Net Asset Value & Corporate Update

29 July 2020

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 third quarter net asset value ("Net Asset Value" or "NAV") as at 30 June 2020 and to provide an update on its corporate activity.

Financial highlights:

· IFRS NAV per share of 106.6 pence1 (31 March 2020: 106.9 pence); a total return for the third quarter of 1.0 pence.

· Total property portfolio value of £277.3 million, with a like-for-like increase in value of £0.4 million (0.2%) reflecting RPI-linked inflationary increases in rental cashflows.

· As a result of the secure asset classes in which ReSI is invested and the robust performance of the portfolio since the onset of the COVID-19 pandemic, the 'material valuation uncertainty' clause has been removed from this quarter's independent valuation, in line with recent RICS guidance.

· The net annual rent roll on completed shared ownership homes is £651,000 (0.38 pence per share). A further £483,000 (0.28 pence per share) of net annual rent is expected on reserved shared ownership homes that are moving towards completion.

· Overall, the net annual rent roll on completed and reserved shared ownership homes is up £373,000 (48.9%), or 0.22 pence per share since last quarter.

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

Dividend:

· Interim dividend announced at a maintained level of 1.25 pence per Ordinary Share for the period from 1 April 2020 to 30 June 2020. Target dividend of 5.0 pence per Ordinary Share reaffirmed for the current financial year2.

Update on corporate activity since 31 March 2020:

· On 3 July 2020 ReSI entered into a £300 million, ultra long-term secured debt facility from the Universities Superannuation Scheme, drawing an initial £34 million with a coupon of 0.461%. The new 45-year facility is drawable against acquisitions over the next three years and represents the first standalone investment grade financing secured for shared ownership, a sector where growth and supply have been constrained by a lack of long-term institutional debt. The new debt has already enabled ReSI to progress the following two transactions:

o Completion on 3 July 2020 of the previously announced £34 million purchase of 73 shared ownership apartments at Clapham Park.

o Completion on 7 July 2020 of 24 occupied shared ownership homes and exchange on an additional 15, which will be acquired by ReSI within six months once construction is completed and the homes are occupied. The aggregate cost of this portfolio is £3.5 million, including deferred payments.

· As of 28 July 2020, ReSI's shared ownership portfolio comprised 205 homes, of which 88 homes were occupied, 44 were reserved and in sales progression and 58 remained available for shared owners. The remaining 15 homes are due to be acquired once construction is completed and the homes are occupied.

· ReSI continues to focus on the deployment of a further c.£30 million into high-quality shared ownership schemes, utilising existing cash and further drawdowns from its new debt facility.

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.

The movement in NAV since 31 March 2020 is as follows:

*Please note that values do not sum to total due to rounding differences 

FOR FURTHER INFORMATION, PLEASE CONTACT: 

NOTES:

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% p.a. and has to date deployed £305 million, assembling a portfolio of 2,718 properties.

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, a wholly-owned subsidiary of TradeRisks Limited which has a 19 year track record of executing transactions within the UK social housing sector and, to date, has arranged funding of over £11 billion in the social housing, care and other specialist residential property sectors.

TradeRisks Limited and ReSI Capital Management Limited were acquired on 4 March 2020 by Gresham House plc, the specialist alternative asset management business which is listed on the London Stock Exchange and now has c.£3.3 billion of assets under management. Gresham House plc provides funds, direct investments and tailored investment solutions, including co-investment across a range of highly differentiated alternative investment strategies. The Group's expertise includes timber, renewable energy, housing and infrastructure, strategic public and private equity (private assets). It aims to deliver sustainable financial returns and is committed to building long-term partnerships with clients (institutions, family offices, high-net-worth individuals, charities and endowments and private individuals) to help them achieve their financial goals. Shareholder value creation will be driven by long-term growth in earnings as a result of increasing AUM and returns from invested capital.

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

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