Residential Secure is close to selling its £20m local authority portfolio.
The portfolio, which represents 6% of the REIT’s total £345m holdings, is under offer and is expected to complete in early 2024. The remaining portfolio of 3,295 homes is focused on direct leases with pensioners and part-homeowners.
The REIT, which specialises in accommodation for the elderly, said the sale followed a review of non-core assets earlier in the year and will allow for repayment of all floating rate debt.
This will leave ReSI with only long-term drawn debt, with 23-year weighted average maturity and the largest loan of £94m fixed at 3.5% until 2043.
The REIT took the decision to sell the portfolio after rising interest rates reduced its positive contribution from 0.9p in FY22 to expected 0.2p in FY24.
Chair Robert Whiteman said: “We announced a review of non-core assets in our interim results, with a plan to reduce financing costs. Following this review, our local authority portfolio is now under offer for sale and in solicitors’ hands.”
He added: “We are very conscious of listed sector discounts widening significantly and ReSI is not immune to factors also affecting our peers. We will continue to review options to reverse this situation.”
In an attempt to reassure shareholders, and to “show its confidence in reducing the discount”, the REIT’s manager, Gresham House, has agreed to reduce its management fee.
The REIT saw a 16% fall in net asset value over the year from £201m to £168.7m, as its portfolio valuation slipped 8% to £345.1m.
Gross rental income was up by 8.6% to £27.9m, with net rental income up 6.4% to £18.1m.
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