Residential Secure Income (RESI) H1 2024 earnings summary

Executive summary

• Achieved 6.5% like-for-like rental growth and maintained high occupancy: 96% in retirement, 100% in shared ownership, with 99%+ rent collection in H1 2024.

• Adjusted earnings grew 9% year-over-year, comfortably covering the rebased dividend by 117%.

• Investment property values declined 2% like-for-like due to higher interest rates, reducing EPRA NTA per share to 77.2p.

• Portfolio now focused on retirement and shared ownership, following the sale of a local authority asset for £5.6m, with further disposals under review.

• Market demand remains robust, underpinned by structural undersupply, demographic trends, and inflation-linked income streams.

Financial highlights

• Gross rental income increased 10% year-over-year to £14.9m; net rental income rose 7% to £9.4m, driven by inflation-linked increases and high occupancy.

• EPRA Adjusted earnings increased 9% to £4.5m (2.4p per share); IFRS Adjusted EPS improved 65% to (5.6)p.

• Dividend paid was 2.1p per share, down 20% year-over-year, but coverage improved to 117%.

• EPRA NTA per share declined to 77.2p, reflecting a 2% like-for-like valuation decrease.

• Net finance costs increased 10% to £3.4m due to higher SONIA rates.

Outlook and guidance

• Expect continued strong rental growth in H2 2024, supported by wage and pension increases and an 8.3% rent increase in shared ownership from April.

• Focused on completing the Local Authority portfolio disposal and repaying floating rate debt by December.

• Further disposals under review to maximize shareholder value and prioritize capital returns.

• Investment market volumes expected to remain low until after Bank of England rate cuts.

• Dividend rebased for full coverage and progressive growth, underpinned by inflation linkage.