TIDMRESI
RNS Number : 0650S
Residential Secure Income PLC
21 June 2018
21 June 2018
Residential Secure Income plc
GBP21.3 MILLION ACQUISITION OF LOCAL AUTHORITY HOUSING
Residential Secure Income plc ("ReSI" or the "Company") (LSE:
RESI), which invests in residential asset classes that comprise the
stock of UK social housing providers, is pleased to announce that
it has exchanged contracts to acquire for a total consideration of
GBP21.3 million a freehold residential building benefitting from a
lease to a local authority and used to provide housing under the
local authority's statutory obligations. The acquisition is due to
complete on or before 29 June 2018, from when it will immediately
be income producing to ReSI.
The building has recently undergone a full refurbishment,
completed in 2016, and contains 134 self-contained residential
flats. The building is located in the centre of Luton and is let to
the local authority on leases with a weighted average remaining
term of 7.3 years, which the Company will seek to extend or renew
in due course. Luton, along with many areas across the UK and
especially in south-east England, has a critical shortage of both
affordable and market housing, exacerbated by the impact of reforms
to the Local Housing Allowance.
The leases provide a CPI-linked upwards-only rent and pass to
the local authority the responsibility for repairs to the flats and
all letting risk. The Company intends to leverage the acquisition
with investment grade equivalent debt secured on the building to
deliver equity returns at least in line with ReSI's total return
target.
Following completion of this acquisition ReSI will have invested
GBP155 million of the proceeds raised at its IPO in assembling a
portfolio which now comprises 1,772 residential units.
Ben Fry of ReSI Capital Management Ltd, ReSI's fund manager,
said: "By investing capital in good quality, modern housing, we can
help local authorities meet their obligations to provide
accommodation without relying on expensive and short-tenure
solutions such as hotels or hostels. Investments such as this
provide ReSI shareholders with a local-authority backed,
inflation-linked income stream underpinned by the continuing strong
demand for such accommodation."
-End-
FOR FURTHER INFORMATION, PLEASE CONTACT:
ReSI Capital Management Limited
Jonathan Slater
Ben Fry
Alex Pilato
Mark Rogers +44 (0) 20 7382 0900
Jefferies International Limited
Stuart Klein
Gary Gould +44 (0) 20 7029 8000
FTI Consulting
Richard Sunderland
Claire Turvey
Richard Gotla
Email: resi@fticonsulting.com +44 (0) 20 3737 1000
NOTES:
Background on Local Authority housing requirements
The critical shortage of both affordable and market housing,
exacerbated by reforms to the Local Housing Allowance, has left
councils with a statutory duty to find housing for increasing
numbers of households but without sufficient supply of permanent
homes to do so. This has led to a rapidly growing need, especially
in London and increasingly across south-east England. Additionally,
the recently enacted Homelessness Reduction Act has put further
pressure on local authorities to find housing solutions in order to
prevent homelessness.
According to published reports, England had 78,930 households in
Temporary Accommodation at the end of 2017, and the total amount
included 120,510 children. Temporary Accommodation demand has grown
by over 60% since March 2011.
The Housing Act 1996, as amended by the Homelessness Act 2002,
places a duty on local authorities to secure accommodation for
unintentionally homeless people who are in priority need. The
Homeless Reduction Act 2017 places further duties on local
authorities to prevent homelessness over and above their existing
duties.
About Residential Secure Income plc
Residential Secure Income plc (LSE: RESI) is listed on the
premium segment of the Official List of the UK Listing Authority
and was admitted to trading on the Main Market of the London Stock
Exchange in July 2017.
ReSI has been established to invest in portfolios of Homes
across residential asset classes that comprise the stock of Housing
Associations and Local Authorities, comprising Shared Ownership
Homes and Rental Homes (being Market Rental Homes, Functional Homes
and Sub-Market Rental Homes) throughout the UK.
ReSI is managed by ReSI Capital Management Limited, a wholly
owned subsidiary of TradeRisks Limited which has a 17 year track
record of executing transactions within the UK social housing
sector and, to date, has arranged funding of over GBP10 billion in
the social housing, care and other specialist residential property
sectors.
ReSI seeks to deliver secure, long-dated, inflation-linked
income returns through investment in UK social housing. It aims to
meet demand from Housing Associations and Local Authorities for
alternative equity-like financing sources that allows them to
recycle capital back into socially and economically beneficial new
housing, making a meaningful contribution to the UK housing
shortage.
Homes acquired by ReSI will predominantly be on a freehold or
long leasehold basis (typically 99 years or more to maturity) and
benefit from long term (typically 20 years plus) inflation-adjusted
cash flows. Acquisitions by ReSI will be limited to Homes with
sufficient cashflows, counterparty credit quality and property
security that allow the Fund Manager to arrange long-term
investment grade equivalent debt.
Further information on ReSI is available at
www.resi-reit.com
IMPORTANT INFORMATION:
The contents of this announcement, which have been prepared by
and are the sole responsibility of ReSI, have been approved by the
Fund Manager as a financial promotion solely for the purposes of
section 21(2)(b) of the Financial Services and Markets Act
2000.
Save to the extent otherwise defined herein, terms used in this
announcement shall, unless the context otherwise requires, bear the
meanings given to them in the prospectus published by ReSI dated 22
June 2017.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements involve known and unknown risks and uncertainties, many
of which are beyond ReSI's control and all of which are based on
ReSI's board of directors' current beliefs and expectations about
future events. These forward-looking statements may be identified
by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "projects", "anticipates",
"expects", "intends", "may", "will" or "should" or, in each case,
their negative or other variations or comparable terminology, or by
discussions of strategy, plans, objectives, goals, future events or
intentions. These forward-looking statements include all matters
that are not historical facts. Forward-looking statements may and
often do differ materially from actual results. Any forward looking
statements reflect ReSI's current view with respect to future
events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to ReSI's business,
the results of operations, financial condition prospects, growth
and dividend policy of ReSI and the industry in which it operates.
Forward-looking statements speak only as of the date they are made
and cannot be relied upon as a guide to future performance. ReSI
expressly disclaims any obligation or undertaking to update, review
or revise any forward-looking statement contained in this
announcement whether as a result of new information, future
developments or otherwise.
This announcement may include references to potential
transactions each of which is subject to satisfactory completion of
negotiations and due diligence by the Fund Manager and its
professional advisers and there can be no certainty that the ReSI
will complete any of these transactions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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