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Residential Secure Income secured £300m debt facility

Residential Secure Income lives up to name with 99% rent collection

Residential Secure Income (RESI), which invests in affordable shared ownership, retirement and local authority housing, has agreed a new £300m debt facility.

The new 45-year facility has been agreed with the Universities Superannuation Scheme (USS), one of the UK’s largest pension schemes. It is drawable against acquisitions over the next three years and represents the first standalone investment grade financing secured in the shared ownership sector.

The RPI-linked debt has an annual coupon of 0.461% whilst the debt principal will inflate in line with the RPI linked rent in RESI’s shared ownership leases, with an RPI collar of 0% and 5% per annum. The debt is interest only for the first three years and then will fully amortise over its remaining 42 years, with the fixed amortisation payments representing around 2% to 3% of the principle per annum.

The facility’s covenants are cashflow based, rather than valuation linked.

RESI will initially draw down £34m of the facility, which, following the completion of the acquisition of 73 homes at Clapham Park, will be secured against its 166-unit shared ownership portfolio located in Totteridge and Clapham Park in London, with a carrying value of £68m at the drawdown date.  

After this initial drawdown, RESI will have a loan to value (LTV) ratio of 43%, a weighted average debt maturity of 23 years and an average cost of debt of 2.7%. 

RESI will pay no commitment fees on undrawn amounts and expects to make further drawdowns from the new facility as it continues to grow its shared ownership portfolio, with £36m expected to be deployed in the near term. 

RESI : Residential Secure Income secured £300m debt facility

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