ReSI earnings rise as it works towards wind-down

(Sharecast News) - Residential Secure Income (ReSI) posted a 15% rise in adjusted earnings to £5.1m for the six months ended 31 March on Wednesday, driven by 4% like-for-like rent increases, operational cost control and lower finance costs following the divestment of its local authority portfolio. The London-listed company maintained its interim dividend at 2.06p per share, with coverage rising to 134%.

Gross rental income edged up 1% to £15m, while rent collection remained strong at nearly 100%.

Adjusted earnings per share rose to 2.8p from 2.4p a year earlier.

Chairman Robert Whiteman said the results demonstrated "continued focus on driving operational performance" and highlighted the positive impact of rent growth, cost discipline, and debt repayment.

"This has culminated in the repayment of drawn floating rate debt, adjusted earnings growth of 15% and dividend coverage of 134%," he added.

However, elevated gilt yields weighed on portfolio valuations, leading to a 12% fall in EPRA net tangible assets (NTA) per share to 66p.

Fair value changes in investment properties resulted in a loss of £15.5m, up from £7.3m a year earlier.

The maximum realisable NAV, including estimated sales proceeds and debt break gains, stood at 70.2p per share.

Fund manager Ben Fry, who was set to step down at the end of July, said: "ReSI has delivered strong like-for-like rental growth of 4% whilst achieving record occupancy and with rent collection stable at almost 100%.

"This flowed through to a 15% increase in adjusted earnings and 134% dividend coverage."

He added that the company is well positioned to "maximise value from the portfolio whilst balancing the joint objectives of concluding the disposals efficiently and responsibly."

The retirement and shared ownership portfolios reportedly continued to demonstrate operational strength, with retirement occupancy reaching a record 98% and shared ownership units fully occupied.

ReSi said the retirement portfolio's asset management programme, initiated in October 2023, had led to improved re-letting times and capital recycling, with 40 properties sold or under offer at a 21% premium to book value.

Following the full divestment of the local authority portfolio for £15m in January, ReSI repaid its revolving credit facility and subsequently refinanced with a new 2.5-year agreement with Shawbrook Bank, providing greater flexibility for capital expenditure.

Marketing of the full portfolio was now underway, with Jones Lang LaSalle acting as sales agent.

ReSI said it had received initial expressions of interest, and was in active discussions with multiple potential buyers.

The board reiterated that further updates on the wind-down would be provided as appropriate.

At 1220 BST, shares in Residential Secure Income were down 0.14% at 59.12p.

Reporting by Josh White for Sharecast.com.