Net Asset Value and corporate update
1 August 2024
Residential Secure Income plc
("ReSI" or the "Company")
Net Asset Value and corporate update
Residential Secure Income plc (LSE: RESI), which invests in independent retirement living and shared ownership to deliver secure, inflation-linked returns, is pleased to announce its unaudited third quarter net asset value ("Net Asset Value" or "NAV") as at 30 June 2024 and to update on recent corporate activity for the period.
Strong operational performance, underpinned by recurring inflation linked rent growth delivering ample dividend coverage
· Portfolio focused on direct leases with pensioners and part homeowners
· Rent collection consistent at 99% for the quarter
· Rental growth of 6.5% on 1,425 homes (48% of portfolio) giving 2.7% like-for-like growth
· 100% shared ownership occupancy
· Retirement occupancy continuing at 96% vs. 94% long-term average occupancy
· Year-to-date dividend coverage of 123%1
10 basis points outward yield shift in the quarter, outweighing valuation accretive inflation led rent growth, driving a 0.4% decline in like-for-like valuations
· Total EPRA return for the quarter of 0.8% (0.6 pence per share ("p")) to give EPRA NTA of 76.7p (£142.0mn) as at 30 June
· Driven by 1.0p, or 0.4%, decrease in like-for-like investment property values, as follows:
o 2.9p increase from inflation-linked rent reviews in the quarter
o 3.9p decrease resulting from a further 10 basis points outward yield shift
· Diverse portfolio of 2,991 homes worth £315mn2
· Loan-to-value ratio of 52%, down from 53% at 31 March 2024 and reduced to 41% when including 26.3% reversionary surplus
Strategic initiatives, disposals and retirement asset management advancing
· Sale of the remaining local authority asset on track and expected to complete in H2 2024, with building control signoff for works already complete still outstanding
· Continuing to review options for further disposals which support maximising shareholder value, from which we would prioritise the return of capital. However, investment market volumes are expected to remain low until any future interest rate cuts, we expect disposal opportunities may take time to emerge.
· Local authority sale will facilitate repayment of floating rate debt, enhancing the predictability of inflation-linked earnings and strengthening the balance sheet leaving only fixed long-term debt with a 21-year weighted average debt maturity.
· Retirement portfolio asset management initiatives further progressing:
o 7 properties sold and 16 under offer (total sold or under offer is equal to 1% of the portfolio commanding a 19% premium to prevailing book value).
o 84 homes re-let to new residents in the quarter with average rent increases of 6.2%.
NAV Movement
The movement in NAV between 31 March 2024 and 30 June 2024 (the "Period") is as follows:
|
|
EPRA NTA |
IFRS NAV |
||
|
|
£'mn |
Pence per Ordinary Share |
£'mn |
Pence per Ordinary Share |
|
Net Asset Value at 31 March 2024 |
142.9 |
77.2 |
154.4 |
83.4 |
|
Net income for the Period |
2.5 |
1.3 |
2.5 |
1.3 |
|
Property valuation change |
(1.8) |
(1.0) |
(1.8) |
(1.0) |
|
Debt valuation / indexation* |
0.4 |
0.2 |
1.6 |
0.9 |
|
Dividend paid |
(1.9) |
(1.0) |
(1.9) |
(1.0) |
|
Net Asset Value at 30 June 2024 |
142.0 |
76.7 |
154.8 |
83.6 |
|
Total return |
0.8% |
0.8% |
1.5% |
1.5% |
|
|
|
|
|
|
*In accordance with the EPRA Best Practice Recommendations, EPRA NTA reflects the amortised cost of indebtedness, rather than its fair value, and thus the EPRA NTA movement reflects the indexation of USS debt.
Ben Fry, Managing Director, Housing at Gresham House, commented:
"This quarter, ReSI has continued to deliver strong operational performance, ensuring ample dividend cover. We continue to execute our retirement related asset management initiatives to drive the future value of our retirement portfolio and review options for further disposals which support maximising shareholder value."
"The shortfall of more affordable homes remains acute, with an estimated £34bn3 of annual investment needed in the UK. With encouraging early steps on planning, we expect the new Labour government's policies to be a tailwind for the affordable housing sector. The government has set a welcome and ambitious target of building 1.5 million new homes over the next parliament, but this will not be possible through planning reform alone and will need to be met with the right funding.
"With public finance tight established Registered Providers and retirement platforms, like ReSI, with a long-term investment approach to deliver for both residents and investors, are well suited to attract the necessary private funding to meet the country's housing needs."
1. Dividend cover measured as Adjusted EPRA earnings per share divided by dividend per share for the period 1 October 2023 to 30 June 2024
2. Excluding finance lease gross up and local authority asset which is held for sale.
3. British Property Federation, and Legal & General, 2022
For further information, please contact:
|
Gresham House Real Estate
Ben Fry Sandeep Patel
|
+44 (0) 20 7382 0900
|
|
Peel Hunt LLP
Luke Simpson Huw Jeremy
|
+44 (0) 20 7418 8900 |
|
KL Communications
Charles Gorman Charlotte Francis |
+44 (0) 20 3882 6644
|
About ReSI plc
Residential Secure Income plc (LSE: RESI) is a real estate investment trust (REIT) focused on delivering secure, inflation-linked returns with a focus on two resident sub-sectors in UK residential - independent retirement rentals and shared ownership - underpinned by an ageing demographic and untapped and strong demand for affordable homeownership.
ReSI plc's purpose is to deliver affordable, high-quality, safe homes with great customer service and long-term stability of tenure for residents. We achieve this through 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 affordable housing.
ReSI plc'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.
About Gresham House and Gresham House Real Estate
Gresham House is a specialist alternative asset manager committed to operating responsibly and sustainably, taking the long view in delivering sustainable investment solutions.
Gresham House Real Estate has an unparalleled track record in the affordable housing sector over 20 years.
Gresham House Real Estate offers long-term equity investments into UK housing, through listed and unlisted housing investment vehicles, each focused on addressing different areas of the affordable housing problem. Each fund aims to deliver stable and secure inflation-linked returns whilst providing social and environmental benefits to its residents, the local community, and the wider economy.
Further information on ReSI plc is available at www.resi-reit.com, and further information on Gresham House is available at www.greshamhouse.com
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