Residential Secure Income buys four blocks in Luton for £13m

The London-listed firm said the buildings benefitted from a 9.2 year lease to the local authority, with an option for the local authority to extend by 10 years, and were used to provide housing under the authority's statutory obligations, as well as back-to-work and support services to tenants.

It said the buildings were operated by property and support services provider Mears, and would immediately be income producing to ReSI.

The buildings had recently undergone a full refurbishment, completed in 2017, and contained 155 residential units.

It would be ReSI's second acquisition in Luton, where the company said it was looking to be a long term partner of the local authority in providing affordable accommodation for its constituents.

Luton, along with a number areas across the UK - and especially in south east England - had a “critical shortage” of both affordable and market housing, the board explained.

Mears was responsible for repairs to the flats and providing the support services, with the local authority bearing the letting risk.

ReSI said it intended to leverage the acquisition with investment-grade equivalent debt secured on the building, to deliver equity returns at least in line with its total return target.

Following the acquisition, ReSI had now invested £168m of the proceeds raised at IPO in assembling a portfolio which comprised 1,928 residential units.

“We continue to identify and acquire good quality and modern assets that offer a highly visible and long-term income stream, leveraging our sector and market knowledge as well as track record with local authorities,” said Ben Fry of ReSI’s fund manager, ReSI Capital Management.