Business
£21.3MN ACQUISITION OF LOCAL AUTHORITY HOUSING
£21.3MN ACQUISITION OF LOCAL AUTHORITY HOUSING.
About this update from Residential Secure Income Plc
[{"type":"text","content":"\n \nRNS Number : 0650S Residential Secure Income PLC 21 June 2018 \n\n21 June 2018\nResidential Secure Income plc\n£21.3 MILLION ACQUISITION OF LOCAL AUTHORITY HOUSING\nResidential 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 £21.3 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.\nThe 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.\nThe 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.\nFollowing completion of this acquisition ReSI will have invested £155 million of the proceeds raised at its IPO in assembling a portfolio which now comprises 1,772 residential units. \nBen 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.\"\n-End-\nFOR FURTHER INFORMATION, PLEASE CONTACT: \n\n\n\nReSI Ca...