Residential Sec Regulatory News (RESI)

17 March 2021

Residential Secure Income plc

Acquisition of 68 income-generating shared ownership homes

Further strengthening of existing partnership with Metropolitan Thames Valley Housing

Residential Secure Income plc ("ReSI") (LSE: RESI), which invests in affordable shared ownership, retirement and local authority housing, has acquired 68 income-generating shared ownership homes from Metropolitan Thames Valley Housing, for a total consideration of £5.1 million. This transaction follows the successful partnership between ReSI and Metropolitan Thames Valley Housing in London and Cambridgeshire which delivered 138 shared ownership homes during 2020.

The properties, located in a modern development in Swindon, comprise 53 apartments and 15 houses, in low-rise brick buildings. The average share already owned by residents in their homes is 44%. Shared ownership allows a purchaser to buy a property with a lower deposit requirement and lower annual costs, making the homes more affordable. The properties are immediately earnings enhancing for ReSI and generate an expected inflation-linked leveraged yield in line with ReSI's 8% total return and c. 5% dividend targets.

The acquisition brings ReSI's total shared ownership portfolio to 358 homes and will be funded through ReSI's £300 million, 45-year debt facility that was put in place in July 2020. In January 2021, ReSI reported resilient rent collection, at more than 99% for the quarter ending in December 2020, unchanged throughout the Covid-19 pandemic and in line with normal performance. This supported investment valuations, increasing by 0.6% for the quarter.

ReSI continues to deploy capital to reach its target 50% leverage, with recent shared ownership deals including the purchase of 85 homes for delivery as shared ownership from Croydon Council's development company Brick by Brick in December 2020.

Ben Fry, Investment Manager of ReSI Capital Management, and Head of Housing at Gresham House, said:

"We are excited to acquire another portfolio of homes from Metropolitan Thames Valley Housing, further strengthening our existing partnership. The acquisition represents further delivery against our targets to meet full dividend cover by the beginning of October 2021."

Kush Rawal, Director of Residential Development at Metropolitan Thames Valley Housing added:

"Accelerating our sale of these mature shared ownership homes through our expanding partnership with ReSI allows us to reinvest proceeds into our ambitious development programme, helping address the critical lack of affordable housing in England."

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Notes to Editors

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% per annum. Including recent committed acquisitions, ReSI's portfolio comprises 2,870 properties, with an (unaudited) IFRS fair value of £329m.

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, whose immediate parent company, TradeRisks Limited, has been active within the social housing sector for over 19 years as a funding arranger and advisor and, over the last three years, as an investor through ReSI.

ReSI Capital Management and its parent, TradeRisks, were acquired by Gresham House plc in March 2020, further increasing the investment expertise available to ReSI. The housing investment team at Gresham House plc has 15 members and growing, with an average of 20 years' relevant experience, covering fund management, housing investment, social housing management and financial and risk expertise.

Gresham House plc 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.

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

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