Proposed managed realisation and return of capital

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

3 October 2024

Residential Secure Income plc

("ReSI plc" or the "Company") 

Proposed managed realisation strategy and return of capital to shareholders

The Board of ReSI plc (LSE: RESI) announces that, following a thorough review of options for maximising shareholder value, it is proposing to shareholders that the Company adopts a managed wind-down and portfolio realisation strategy.

With a market capitalisation of approximately £101 million¹ the Company remains of a size which might deter some potential investors due to lower share liquidity and the increasing demand from investors for larger listed funds. In addition, the Company's shares have, since September 2022, traded at a persistent, material discount to the Company's net asset value ("NAV"). The Board of ReSI plc and its fund manager, Gresham House Asset Management Limited (the "Fund Manager"), have engaged with the Company's shareholders and advisers to consider the optimal route forward to realise shareholder value. 

Accordingly, the Board has concluded that a proactive approach, executing a managed wind-down and portfolio realisation strategy, which prioritises maximisation of proceeds from portfolio sales whilst ensuring the interests of residents are protected, and a subsequent return of capital to shareholders is the appropriate course of action and in the best interests of the Company's shareholders. The portfolio will continue to be actively managed to deliver robust earnings growth.

To implement this proposal, the Board intends to propose resolutions to change the Company's investment policy and will send a circular to shareholders in due course.

Background

ReSI plc launched in 2017 with the purpose of delivering affordable, high-quality, safe homes with great customer service and long-term stability of tenure for its residents. Since launch, ReSI plc has assembled a residential portfolio across the independent retirement rental, shared ownership and local authority accommodation sub-sectors. As at 30 June 2024, the Company's portfolio comprised 3,125 homes (2,234 independent retirement rental homes, 757 shared ownership homes and 134 homes providing local authority accommodation).

ReSI plc's sole remaining local authority asset has now exchanged for sale at a price marginally in excess of book value, with completion scheduled to occur by the end of 2024, enabling the full repayment of the Company's floating rate debt. This will concentrate ReSI plc's portfolio in its two preferred residential sub-sectors - independent retirement rental and shared ownership - where ReSI plc's high-quality portfolios are underpinned by inflation-linked leases and long-term leverage, supporting long-term shareholder returns.

ReSI plc has continued to be significantly impacted by the wider adverse macroeconomic environment prevailing since September 2022 and the pressures affecting the real estate investment trust sector generally. ReSI plc's shares have traded at a persistent discount to the Company's prevailing NAV per share, greatly restricting ReSI plc's ability to raise further capital, develop its portfolio, and attract a wider range of investors. 

Investment property market trading is starting to increase, with buyers targeting the acquisition of high-quality real estate portfolios with strong inflation-linked revenue streams, such as the ReSI plc portfolio, which should facilitate an orderly realisation of the portfolio over time.

The Board remains aware of its duties to stakeholders, its obligations to pay out distributions as a real estate investment trust and will continue to provide updates as the process develops.

Rob Whiteman CBE, Chairman of ReSI plc, commented:

"The headwinds for smaller listed real estate businesses have been well flagged, and there are no quick fixes. The Board and Fund Manager are focused on maximising returns to all shareholders. Having explored a range of options with our advisors, the Board has decided that the best course of action is a proactive managed wind-down and portfolio realisation strategy over an appropriate time period. We will be asking shareholders to approve this at a general meeting in due course.  

"On behalf of the Board, I would like to thank our shareholders for their continued support of the Company and its portfolio, as well as Gresham House Asset Management, our Fund Manager, for its active management of the portfolio and focus on delivering in the best interests of our shareholders."

Notes:

1.     As at market close on 2 October 2024

- Ends -

The information contained within this announcement constitutes inside information. The person responsible for arranging for the release of this announcement on behalf of the Company is Charles Gorman of KL Communications.

LEI: 213800D24WA531LAR763

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About ReSI plc

ReSI plc (LSE: RESI) is a real estate investment trust (REIT) focused on delivering secure, inflation-linked returns with a focus on two residential sub-sectors in UK residential - independent retirement rentals and shared ownership - underpinned by an ageing demographic and untapped and strong demand for affordable home ownership.

ReSI plc's purpose is to deliver affordable, high-quality, safe homes with great customer service and long-term stability of tenure for residents. We achieve this through meeting demand from housing developers, housing associations, local authorities, and private developers for long-term investment partners to accelerate the development of socially and economically beneficial affordable housing.

ReSI plc's subsidiary, ReSI Housing Limited, is registered as a for-profit Registered Provider of social housing, and so provides a unique proposition to its housing developer partners, being a long-term private sector landlord within the social housing regulatory environment. As a Registered Provider, ReSI Housing can acquire affordable housing subject to s106 planning restrictions and housing funded by government grant.

About Gresham House and Gresham House Real Estate

Gresham House is an alternative asset manager committed to operating responsibly and sustainably, taking the long view in delivering sustainable investment solutions.

Gresham House Real Estate has an unparalleled track record in the affordable housing sector over 20 years.

Gresham House Real Estate offers long-term equity investments into UK housing, through listed and unlisted housing investment vehicles, each focused on addressing different areas of the affordable housing problem. Each fund aims to deliver stable and secure inflation-linked returns whilst providing social and environmental benefits to its residents, the local community, and the wider economy.

Further information on ReSI plc is available at www.resi-reit.com, and further information on Gresham House is available at www.greshamhouse.com