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Residential Secure Income invests in retirement homes portfolio

11
2018
September

Residential Secure Income invests in retirement homes portfolio – Residential Secure Income (ReSI), which is a REIT that invests in residential asset classes that comprise the stock of UK social housing providers, has announced that it has exchanged contracts to acquire a 478 property retirement homes portfolio. The seller is Places for People, an housing associations.

The transaction

The consideration is £40.2million, generating a yield in line with ReSI’s previous retirement home acquisitions.

The acquisition has already completed for 421 of the properties. As a result, they are already generating income. The completion of the remaining 57 properties is anticipated to happen within 3 months.

Heads of Terms have been agreed for long-dated investment grade equivalent debt secured on the Portfolio, providing leverage to deliver equity returns from the Portfolio at least in line with ReSI’s total return target.

After this acquisition, ReSI will have invested £215 million in assembling a portfolio which comprises 2,414 residential units.

The property portfolio

The portfolio consists primarily of one-bedroom flats and is located across 284 purpose-built retirement schemes, with over 93% located in Southern England, including in the Greater London area. The properties are held on a long leasehold basis, with a weighted average unexpired lease term of 92 years.

In line with ReSI’s existing retirement homes, the portfolio offers independent living and does not include the provision of care services. The portfolio is leased to retirement aged residents on RPI-linked assured tenancies which offer lifetime security of tenure. The portfolio will continue to be managed by Girlings, part of the Places for People Group, which is responsible for the day-to-day management, rent collection and maintenance.

Comment from Ben Fry, ReSI Capital Management Ltd, (ReSI’s fund manager)

“This acquisition complements our existing portfolio of retirement flats. The Portfolio offers a later-life independent living solution with security of tenure but without the hassles of ownership, and serves a fast growing, yet hugely fragmented and underserved, sector of the market. Our strategy continues to be focused on delivering a secure, long term income stream to shareholders. We are making good progress in building a high quality portfolio that meets these disciplined investment criteria, and expect this progress to continue.”

RESI : Residential Secure Income invests in retirement homes portfolio

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