Shares issued at 100p, including dividends 75.5p. If u had re-invested the dividends elsewhere a benefit, which we will ignore.
Bottom picking is a nasty habit as the chart shows but out of adversity, often comes opportunity.
Current yield 10% discount to NAV 54%.
(Alliance News) – Residential Secure Income PLC on Wednesday said it was making good progress on the sale of its local authority portfolio, though it declared a lower payout amid a net asset value fall.
The real estate investment trust, focused on retirement living and shared ownership homes, said net asset value per share declined 5.7% to 85.9 pence at its December 31 first-quarter end, from 91.1p at September 30.
Residential Secure shares rose 2.3% to 53.01 pence each on Wednesday morning in London.
Over the same three months, EPRA net tangible assets NAV contracted 2.1% to 80.1p from 81.8p.
The company declared a quarterly dividend of 1.03 pence per share, down 20% from 1.29p a year prior.
Looking ahead, the company noted “strong” rental inflation-linked growth which it anticipated to continue and to be buoyed by wage and pension growth, amid “strong and accelerating institutional appetite for residential exposure.”
Ben Fry, managing director of Housing at Gresham House, which manages the company, said: “We’re pleased to be making good progress on the sale of our local authority portfolio, with one asset exchanged in line with book value and the remainder advancing through due diligence. These sales will enable the repayment of all our floating rate debt, significantly strengthening our balance sheet. That will allow us to strengthen the quality of our dividend cover, better buttressing RESI against potential future economic headwinds.”
He added: “Long-term demand drivers for affordable, accessible or retirement housing remain very strong and this continues to be a highly attractive part of the real estate sector for us to be invested in.”
31 January 2024
Residential Secure Income plc
Net Asset Value and corporate update
Residential Secure Income plc (“ReSI plc”) (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 2023 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 homeowners
· Rent collection consistent at over 99% for the quarter
· Rental growth of 6.6% on 449 properties (15% of portfolio) giving 1.3% like-for-like growth
· Shared ownership portfolio fully occupied with record 96% retirement occupancy continuing
Advancing sale of Local Authority Portfolio
· Exchanged on sale for £5.8mn of assets in line with September 2023 book value, with completion scheduled to occur by early April 2024
· As announced at year end, proceeds will be used to pay down floating rate debt
· Remainder of the Local Authority portfolio under offer with due diligence advancing
Fully covered dividend
· Quarterly dividend of 1.03 pence per share (“p”) announced today in line with FY24 target
· 121% dividend coverage from Adjusted EPRA earnings of 1.25p
· Local Authority Portfolio Sale is expected to reduce annualised dividend coverage by c.6% but improve its quality through repayment of floating rate debt
Valuation decline as a result of a 10 basis point outward yield shift across the portfolio
· Total EPRA return for the quarter of -0.8% (0.7p) to give EPRA NTA of 80.1p (£148.3mn) as at 31 December 2023
· Driven by a 1.3p, or 0.6% decrease in like-for-like investment property values, as follows:
1.8p increase from inflation-linked rent reviews in the quarter
o 3.1p decrease resulting from a further 10 basis points outward yield shift
· Annualised net rental yields now 5.6% in retirement and 3.5% in shared ownership.
Resilient balance sheet with long-term and low-cost debt
· Diverse portfolio of 3,293 homes worth £343mn
· 21-year average debt maturity, 90% fixed or index linked
· Loan-to-value ratio of 52% and reduced to 43% when including 22% reversionary surplus
· Sale of local authority portfolio will allow for repayment of all floating rate and short-term debt
Outlook
· Strong rental inflation-linked growth expected to continue, underpinned by wage/pension growth
· Strong and accelerating institutional appetite for residential exposure
· Focus on driving retirement performance including rationalising portfolio footprint, driving rents, and reducing leakage
· Continuing to review options for further disposals which support maximising shareholder value
· Acute need for more affordable homes, estimated at £34bn annually
· Particular shortage of independent retirement accommodation for growing elderly population and accessible homeownership options providing significant opportunity to scale these platforms and drive returns
Ben Fry, Managing Director, Housing at Gresham House, commented:
“This has been a quarter of continued strong operational performance, with high levels of rent collection, occupancy and rent growth all leading to strong dividend cover. While this covers a period where rising long-dated gilt yields continued to impact on valuations, we’re encouraged by independent market forecasters projecting that the interest rate hiking cycle has ended and is turning, which should alleviate any further downward pressure on valuation yields.
“We’re pleased to be making good progress on the sale of our local authority portfolio, with one asset exchanged in line with book value and the remainder advancing through due diligence. These sales will enable the repayment of all our floating rate debt, significantly strengthening our balance sheet. That will allow us to strengthen the quality of our dividend cover, better buttressing ReSI against potential future economic headwinds.”
“Long-term demand drivers for affordable, accessible or retirement housing remain very strong, and this continues to be a highly attractive part of the real estate sector for us to be invested in.”
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.
As at 31 December 2023 ReSI plc’s portfolio comprises 3,293 properties, with an (unaudited) IFRS fair value of £343mn.
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.
(Alliance News) – Residential Secure Income PLC on Wednesday said it was making good progress on the sale of its local authority portfolio, though it declared a lower payout amid a net asset value fall.
The real estate investment trust, focused on retirement living and shared ownership homes, said net asset value per share declined 5.7% to 85.9 pence at its December 31 first-quarter end, from 91.1p at September 30.
Residential Secure shares rose 2.3% to 53.01 pence each on Wednesday morning in London.
Over the same three months, EPRA net tangible assets NAV contracted 2.1% to 80.1p from 81.8p.
The company declared a quarterly dividend of 1.03 pence per share, down 20% from 1.29p a year prior.
Looking ahead, the company noted “strong” rental inflation-linked growth which it anticipated to continue and to be buoyed by wage and pension growth, amid “strong and accelerating institutional appetite for residential exposure.”
Ben Fry, managing director of Housing at Gresham House, which manages the company, said: “We’re pleased to be making good progress on the sale of our local authority portfolio, with one asset exchanged in line with book value and the remainder advancing through due diligence. These sales will enable the repayment of all our floating rate debt, significantly strengthening our balance sheet. That will allow us to strengthen the quality of our dividend cover, better buttressing RESI against potential future economic headwinds.”
He added: “Long-term demand drivers for affordable, accessible or retirement housing remain very strong and this continues to be a highly attractive part of the real estate sector for us to be invested in.”
31 January 2024
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