Residential Secure Income Plc · LSE:RESI
Residential Secure Income — FY2022 Earnings Presentation
33 slides from Residential Secure Income's earnings presentation, December 2022
Slide 1: Residential Secure Income plc FY 2022 Results presentation
Residential Secure Income plc (ReSI plc) Aiming to generate secure inflation-linked returns while accelerating the development of socially and economically beneficial new housing FY 2022 Results presentation December 2022 For professional investors only. Capital at risk.
Slide 2: Important Legal Notice
IMPORTANT LEGAL NOTICE THIS PRESENTATION IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, BY ANY MEANS OR MEDIA TO US PERSONS IN OR INTO, THE UNITED STATES, AUSTRALIA, SOUTH AFRICA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE
Slide 3: 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 visiting: presentation in making an investment or other decision but should obtain greshamhouse.com/real-assets/real-estate-invest
Slide 4: Presentation Team
PRESENTATION TEAM Rupert Robinson Ben Fry Brandon Holloway Managing Director, Lead Fund Manager Deputy Fund Manager Gresham House 4
Slide 5: Highlights
HIGHLIGHTS
Slide 6: FY 2022 Highlights
FY 2022 HIGHLIGHTS +18% +4.5% +3.2% to 5.16p Adjusted earnings growth Like-for-like rent growth1 FY22 dividend growth2 per share £31mn 22 years / 90% 97% (100% Q4) Shared ownership Average debt maturity / Dividend coverage3 acquisitions, fully committing fixed or hedged debt4 £15mn February equity r
Slide 7: A Diversified UK Housing Portfolio
A DIVERSIFIED UK HOUSING PORTFOLIO UK REIT focused on two resilient sectors of affordable housing1 3,284 homes2 97% inflation-linked income4 £383mn valuation2 5 106.1p EPRA NTA3 19 259 Retirement 7% 93 Annual RPI (6% cap) 36% 57% 74 Shared ownership 90 835 53 Uncapped 100+ year 478 annual RPI +0.5%
Slide 8: EPRA Net Tangible Assets (EPRA NTA)
EUROPEAN REAL ESTATE ASSOCIATION NET TANGIBLE ASSETS (EPRA NTA) FY 2021 - FY 2022 movement in NTA (pence per share)1 FY 2022 total return: 3.4p (4.6p total recurring return)2 ▪ £8.9mn/5.0p per share net income ‒ 97% dividend cover for the year ▪ 1.8p per share valuation gain (0.6% like-for-like valu
Slide 9: FY 2022 Financial Results
FY 2022 FINANCIAL RESULTS
Slide 10: FY 2022 Income
FY 2022 INCOME Growing operating income reflects sales execution on FY 2021 shared ownership acquisitions FY 2022 FY 2021 Change Net rental income (pence per share) Net rental income1 9.4p 8.3p 14% 4.5% First tranche sales profits 2 0.3p 0.6p (52%) like-for-like growth Net finance costs3 (3.1)p (3.0
Slide 11: Growing & Higher Quality Income Stream
GROWING & HIGHER QUALITY1 INCOME STREAM Reflecting sustained investment and leasing activity throughout FY 2022, rental operating profit 1 grew c.36% year-over-year Annualised rental operating profit & Successfully delivering shared ownership homes, with like- first tranche sales (£mn)2 for-like por
Slide 12: Strong FY 2022 Operational Performance
STRONG FY 2022 OPERATIONAL PERFORMANCE Independent retirement rental occupancy Robust rent collection rate through Covid increased above pre-Covid average 12.00% 100% Improving occupancy 10.00% (94% avg. for FY 2022) 98% 8.00% 96% 6.00% 4.00% 94% 2.00% 92% 0.00% Sep 2019 Mar 2020 Sep 2020 Mar 2021 S
Slide 13: Long & Low-Cost Investment-Grade Debt
LONG & LOW-COST INVESTMENT-GRADE DEBT 22 years 2.4% 47% 42%1 90%2 41%2 Average debt Average debt coupon LTV (50% target) Reversionary LTV % fixed or hedged % inflation linked maturity (5.5% cap) Debt maturities schedule 20,000,000 c.£82,000,000 ReSI’s balance sheet remains strong 15,000,000 ▪ Near-t
Slide 14: ReSI plc Debt Covenants
RESI PLC DEBT COVENANTS Strong inflation linkage in revenues (and resilient valuations) with limited floating rate debt exposure keeping ReSI plc’s debt covenants healthy Loan Covenants by Portfolio - most recently reported covenants1 Covenant Shared Ownership Retirement Local Authority Total Portfo
Slide 15: Sustainability & Impact
SUSTAINABILITY & IMPACT
Slide 16: Sustainable Investment Highlights
SUSTAINABLE INVESTMENT HIGHLIGHTS Social impact Environmental impact Saving on 2023 housing cost increases1: Monthly saving on energy Shared owner vs. Shared owner bills and carbon emission for 56% outright owner 17% vs. renter £101 | 200kg CO2 shared ownership residents5 Customer surveys: EPCs ahea
Slide 17: Outlook
OUTLOOK
Slide 18: Investing in Gilts vs. ReSI
INVESTING IN GILTS VS. RESI ▪ Residential yields tend to be relatively stable compared to gilt yields and commercial real estate ▪ ReSI’s inflation linkage provides potential upside in total returns 10-year gilts vs. residential yields1 ReSI total return - inflation sensitivities1 15% 10% Total Retu
Slide 19: Summary & Outlook
SUMMARY & OUTLOOK ▪ ReSI offers superior yield vs. inflation-linked gilts and low volatility in residential yields ▪ Secure, long-term income from 3,284 homes1 ‒ Affordable rents underpinned by equity stakes, pensions and housing welfare ‒ 97% inflation-linked rents, and long 22-year average debt li
Slide 20: Q&A
Q&A
Slide 21: Appendices
APPENDICES
Slide 22: ReSI plc's Portfolio
RESI PLC’S PORTFOLIO High-quality, affordable homes generating positive outcomes for residents Independent retirement living Shared ownership 94% £813 100% £501 Occupancy Monthly rent / home Like-for-like occupancy1 Monthly rent / home2 Homechase House, Southport Homechase House, Southport Forest Ho
Slide 23: Portfolio: Valuation & Returns
PORTFOLIO: VALUATION & RETURNS Retirement Shared ownership Total1 Homes / Value 2,215 / £219mn 780 / £137mn2 3,284 / £383mn2 5% Unlevered net yield on cost3 5.2% 3.6% 4.7% Dividend yield Levered net yield on cost3 6.7% 8.4% 7.1% Inflation-linkage RPI RPI+0.5% 97% Debt4 £94.6mn £77.5mn £191.9mn Loan-
Slide 24: How Does Shared Ownership Work?
