?	How have the directors and Fund Manager engaged?
Shareholders	As a public company listed on the London Stock Exchange, ReSI is subject to the Listing Rules and the Disclosure Guidance and Transparency Rules. The Listing Rules include a listing principle that a listed company must ensure that it treats all holders of the same class of shares that are in the same position equally in respect of the rights attaching to such shares. With the assistance of regular discussions with and the formal advice of ReSI's legal counsel, secretary and corporate broker, the Board abides by the Listing Rules at all times. For information on shareholder engagement please see the Governance section of this report which contains further information on shareholder engagement.	The Fund Manager along with ReSI's corporate broker regularly meets with ReSI's shareholders to provide corporate updates and to foster regular dialogue. The Board encourages shareholders to attend and participate in ReSI's Annual General Meeting ("AGM"). ReSI values any feedback and questions it may receive from shareholders ahead of and during the AGM. ReSI's Annual and Interim reports are made available on ReSI's website and then are circulated to shareholders as requested, providing shareholders with an in depth understanding of the Company's financial position and portfolio. ReSI also make available RNS and other business and market updates on ReSI's website.
Residents	Residents are integral to ReSI's business model. The importance of engaging with residents cannot be understated; strong relationships have been shown to improve tenant retention, rent collection rates, overall tenant satisfaction and impact on the community. ReSI is committed to accelerating the development of socially and economically beneficial new housing to make a meaningful contribution to the UK housing shortage. ReSI's homes deliver a social benefit through providing wellbeing improvements to residents (e.g. by providing the security of a home for life), fiscal savings (e.g. lower costs for housing those at risk of homelessness and savings to the NHS), and wider economic benefits (e.g. by enabling people to live and find work in otherwise unaffordable parts of the country). The social impact delivered by ReSI is reported on page 46	ReSI works with trusted partners to manage its relationships with all residents on all tenures. ReSI's property managers are in regular contact, and residents are also provided with contact details and are able to contact dedicated teams to discuss any problem that they might have. The Fund Manager reviews detailed affordability assessments before a resident is selected, and throughout the lease term a close relationship is maintained through ongoing engagement. The Fund Manager expects, and monitors, the property managers to encourage feedback from residents including suggestions for service improvement and to learn from any complaints about service delivery. The safety and wellbeing of residents is of the highest priority and when making an investment the Fund Manager is rigorous in using the skills and expertise of its property team to provide high quality homes and identify and mitigate all risks to residents. The Fund Manager considers residents' changing needs and uses their expertise to assist them. ReSI's lifecycle plans for accommodation includes a conservative approach to the long-term costs of ownership to ensure that the standard of quality is maintained or improved throughout the life of the property. At the same time, the Fund Manager only works with well-regarded and established partners to ensure all routine and other maintenance is undertaken promptly and properly.
Fund Manager	The most significant service provider for ReSI's long-term success is the Fund Manager, who has been engaged as ReSI's alternative investment fund manager, in compliance with the provisions of the Alternative Investment Fund Managers Directive ("AIFMD"), since launch of ReSI. Pursuant to the Fund Management Agreement, the Fund Manager is tasked with providing investment management services to ReSI.	The Board regularly monitors the Company's investment performance in relation to its objectives and investment policy and strategy. The Board receives and reviews regular reports and presentations from the Fund Manager and seeks to maintain regular contact to maintain a constructive working relationship.
Property Managers & Developers	ReSI works with property managers who are experienced in managing tenants' needs to ensure a good quality of service and to ensure that the regulatory risk is minimised. Strong developer relationships enable ReSI to secure a pipeline of assets for investment. Experienced development partners ensure that ReSI acquires high quality homes to lease to its residents, improving quality of life for residents. By supporting development partners, ReSI aims to benefit local communities by increasing the provision of affordable housing. Through ReSI Housing, ReSI is able to acquire assets within the social housing regulatory environment, which emphasises good governance and financial viability.	ReSI always seeks to work with well-regarded partners to ensure that its homes are fit for purpose and maintained at a high standard in order to meet the needs of lessees and occupiers, as well as sustaining value over the long-term. The Fund Manager has regular contact with property managers, estate managers and developers and takes a proactive approach to working with third parties. Before an acquisition, detailed property due diligence is performed by the Fund Manager on all acquisitions to minimise fire and other risks to residents and provide safe and secure accommodation. After acquisition, the Fund Manager (with input from property managers) regularly reports to the Board on ReSI's property performance and compliance with property obligations.
Key Service Providers	A list of the Company's key service providers can be found on page 139 of this Report. As an externally managed real estate investment trust, the Company conducts all its business through key service providers.	Before the engagement of a service provider, the Board ensures that the Company's business outlook as well as values are similar. On an annual basis the Board reviews the continuing appointment of each service provider to ensure re-appointment is in the best interests of the Company's shareholders. The Board has strong working relationships with the Fund Manager, broker, company secretary, administrator and depositary and receives reports on the performance of the key service providers by the Fund Manager and company secretary. Separately, the auditor is invited to attend the Audit Committee meeting at least once per year. The Audit Committee Chair maintains regular contact with the audit partner to ensure the audit process is undertaken effectively.
Regulator of Social Housing	ReSI Housing Limited ("ReSI Housing") is a wholly-owned subsidiary of ReSI and is registered with, and regulated by, the Regulator of Social Housing (the "Regulator") as a for-profit registered provider. As a regulated entity, ReSI Housing is able to offer shared ownership properties, which are central to its future investment strategy.	The Fund Manager and ReSI Housing's board each maintains strong lines of communication with the Regulator and is transparent in all dealings. The Fund Manager, in conjunction with the board of ReSI Housing, keeps ReSI Housing's compliance with its regulatory obligations under constant review, with input from such external advisers as may be necessary.
Grant providers	To enable delivery of shared ownership homes, ReSI Housing is an investment partner of multiple grant providers, including the Greater London Authority ("GLA") and Homes England, and has accessed grant funding under their standard form grant agreements.	To enable delivery of shared ownership homes, ReSI Housing is an investment partner of multiple grant providers, including the Greater London Authority ("GLA") and Homes England, and has accessed grant funding under their standard form grant agreements. The Company engages third parties to ensure compliance with grant requirements from all grant providers. Any correspondence from a grant provide is responded to promptly. ReSI Housing's compliance with grant requirements on Clapham B4 with the GLA has been audited by Trimmer CS Ltd on the basis of which a clean audit opinion has been issued.
HMRC	If ReSI fails to remain qualified as a REIT, its rental income and gains will be subject to UK corporation tax.	ReSI corresponds with its contacts at HMRC regularly and is transparent in all dealings. The Directors and the Fund Manager will at all times conduct the affairs of ReSI so as to enable it to remain qualified as a REIT for the purposes of Part 12 of the CTA 2010.
Lenders	Members of the Group have raised secured debt and entered into a working capital facility, to enable leveraged returns. Each facility entered into contains covenants that must be complied with. Proactive correspondence with the lenders helps ensure covenant compliance and aides the Company maintain its ability to raise further debt in the future.	ReSI's Subsidiaries report to their respective lenders in line with the covenants entered into. Changing market conditions (such as COVID-19) are discussed with dedicated contacts at each lender.


