Residential Secure Income PLC · LSE:RESI
Residential Secure Income — FY2021 Earnings Presentation
36 slides from Residential Secure Income's earnings presentation, December 2021
Slide 1: Residential Secure Income plc FY21 Results presentation
Residential Secure Income plc Aims to generate secure inflation-linked returns while accelerating the development of socially and economically beneficial new housing FY21 Results presentation December 2021 For professional investors only
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: Presentation Team
PRESENTATION TEAM Alex Pilato Ben Fry Mark Rogers Head of Origination & Managing Director, Fund Manager Housing CEO, ReSI Housing Limited (ReSI plc’s Registered Provider) 3
Slide 4: Gresham House plc - Sustainable Alternatives Specialists
GRESHAM HOUSE PLC - SUSTAINABLE ALTERNATIVES SPECIALISTS A specialist alternative asset manager offering clients tailored investment solutions New Energy & Housing Sustainable Forestry Public Equity Private Equity Infrastructure Awarded the LSE Our purpose Green Economy Mark To deliver effective alt
Slide 5: Residential Secure Income plc
RESIDENTIAL SECURE INCOME PLC 5
Slide 6: About Residential Secure Income plc (ReSI)
ABOUT RESIDENTIAL SECURE INCOME PLC (RESI) Aiming to generate secure inflation-linked returns while accelerating the development of socially and economically beneficial new housing ▪ UK REIT focused on delivering secure inflation-linked income ▪ Focus on two resilient sub-sectors in UK residential,
Slide 7: ReSI's Portfolio Focus
RESI’S PORTFOLIO FOCUS Aims to deliver diversified secure inflation-linked income from residential sub-sectors with strong fundamentals and supply-demand imbalances Independent retirement living housing Shared ownership housing (£215m GAV | 2,218 homes | 61% of portfolio) (£105m GAV1 | 544 homes | 3
Slide 8: 2021 Targets / Achievements
2021 TARGETS / ACHIEVEMENTS (All figures are presented in pence per share) Dividend coverage achieved three months ahead of target thanks to outperforming operational targets Targeted Earnings per Share (EPS) Growth Achieved Earnings per Share (EPS) Growth Achieved July 2021 Targeted Oct 2021 Target
Slide 9: Exceeding Our Targets
EXCEEDING OUR TARGETS Successfully delivering shared ownership homes Retirement voids reduced to pre-Covid average £120m 12% £100m 10% £80m 8% £60m 6% £40m 4% £20m 2% £0m Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 0% Income generating Reserved Available Committed Acquisitions Dec-19 Mar
Slide 10: FY21 Financial Results
FY21 FINANCIAL RESULTS 10
Slide 11: FY21 Highlights
FY21 HIGHLIGHTS £7.1m 4.2p 7.5% 5.0p 107.9p £351m Recurring profit before EPRA adjusted earnings Total return Value of investment Dividend per share EPRA NTA per share fair value per share (on opening NTA) property (FY20: 5.0p1) (FY20: 105.1p) (FY20: £5.0m) (FY20: 2.9p) (FY20: -0.1%) (FY20: £302m) S
Slide 12: FY21 Income
FY21 INCOME Growing operating income during Covid-19 crisis demonstrates portfolio’s defensive characteristics Net rental income (£’m) FY21 FY20 Change Net rental income1 £13.2m £11.3m 16% First tranche sales profits2 £1.0m £0.5m 98% Net Finance Costs3 £(4.2)m £(3.9)m 8% Management fees £(1.8)m £(1.
Slide 13: EPRA NTA
EPRA NTA FY20 - FY21 movement in NTA (pence per share) FY21 total return: 7.8p 7.5%/7.8p per share total return comprising: ▪ £7.1m/4.2p per share net income representing 85% dividend cover for the year ▪ 4.2p per share valuation gain (2.5% like-for-like) driven by 1.5% like-for-like rent growth and
Slide 14: Capital Structure
CAPITAL STRUCTURE Investment grade debt ensures asset quality and provides access to low cost of funding, which expands investment opportunity to higher credit-quality investments at lower yields FY21 FY20 Capital stack Total debt £166m £141m £450m Total assets1 £350m £316m £400m Loan-to-Value (LTV)
Slide 15: Inflation's Impact on ReSI's Operations
INFLATION’S IMPACT ON RESI’S OPERATIONS Inflation-linked revenues (largely uncapped) 180 170 ▪ 61%1: Independent retirement living increases with RPI each 160 year 150 2021 YE date ▪ RPI 30%: Shared ownership increases contractually by RPI+ 0.5% 140 each year, with residents on long-term leases 130
Slide 16: Social Impact
SOCIAL IMPACT 16
Slide 17: Sustainable Investment Highlights
SUSTAINABLE INVESTMENT HIGHLIGHTS 81% 336 6% 81% Up to £607k Reduction in carbon Retirees have made Annual saving to the public Properties rated Households helped emissions per new friends since purse from Local Authority EPC A-C onto housing ladder property moving in properties Highlights for the y
Slide 18: Demand & Origination
4 DEMAND & ORIGINATION 4 "
Slide 19: Why ReSI: Mitigating a Systemic UK Housing Problem
WHY RESI: MITIGATING A SYSTEMIC UK HOUSING PROBLEM Source: ONS House price to earnings ratios: No data 2-5x 5-8x 8-12x 12x+ Unaffordable 19
Slide 20: Demand Drivers: Independent Retirement Living & Shared Ownership
DEMAND DRIVERS: INDEPENDENT RETIREMENT LIVING & SHARED OWNERSHIP Structural drivers underpin returns for both independent retirement living and shared ownership housing UK population over 65 (millions) Home ownership eligibility 25 7 6.2m 6 20 4.7 million 5 more people Number of people (million) 15
