Residential Secure Income REIT patience required – Residential Secure Income REIT has announced its first results, these cover the period from launch in July 2107 to 31 March 2018. In the period under review they acquired 1,341 residential units located across England, Wales and Scotland. All of these units are used to provide age-restricted retirement housing and are managed by a specialised subsidiary of one of the largest UK Housing Associations. The vast majority of these units are long-leasehold properties, with a weighted average unexpired lease term at acquisition of around 81 years. Subsequently, they have extended the term of a majority of the leases to 150 years, which will enhance the value of these assets.
At 31 March 2018, the portfolio had produced income in line with expectations and its valuation, performed by Savills, had increased by 3% over its purchase price. The NAV per share at 31 March 2018 was 98.8p which represents a 0.8% increase from the 98.0p NAV per share immediately after IPO. Total profit attributable to shareholders was GBP3,319,369 implying net earnings per share for the period of 1.8p. On 8 February 2018, RESI declared its maiden interim dividend of 0.75p per share for the initial period from the date of admission to 31 December 2017, and on 9 May 2018 declared a second dividend of 0.75p per share (for the quarter ended 31 March 2018). RESI is targeting dividends of 3.0p per ordinary share for the first financial period from the date of admission to 30 September 2018.
On 9 April 2018 RESI announced that it would commence a share buyback programme in response to weakness in its share price.
Jonathan Slater, chief executive of ReSI Capital Management, the manager, commented: “Whilst sourcing and acquiring portfolios has required us to be patient, we have continued to generate a strong pipeline of potential investments which are rigorously filtered before choosing to begin execution, and we have now developed good momentum in deploying ReSI’s capital. In addition to the post-period acquisitions that we have announced, we are currently undertaking due diligence to complete another GBP54mn of acquisitions under exclusivity.”
Robert Whiteman, chairman of Residential Secure Income, added: “Since the successful IPO, we have acquired two well-located portfolios of retirement properties, and a further Local Authority-leased building, secured on strong counterparty covenants that allow us to put in place a long-term investment grade equivalent debt strategy. This criterion continues to underpin our investment strategy and we will continue to be highly selective in choosing opportunities and apply rigorous due diligence, consistent with requiring acquisitions to be capable of supporting it.” the statement goes on to say “We remain fully confident in our overall investment strategy and our target dividend and return expectations are unchanged from those set out at the time of our IPO. We believe it is in the long-term interests of our shareholders to maintain our stringent investment criteria even if that means some delay in deploying funds.”
RESI : Residential Secure Income REIT patience required