Residential Sec Regulatory News (RESI)

1 February 2023

Residential Secure Income plc

Net Asset Value and corporate update

Residential Secure Income plc ("ReSI plc" or the "Company") (LSE: RESI), which invests in independent retirement living and shared ownership to deliver secure, inflation-linked returns, is pleased to announce its unaudited first quarter net asset value ("Net Asset Value" or "NAV") as at 31 December 2022 and to update on recent corporate activity for the period.

Strong operational performance reflecting defensive nature of assets

· Portfolio focused on direct leases with pensioners and part home owners

· Rent collection remains at 99% for the quarter

· Rental growth of 5.3% on 502 properties (15% of portfolio) representing 1.0% like-for-like growth

· 33 new build shared ownership homes completed on 19 December 2022, with 28 already reserved

· 99% like-for-like shared ownership occupancy1 (95% including new homes acquired in Dec 2022)

· Retirement occupancy continues at 94%2 ahead of long-term average occupancy of c. 93%

Valuation decline driven by macro environment

· Total EPRA return for the quarter of -9.9% (10.5 pence per share ("p")) to give EPRA NTA of 94.3p (£174.6mn) as at 31 December 2022

· Driven by 5.4% reduction in like-for-like investment property values, representing 11 p

o 8p from 25bps increase in the discount rate used in discounted cash flow property valuations

o 3p caused by reduced inflation projections and expected lower receipts from staircasing

Resilient balance sheet with long-term and low-cost debt

· Diverse portfolio of 3,303 homes worth £364mn3

· 22-year average debt maturity, 90% fixed or hedged with low 2.5% weighted average coupon

· Loan-to-value ratio of 48%, reduced to 41% when including 19% reversionary surplus

Continued focus on dividend cover at 5.16p in FY 20234

· Quarterly dividend of 1.29p announced today in line with target

· Focus on improving dividend cover in FY2023 (97% FY22) despite headwinds from increasing interest cost on 10% of debt that is floating, and, energy costs in our retirement communal areas

Outlook: Well positioned for future growth

· 97% inflation-linked rents provides strong basis for future growth

· Accelerating tenanted shared ownership opportunities as housing associations look to fund increasing costs of investing in their existing stock whilst maintaining development programmes

· Institutional appetite for residential income generating assets remains strong

NAV movement

The movement in NAV between 30 September 2022 and 31 December 2022 (the "Period") is as follows:

*Note: 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:

"We're pleased by ReSI's operational performance this quarter, with strong rental growth, continued high occupancy and good demand for new homes. As with many other REITs and investment companies, the difficult UK macro environment in the last three months of 2022 drove a spike in gilt yields, which has directly impacted our valuations as at the end of December.

"Valuations of course remain sensitive to moves in gilt yields, but we see downward pressure on valuations starting to ease, while inflationary pressures are hopefully nearing their peak. Mortgage rates remain well below our portfolio stress-test levels, and with rents rising less than mortgage costs, the shared ownership model helps insulate residents from cost of living pressures. Our retirement residents typically fund rent payments with inflation-linked pension income. Across the whole portfolio our continued efforts to improve our homes' energy efficiency is helping to keep residents' energy bills in check.

"The quality of ReSI's operational business model, with individual tenant contractual relationships, rent collection stable at almost 100%, and very high levels of occupancy, ensures that our focus can remain on delivering dividend cover and underlying performance for investors."

For further information, please contact:

About ReSI plc

Residential Secure Income plc ("ReSI 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 home ownership.

ReSI plc targets a secure, long-dated, inflation-linked dividend of 5.16p per share p.a. (paid quarterly) in FY23 and a total return in excess of 8.0% per annum4. As at 31 December 2022, including committed acquisitions, ReSI plc's portfolio comprises 3,303 properties, with an (unaudited) IFRS fair value of £364 mn5.

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 London Stock Exchange quoted 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, with senior members having an average of c.30 years' experience.

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

Notes:

1. At 31 December 2022, based on homes owned at the start of the quarter.

2. Twelve month trailing average.

3. Including £2mn of committed acquisitions.

4. The dividend target and total return target are targets only and are not profit forecasts. There can be no assurance that either target will be met, and they should not be taken as an indication of the Company's future results.

5. Excluding the finance lease gross up and including £2mn of committed acquisitions.