HOW DOES SHARED OWNERSHIP WORK? The house is paid for in full by the Fund 100% bought by the Fund 1 …typically at a discount and subsidised by government grant1 Resident 75% Resident 2 The resident buys the bit they can afford …and pays below market rent on the rest buys rents 25% 3 But the home is
Slide 25: Lifetime Affordability of a Home
LIFETIME AFFORDABILITY OF A HOME Shared ownership affordability1 Cost comparison of housing solutions1 £70,000 £6,000 Private rental sector £61,650 Real lifetime cost: c.£755K £60,000 Most accessible, but highest £5,000 lifetime cost £50,000 Monthly housing costs £4,000 £40,000 £38,185 Shared owners
Slide 26: Measurable Social & Environmental Impact
MEASURABLE SOCIAL & ENVIRONMENTAL IMPACT Making home ownership accessible ESG decision tool rolled out during for low-to-mid-income earners the year Resident Additionality experience Addressing growing levels of Funding new Homes with Homes private outdoor loneliness in the elderly population space
Slide 27: ReSI plc & ReSI Housing Boards of Directors
RESI PLC & RESI HOUSING BOARDS OF DIRECTORS ReSI plc - Fully Independent Board ReSI Housing Board includes two Independent Directors who can veto any action that threatens compliance with regulatory standards Robert Whiteman Chairman David Orr ▪ CEO of Chartered Institute of Public Finance & Account
Slide 28: UK Housing Team Credentials
UK HOUSING TEAM CREDENTIALS Gresham House has extensive experience and expertise Key investment team in affordable housing ▪ 26-person investment team - senior members with average >20 years’ experience Ben Fry Alex Pilato Brandon Holloway Narvinder Khossa Joe Thomas Lead Fund Manager Senior Advisor
Slide 29: Rising Cost of Living: The Impact on Our Residents
RISING COST OF LIVING: THE IMPACT ON OUR RESIDENTS Costs for our residents increasing at a slower rate when compared to alternative open market tenures Retirement Shared Ownership ▪ 6% rent cap ▪ Cost increase from refinancing reduced ‒ Above average private rental increase of 12%1 ‒ Increase for ty
Slide 30: Retirement Rental Case Study: Martha at Sheridan Lodge, Bromley
RETIREMENT RENTAL CASE STUDY: MARTHA1 AT SHERIDAN LODGE, BROMLEY The resident ▪ Retirement community living offers the freedom and flexibility she wants ▪ She feels very happy and safe, and assured tenancy gives her security The property “As a woman living alone it is reassuring to know I have ▪ Ame
Slide 31: EPRA Performance Measures
EPRA PERFORMANCE MEASURES 30 Sept 2022 30 Sept 2021 EPRA NDV per share (pence) Represents the shareholders’ value under a disposal scenario, where deferred tax, financial instruments and certain other 121.8p 104.1p adjustments are calculated to the full extent of their liability, net of any resultin
Slide 32: EPRA Reconciliation to IFRS Profit
EPRA RECONCILIATION TO IFRS PROFIT FY 2022 FY 2021 Variance (£’000) (£’000) Operating profit before property disposals and change in fair value 14,306 11,956 20% Finance costs (excluding one-off debt arrangement costs) (5,588) (5,220) 7% Non-recurring set up costs 234 368 (36%) EPRA adjusted earning
Slide 33: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 30 Sept. 2022 30 Sept 2021 Variance £’000s £’000s Total investments 374,785 341,128 10% Inventories - properties available for sale 1,203 3,800 (68%) Cash and cash equivalents 15,984 8,370 91% Borrowings (189,705) (168,339) 13% Other (5,782) (279) 1971% EPRA NTA1 196,
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