Slide 21: Origination (Sourcing)
ORIGINATION (SOURCING) Strong relationships built up over 20 years in the social housing sector What we buy Prudent approach to asset selection ▪ Low-rise properties Housing Local Authorities Private ▪ Simple to operate Association housebuilders ▪ Secure and subsidised rents Key selection criteria 8
Slide 22: 2021 Investment Activity
2021 INVESTMENT ACTIVITY 2020 portfolio split 2021 portfolio split (valuation %) (valuation %) 9% Nationwide Orbit Occupied SO 11% March 2021 2,708 3,051 191 homes / £16.5m 19% homes +16% 30% homes (£302m (£351m1 valuation) YoY valuation) 61% 70% Swindon Occupied SO March 2021 Independent Retirement
Slide 23: Outlook
OUTLOOK ▪ Year end targets achieved, with 5p dividend covered from Q4 2021 ▪ Long-term, inflation-linked dividend and capital growth is now supported by the portfolio’s full deployment and stabilisation ▪ FY22 dividend target growing with inflation to 5.16p ▪ Ring-fenced from other issues in the wid
Slide 24: Appendices
APPENDICES
Slide 25: Portfolio Returns
PORTFOLIO RETURNS Retirement Shared ownership Local authority Total Value £215m £105m1 £31m £351m Homes 2,218 544 289 3,051 Poplar Court, Lancashire Net yield 5.3% 3.4% 5.4% 4.9% Levered yield 6.9% 7.1% 7.1% 7.0% Inflation-linkage RPI RPI+0.5% 60% linked to CPI N/A Annualised like for Eaton Green Co
Slide 26: Social Impact: Examples
SOCIAL IMPACT: EXAMPLES Shared ownership ▪ Rolled out customer charter, giving shared owners the option of 1% staircasing without legal and valuation fees ▪ Made it easier for shared owners to sell or move on ▪ Offered lease extensions to shared owners on short leases for £1 ▪ All new build properti
Slide 27: What Have Our Customers Said About Us?
WHAT HAVE OUR CUSTOMERS SAID ABOUT US? Independent retirement living Our home is ours and Shared ownership we have more 90% of our 93% of our residents are security residents describe 90% of residents funding rental payments the stability of responded positively through pensions or welfare their ret
Slide 28: Environmental Impact Approach
ENVIRONMENTAL IMPACT APPROACH EPC rating by property: ▪ ReSI is focused on energy efficiency upgrades for its least efficient rental homes ▪ All new build developments are rated EPC B or higher ReSI plc ▪ Committed to achieving EPC rating of C or better for all directly rented properties by 2025 (20
Slide 29: ReSI Governance & Oversight
RESI GOVERNANCE & OVERSIGHT ReSI’s wholly-owned subsidiary, ReSI Housing Limited (ReSI Housing), is authorised by the Regulator of Social Housing (RSH) as a for-profit Registered Provider ▪ Investing via ReSI’s wholly-owned, for-profit Registered Provider allows ReSI to hold and manage regulated aff
Slide 30: Team & Governance
TEAM & GOVERNANCE ReSI team My Future Living team Investment Committee Investment management is led by Property management is led by Ben Fry Nygel Scourfield Capital Markets and Analytics Maintenance 5 91 Alex Pilato Ben Fry Mark Rogers Pete Redman Managing Director, Head of Housing Head of Housing
Slide 31: Case Study: Brick by Brick, Auckland Rise
CASE STUDY: BRICK BY BRICK, AUCKLAND RISE 41 homes at Auckland Rise, Crystal Palace, purchased through ReSI’s Registered Provider of Social Housing, ReSI Housing Limited Social impact Environmental impact ▪ Price to earnings ratio of 11.5x1 ▪ EPC ratings of B or above ▪ Rents charged at a discount o
Slide 32: Case Study: Bower House
CASE STUDY: BOWER HOUSE Location Wirral, Merseyside Size ReSI own 7 x 1 bed flats, 1 x 2 bed flats in a block of 54 Purchase Date November 2017 Affordable rents Local Authority Housing Benefit ▪ 24-hour management staff and a Careline alarm service ReSI Entry Level Rent provides tenants with securit
Slide 33: Shared Ownership: Overview
SHARED OWNERSHIP: OVERVIEW A part-buy, part-rent model with subsidised rents and low deposit requirements which allows access to the housing ladder and helps to build thriving and inclusive communities Deposit and income comparison £60,000 Shared Outright Ownership Purchase Outright Purchase Shared
Slide 34: EPRA Performance Measures
EPRA PERFORMANCE MEASURES 30 Sept 2021 30 Sept 2020 Variance EPRA NDV per share (pence) Represents the shareholders’ value under a disposal scenario, where deferred tax, financial instruments and certain 104.1p 95.8p 9% other adjustments are calculated to the full extent of their liability, net of a
Slide 35: EPRA Reconciliation to IFRS Profit
EPRA RECONCILIATION TO IFRS PROFIT FY21 FY20 Variance (£’000) (£’000) Operating profit before property disposals and change in fair value 11,956 9,880 21% Finance costs (excluding one-off debt arrangement costs) (5,221) (4,941) 6% Non-recurring set up costs 368 - Abortive acquisition costs 1 79 (99%
Slide 36: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 30 Sept 2021 30 Sept 2020 Variance £’000s £’000s Total investments 341,128 302,478 13% Inventories - properties available for sale 3,800 10,421 (64)% Cash and cash equivalents 8,370 10,365 (19)% Borrowings (168,339) (141,101) 19% Other (278) (2,455) (89)% EPRA NTA 184
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