Residential Secure Income PLC · LSE:RESI
Residential Secure Income — H1 2024 Earnings Presentation
29 slides from Residential Secure Income's earnings presentation, June 2024
Slide 1: Residential Secure Income plc (ReSI) H1 2024 results presentation
Residential Secure Income plc (ReSI) H1 2024 results presentation June 2024 For professional investors only. Capital at risk.
Slide 2: Important legal notice
Important legal notice This presentation (the Presentation) is issued on a confidential basis by Gresham House for No representation is being made that any investment will or is likely to achieve profits or losses similar information purposes only. This Presentation, its contents and any information
Slide 3: Presentation team
Presentation team Mike Adams Ben Fry Sandeep Patel Managing Director, Lead Fund Manager Finance Director Real Estate 3
Slide 4: Highlights
Highlights
Slide 5: H1 2024 key metrics
H1 2024 key metrics +6.5% 96% >99% +8.5% 117% Like-for-like Record Retirement Rent collection EPRA Adjusted Dividend rent growth1 occupancy continuing2 Earnings growth coverage -2.1% -3.1% / 77.2p 89% / 20 years Like-for-like 52% H1 2024 total return / fixed or inflation-linked debt for valuation Lo
Slide 6: Ongoing strategic initiatives
Ongoing strategic initiatives ▪ Local Authority portfolio disposal: ─ One asset sold on 4 April 2024 for net £5.6mn, ahead of £5.5mn Sept 2023 book value ─ Remaining asset under offer with sale expected in H2 ─ Proceeds will be used to extinguish revolving capital facility due for repayment by 30 De
Slide 7: Portfolio overview and performance
Portfolio overview and performance
Slide 8: Two strong platforms in growth markets
Two strong platforms in growth markets Focused on two resilient sectors of affordable housing1 with inflation-linked income2 Independent retirement living Diversified by tenure and location 2,996 homes3 ▪ UK’s largest private rent portfolio4 £317mn valuation3 77.2p EPRA NTA4 ▪ Maintaining independen
Slide 9: Shared ownership portfolio performance
Shared ownership portfolio performance Accelerating demand H1 2024 key metrics Homes / Value 758 / £115mn ▪ Fully occupied and income generating Occupancy 100% ▪ Rising mortgage rates and private rents fuelling demand Like-for-like rent increases +6.8% Secure income Margin 94% Unlevered net initial
Slide 10: Retirement portfolio performance
Retirement portfolio performance H1 2024 key metrics Top-line growth Homes / Value 2,238 / £202mn ▪ 9.6% rental revenue growth Occupancy 96%2 ▪ 6.1% like-for-like rent growth1 Like for like rent growth +6.1% ▪ 96% occupancy2, up from 94% H1 2023 Margin (excl. ground rent)3 53% Unlevered net initial
Slide 11: Retirement - driving future value
Retirement - driving future value Good progress on the asset management initiatives announced at year end to drive NOI ▪ Improved re-letting times maintaining record 20% of portfolio identified for recycling and 96% occupancy over winter months reinvestment in core areas ▪ Introducing customer porta
Slide 12: Sustainable investment highlights
Sustainable investment highlights Social impact Environmental impact Saving on annual housing costs compared to alternative tenures Monthly saving on energy Shared owner vs. Shared owner £57 | 200kg CO2 bills and carbon emission for 34% outright owner 16% vs. renter shared ownership residents4 Custo
Slide 13: H1 2024 financial results
H1 2024 financial results
Slide 14: FY 2024 Income
FY 2024 Income Top line rent growth and stabilisation of costs delivering +9% Adjusted EPRA Earnings growth and 117% Dividend Coverage H1 2024 H1 2023 Change Net rental income (£mn) Gross rental income £14.9mn £13.6mn +10% Net rental income1 £9.4mn £8.8mn +7% First tranche sales profits2 £0.04mn £0.