Acquisitions	Given the volatility of the property market caused by COVID-19, the Board assessed the strategy of continuing to acquire stock in the short-term. Given the demand for affordable accommodation, at a time when demand was higher than ever, it was considered to be in shareholders' best interests to proceed. The social benefit provided by new high quality affordable housing was considered and deemed to have a positive impact on the local community by providing affordable housing in an area where average house prices make home ownership unaffordable for most people.
Loan drawdowns	Acquisitions in shared ownership assets were funded by further drawdowns from the ultra-long term USS facility of £300m, as ReSI's portfolio focus shifts to greater investment in shared ownership. Consideration was given and concluded that this still represented the best way to fund new shared ownership acquisitions.
Transfer of Independent Retirement Living Property Management Agreement	The property and lettings management of the ReSI's retirement portfolio was transferred from Girlings to a subsidiary of the Fund Manager in July 2021 and is now provided at cost. A great deal of thought was given to whether to continue with Girlings, move to a third party or to a subsidiary of the Fund Manager. The transfer of this property and lettings management function now allows the former Girlings team to work closely with the Fund Manager to optimise customer service and maximise performance for ReSI. From the acquisition date on 1 July 2021, this team focuses solely on managing homes for the Fund Manager. The operational improvements from the transfer of ownership, combined with a managed approach to help residents move into blocks throughout the second and third UK lockdowns, has resulted in retirement voids returning to their pre COVID level of around 7% in the second half of the year and returning a full year average of 7.6%.
Extension of Debt on Local Authority Portfolio	The Loan facility with Natwest secured over local authority housing assets has been extended by twelve months till February 2023. This ensures liquidity for ReSI whilst it completes the stabilisation process of its portfolio.

