Residential Sec Regulatory News (RESI)

4 May 2022

Residential Secure Income plc("ReSI plc" or the "Company")

Acquisition of 39 new build shared ownership homes in South London

Residential Secure Income plc (ReSI plc) (LSE: RESI), which invests in independent retirement living and shared ownership to deliver secure, inflation-linked returns, has exchanged contracts to acquire 39 newly completed homes for delivery as shared ownership for net consideration of £7.5 million (consideration shown net of purchase costs, receipts from residents for their respective ownership stakes in their homes, and government grants).

The new homes consist of one, two and three‐bedroom apartments in new developments in Purley, Coulsdon and Addiscombe, which are all part of the London Borough of Croydon. The homes have been developed to a high specification, with timber parquet flooring, Silestone worktops, Bosch appliances and private balconies. The homes meet or exceed ReSI plc's sustainability criteria and include secure cycle storage, solar energy, electric vehicle charging points, and have an energy efficiency Environmental Performance Certificate rating of B.

The acquisitions will complete in a staggered manner over the next few months to ensure that on completion the properties are ready for occupation by shared owners. All homes will be sold on shared ownership 999-year leaseholds with uncapped annual RPI + 0.5% linked rent increases, with the rental income underpinned by residents' ownership stakes in their homes. Once acquired and occupied the homes are expected to deliver an annual rent of £0.3mn and they will generate an expected inflation-linked leveraged yield in line with ReSI plc's 8% total return and c.5% dividend targets.

The properties are being acquired from a local authority housebuilder and will be held by ReSI plc's wholly owned registered provider of social housing, ReSI Housing Limited, and part financed by government grant. The properties will be managed by ReSI Property Management Limited in line with the best practice approach set out in Gresham House's shared ownership customer and environmental charters.

Ben Fry, Managing Director of Housing at Gresham House, said:

"This is the second acquisition since our £15 million equity raise in February 2022 and, alongside the acquisition of the 182 shared ownership portfolio announced in March, completes the investment of the new equity and associated debt within a three-month period.

ReSI plc's portfolio benefits from long leases with RPI-linked rental increases. Demand for our shared ownership homes remains strong whilst the shared ownership model helps to align the interests of our shareholders and resident partners by ensuring that all parties own a stake in the home with residents thereby incentivised to maintain it in good condition, to meet their ongoing rental commitments and over time look to grow their equity position."  

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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 5.16 pence per share p.a.1 (paid quarterly) and a total return in excess of 8.0% per annum. As at 31 December 2021, including committed acquisitions, ReSI plc's portfolio comprises 3,050 properties, with an (unaudited) IFRS fair value of £351m2.

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 a 25-strong housing investment team with an average of 17 years' relevant 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

1 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.

2 Excluding the finance lease gross up and including £7m of committed acquisitions.