Slide 15: Adjusted EPRA earnings
Adjusted EPRA earnings Movement in adjusted EPRA Earnings (pence per share) H1 2024 dividend cover: 117% H1 2023 dividend: 2.58p Full coverage via: ▪ Inflation linked rental growth ▪ Active void management H1 2024 dividend: 2.06p ▪ Rebased dividend and management fee FYH12324 FY 23 117% 91% 86% divi
Slide 16: European Real Estate Association Net Tangible Assets (EPRA NTA)
European Real Estate Association Net Tangible Assets (EPRA NTA) H1 2024 movement in NTA (pence per share) H1 2024 total return: (2.6)p 4.0p share valuation change ▪ £4.6mn/2.5p net income ─ 117% dividend cover ▪ 4.0p valuation decline ─ 2% like-for-like valuation decrease ─ Rent increases of 6.5% ─
Slide 17: Long-dated investment-grade debt
Long-dated investment-grade debt 20 years1 49%1 40%1 52%2 45%3 Average debt maturity Fixed (3.5% coupon) Inflation linked (5.5% cap) LTV (50% target) Reversionary LTV (1.1% coupon) 30 c.82 ▪ 89% fixed / inflation-linked debt for a weighted average of 20 25 years1 ▪ Amortisation of debt achieved 20 v
Slide 18: ReSI debt covenants
ReSI debt covenants Aside from Santander LTV covenant, ReSI has ample room in debt covenants Loan covenants by portfolio - most recently reported covenants1 ▪ Post £4mn repayment of RCF2 in Retirement / Scottish Total portfolio / Santander Covenant Shared Ownership / USS Widows Revolving Capital Fac
Slide 19: Outlook
Outlook
Slide 20: Summary and outlook
Summary and outlook ▪ Growing demand and structural undersupply underpin the market ▪ Strong top-line growth in H1 2024 is flowing through to adjusted earnings ▪ Strong rental inflation-linked growth expected to continue, underpinned by wage and pension growth, which will underpin ReSI’s earnings gr
Slide 21: Q&A
Q&A
Slide 22: Appendices
Appendices
Slide 23: Portfolio: valuation and returns
Portfolio: valuation and returns High-quality, affordable homes generating positive outcomes for residents Retirement Shared ownership Total1 Homes / Value 2,238 / £202mn2 758 / £115mn2 2,998/ £318mn2 Homechase House, Southport Unlevered net initial yield3 5.7% 4.0% 5.2% Levered net initial yield4 7
Slide 24: Valuations – impact of Interest Rate rises
Valuations – impact of Interest Rate rises Rising discount rates over the past 18 months have driven down valuations despite strong rental growth 18 month Pence per ▪ Valuation yields have 18 month Share Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 NOI moved out 90bps over Movement impact on Gro
Slide 25: ReSI performance vs. peers and gilts
ReSI performance vs. peers and gilts The recent changes in macroeconomic environment have impacted valuations and share price performance for ReSI and the wider REIT sector which is trading at a discount to NAV on average ReSI vs. Peer Group1 150.0 ReSI share price indexed performance vs. peers and
Slide 26: EPRA performance measures
EPRA performance measures 31 Mar 2024 31 Mar 2023 EPRA Net Initial Yield (NIY)1 Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating 4.8% 4.1% expenses, divided by the market value of the property, increased with (estimated) purc
Slide 27: EPRA reconciliation to IFRS profit
EPRA reconciliation to IFRS profit H1 2024 H1 2023 Variance (£’000) (£’000) Operating profit before property disposals and change in fair value 7,920 6,934 14% Finance costs (excluding one-off debt arrangement costs) (3,444) (3,132) 10% Non-recurring set up costs (10) 316 -103% EPRA adjusted earning
Slide 28: Statement of financial position
Statement of financial position 31 Mar 2024 31 Mar 2023 Variance £’000s £’000s Total investments 317,004 355,332 -11% Inventories - properties available for sale - 1,817 - Assets held for sale 20,709 - - Cash and cash equivalents 8,861 9,906 -11% Borrowings – amortised cost (199,518) (203,107) -2% O
Slide 29: Risk warnings
Risk warnings Important information You should not rely on any information or opinions contained in this For a full list of risks, please read the Prospectus and KIID by presentation in making an investment or other decision but should obtain visiting: appropriate and specific professional advice of
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