Risk	Risk mitigation	Party responsible	Party responsible for monitoring	Change in risk since 2020 Annual Report
Company, Investment Strategy and Operations
ReSI may not meet its investment objective or return objective	•Due diligence performed by the Fund Manager prior to each acquisition •On-going information on investment activities provided by the Fund Manager to the Board •Regular review of investment and return objectives	Fund Manager	Board	No change
ReSI may be unable to make acquisitions within its targeted timeline	•ReSI has a detailed Investment Policy that describes target assets and the process for acquiring such assets. •The Fund Manager has long-term relationships with leading housing associations, local authorities and private developers •The authorisation of ReSI Housing as a for-profit Registered Provider expands the origination universe to include acquiring newly developed properties that are designated as affordable accommodation under planning requirements and unrestricted stock where ReSI can apply government grant to convert into shared ownership •The Fund Manager has extended its origination and relationship network by bringing in additional experienced professionals with backgrounds working for housing associations, local authorities and private developers •To mitigate the impact of COVID-19, ReSI has worked with its partners to develop a strong pipeline of assets, and has looked to develop its network further with new partners •ReSI is fully deployed as of 30 September 2021	Fund Manager	Board	Reduced
ReSI's due diligence ("DD") may not identify all risks and liabilities in respect of an acquisition	•Legal DD is carried out by established law firms and is managed by in-house counsel and housing specialists •Property DD is carried out by reputable real estate surveyors and is managed by in-house property experts •Financial DD is carried out by major accounting firms and is managed by in-house experienced accountants •The Fund Manager performs shadow credit ratings utilising published credit rating methodologies •ReSI is fully deployed as of 30 September 2021	Fund manager	Board	Reduced
Environmental
Risk of long-term impact on the portfolio from climate change	•Environmental concerns are integral to the ReSI investment analysis process, and are considered before investment in each scheme • The Fund Manager has a sustainable investment policy, which is used to inform investment decisions • We have partnered with knowledgeable third parties to understand our impact on the environment and enhance our reporting - please see the Environmental, Social and Governance section of this report • ReSI is investing in improving the environmental efficiency of its portfolio	Fund Manager	Board	No change
Real estate
Significant or material fall in the value of the property market	•ReSI's aim is to hold the assets for the long-term and generate inflation-linked income •Although the risk of volatility in valuations has increased, the risk to ReSI is low as ReSI does not intend to rely on realised revaluation gains to cover dividend payments, which it intends to cover from income now that ReSI is fully deployed •ReSI focuses on areas of the market with limited and ideally countercyclical exposure to the wider property market	N/A	Board	Decreased
Customers
Retaining and procuring appropriate residents	•The Fund Manager engages established property managers to provide the day-to-day management of home lettings and collection of underlying rent from residents or shared owners •The Fund Manager only accepts void risk where there is a demonstrable strong demand or where the residents are part owners of the properties (as exhibited by retirement, sub-market rental assets or shared ownership properties) •The shared ownership portfolio is now almost entirely occupied and de-risked, with the retirement portfolio now back to pre-COVID 19 void levels	Property managers / estate agents	Fund Manager	Decreased
Service providers
ReSI is dependent on the expertise of the Fund Manager and its key personnel to evaluate investment opportunities and to assist in the implementation of ReSI's investment objective and investment policy	•ReSI places reliance on the independent Board of Directors who have strong relevant experience •The Fund Manager's interests are aligned to those of ReSI's shareholders through a fee structure which pays 25% of Fund Manager fees in equity and provides for no transaction-specific fees •As of the date of this report, the current and founder directors of the Fund Manager (or persons connected to them) hold (in aggregate) 4,141,248 Ordinary Shares in ReSI and the fund manager holds 1,337,935 Ordinary Shares	Fund Manager	Board	No change
Taxation
If ReSI fails to remain qualified as a REIT, its rental income and gains will be subject to UK corporation tax	•ReSI intends to remain within the UK REIT regime and work within its investment objective and policy •The Fund Manager will at all times conduct the affairs of ReSI so as to enable it to become and remain qualified as a REIT for the purposes of Part 12 of the CTA 2010 •The Board would have oversight on any action that would result in ReSI failing to adhere to the UK REIT regime, and ReSI receives tax advice from professional advisers	Fund Manager	Board	No change
Investment Management
Market and individual investment risks not analysed or detected in a timely fashion leading to investments with poor performance or a higher risk profile than stated within investment policy	•The Fund Manager rigorously analyses investment opportunities and undertakes comprehensive due diligence before acquisition •The Fund Manager does not receive a performance-based fee and as such is not financially incentivised to target riskier higher yielding assets •The Fund Manager receives a management fee prior to deployment and so is not financially incentivised to purchase assets quickly regardless of the performance of such assets	Fund Manager	Board	No change

