Residential Secure Income PLC · LSE:RESI
Residential Secure Income — FY2023 Earnings Presentation
31 slides from Residential Secure Income's earnings presentation, December 2023
Slide 1: Residential Secure Income plc (ReSI plc) FY 2023 results presentation
Residential Secure Income plc (ReSI plc) FY 2023 results presentation December 2023 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 information purposes only. This Presentation, its contents and any information provide
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: FY 2023 key metrics
FY 2023 key metrics +6.1% 96% >99% -3% 91% Like-for-like Record Retirement Rent collection EPRA Adjusted Dividend rent growth1 occupancy2 Earnings growth coverage -9.9% -18.1% / 81.8p 50% 89% / 21 years Like-for-like H1 2023 total return / Loan to fixed or inflation-linked valuation decrease EPRA NT
Slide 6: ReSI plc - overview and opportunity
ReSI plc - overview and opportunity ▪ Focused on two growth markets ▪ Continuation of top-line growth whilst continuing to protect residents ▪ Local Authority portfolio now under offer and expected to complete in early 2024 ▪ Aim to strengthen balance sheet to only long-term debt1 (23-year average m
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 to deliver 97% inflation-linked income2 Independent retirement living Diversified by tenure and location 3,295 homes3 ▪ UK’s largest private rent portfolio4 £345mn valuation3 81.8p EPRA NTA4 ▪ Maintaining
Slide 9: Shared ownership portfolio performance
Shared ownership portfolio performance Accelerating demand FY 2023 key metrics Homes / Value 766 / £124mn ▪ Now fully occupied2 including 59 new homes % leased or reserved1 100% ▪ Rising mortgage rates and private rents fuelling demand Like-for-like rent increases +6.8% Secure income Margin 94% ▪ Un
Slide 10: Retirement portfolio performance
Retirement portfolio performance Top-line growth offset by cost pressure FY 2023 key metrics ▪ 6.0% like-for-like rent growth1 Homes / Value 2,240 / £201mn ▪ 96% occupancy2 in September, up from 94% in year Occupancy 96%2 Like for like rent growth +6.0% ▪ 99% rent collection1 Margin (excl. ground re
Slide 11: Retirement - driving future value
Retirement - driving future value Active asset management of portfolio given strength of current market position and opportunity set ▪ Focused on rent growth given high occupancy achieved ▪ Planned bathroom and kitchen upgrades, with minimum 8% return on cash ▪ Introduction of self-serve technology
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 £55 | 200kg CO2 bills and carbon emission for 34% outright owner 16% vs. renter shared ownership residents4 Custo
Slide 13: 2023 financial results
2023 financial results
Slide 14: FY 2023 income
FY 2023 income Higher expenses and floating rate financing costs more than offset 9% growth in gross rental income 2023 2022 Change Net rental income (£mn) Gross rental income £27.9mn £25.7mn +9% Net rental income1 £18.1mn £17.0mn +6% First tranche sales profits2 £0.4mn £0.5mn -18% Net finance costs
Slide 15: Adjusted EPRA Earnings
Adjusted EPRA Earnings Movement in adjusted EPRA Earnings (pence per share) 2023 dividend cover: 91% FY 23 dividend: 5.16p Dividend cover reduced by 0.3p/ FY 24 dividend 6bps from higher: target: 4.12p ▪ retirement energy costs ▪ floating rate debt costs ▪ fund overheads FY 22 FY 23 FY 23 Exc. LA 97
Slide 16: European Real Estate Association Net Tangible Assets (EPRA NTA)
European Real Estate Association Net Tangible Assets (EPRA NTA) FY 2023 movement in NTA (pence per share) 21.0p share valuation change FY 23 total return: (19.1)p ▪ £8.7mn/4.7p net income - 91% dividend cover ▪ 21.0p valuation decline - 10% like-for-like valuation decrease - Rent increases of 6.1% -
Slide 17: Management Fee amendment
Management Fee amendment Greater alignment of Fund Manager with shareholder interests ▪ Fund Manager offered and agreed with the Board to align management fee more closely with share price Average of mkt cap1 and NAV2 Fee ▪ Effective 1 Jan 2024, fee levels will be set relative to <= £250mn 1.0% aver
Slide 18: Debt maturity and LTV
Long investment-grade debt 21 years1 51%1 c.38%1 50% 44%2 Average debt maturity Fixed (3.5% coupon) Inflation linked (5.5% cap) LTV (50% target) Reversionary LTV (1.1% coupon) c.82 30 ▪ c. £7mn of liquidity post near-term maturities3 25 20 ▪ 89% fixed / inflation linked debt for a weighted average o
Slide 19: ReSI debt covenants
ReSI debt covenants Aside from Santander LTV covenant, ReSI plc has ample room in debt covenants Loan covenants by portfolio - most recently reported covenants1 ▪ Valuation yield could widen by a Retirement / Scottish further c.40 bps (c.£25mn of Covenant Shared Ownership / USS Total portfolio / San
Slide 20: Outlook
Outlook
Slide 21: Summary & outlook
Summary & outlook ▪ Growing demand and structural undersupply underpin market ▪ Strong top-line growth in FY 23 curtailed by rising rates and cost pressure ▪ Wage/pension growth allow us to grow rents without impacting affordability ▪ Opportunity to drive value in retirement portfolio through active
Slide 22: Q&A
Q&A
Slide 23: Appendices
Appendices
Slide 24: Portfolio: valuation & returns
Portfolio: valuation & returns High-quality, affordable homes generating positive outcomes for residents Retirement Shared ownership Total1 Homes / Value 2,240 / £202mn2 766 / £123mn2 3,295 / £345mn2 Homechase House, Southport Unlevered net initial yield3 5.5% 3.4% 5.2% Levered net initial yield4 7.
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 150.0 ReSI share price indexed performance vs. peers and gilts3 ReSI vs. Peer
Slide 26: 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 p 2022 2023 Increase % ▪ 6% rent cap is: Rent 10,200 10,812 612 6% ‒ Below average private rental increase of 11%1 ReSI Retirement Energ
Slide 27: 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 2022 2023 Increase % Shared ownership Rent and service charge 7,688 8,226 538 7% ▪ 2023 shared ownership rent increase Typical ReSI Shared ownership
Slide 28: EPRA performance measures
EPRA performance measures 30 Sept 2023 30 Sept 2022 EPRA NDV per share (pence) Represents the shareholders’ value under a disposal scenario, where deferred tax, financial instruments and certain other 105.5p 121.8p adjustments are calculated to the full extent of their liability, net of any resultin
Slide 29: EPRA reconciliation to IFRS profit
EPRA reconciliation to IFRS profit FY 2023 FY 2022 Variance (£’000) (£’000) Operating profit before property disposals and change in fair value 3% 14,710 14,306 Finance costs (excluding one-off debt arrangement costs) (6,500) (5,588) 16% Non-recurring set up costs 464 234 98% EPRA adjusted earnings
Slide 30: Statement of financial position
Statement of financial position 30 Sept. 2023 30 Sept. 2022 Variance £’000s £’000s Total investments 345,138 374,785 -8% Inventories - properties available for sale 431 1,203 -64% Cash and cash equivalents 8,805 15,984 -45% Borrowings – amortised cost (199,039) (194,701) 2% Other (3,882) (786) 393%
Slide 31: 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
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