Shareholders	Number of shares	% Holding
Close Asset Management Limited	18,818,332	11.00%
Schroders plc	16,648,405	9.73%
CG Asset Management Ltd	13,956,949	8.16%
Halb Nominees Limited	11,560,797	6.76%
Standard Life Aberdeen plc	9,060,000	5.29%
VT Gravis Funds ICVC	9,049,470	5.29%
Premier Miton Group plc	7,699,945	4.50%
City Asset Management PLC	7,394,138	4.32%

Listing Rule
9.8.4 (1) - Capitalised Interest	The Company has not capitalised any interest in the year under review.
9.8.4 (2) - Unaudited Financial Information	The Company publishes a quarterly NAV statement. The Company also published its interim report and unaudited financial statements for the period from 1 October 2020 to 31 March 2021.
9.8.4 (4) - Incentive Schemes	The Company has no incentive schemes in operation.
9.8.4 (5) and (6) - Emolument Waivers	No Director of the Company has waved or agreed to waive any current or future emoluments from the Company.
9.8.4 (7), (8) and (9) - Share Issuance	During the period, the Company has not issued or allotted and equity securities within the meaning of LR 9.8.4 (7), (8) and (9).
9.8.4 (8) and (9) - Companies Part of the Group	Not applicable.
9.8.4 (10) - Significant Contracts	During the period under review, there were no contracts of significance subsisting to which the Company is a party and in which a Director of the Group is or was materially interested or between the Company and a controlling shareholder.
9.8.4 (11) - Controlling Shareholders	The Company is not party to any contracts for the provision of services to the Company by a controlling shareholder.
9.8.4 (12) and (13) - Waiving Dividends	During the period under review, there were no arrangements under which a shareholder has waived or agreed to waive any dividends or future dividends.
9.8.4 (14) - Board Statement re Significant Shareholders	Not applicable.

Directors	Board Meeting (5 meetings held)	Audit Committee (2 meetings held)
Rob Whiteman	5	2
Robert Gray	5	2
John Carleton	5	2
Elaine Bailey	5	2

	Fees from 1 October 2020 to 30 September 2021	Fees from 1 October 2019 to 30 September 2020	Annual percentage change in fees^b
	£'000	£'000	%
Robert Whiteman	50	50	0
Robert Blackburn Gray	35	35	0
John Carleton	35	35	0
Elaine Bailey^a	35	15	0
	155	156^c


	2021	2020	Change
	£'000	£'000	£'000
Net Property Income	15,173	12,889	2,884
Directors' fees	155	156	(1)
Operating expenses	3,217	3,009	208
Dividends paid and payable to shareholders	8,552	8,547	5

Net Asset Value	Annual Fee
Up to £100,000,000	£40,000
£100,000,001 to £200,000,000	£50,000
£200,000,001 to £350,000,000	£60,000
thereafter	£70,000