A Strong Performance Amidst the Wind-Down
ReSI plc’s latest interim results reveal a company executing its managed wind-down with impressive precision. Against a backdrop of challenging gilt yields, they’ve delivered 15% growth in adjusted earnings and robust dividend coverage of 134%. This isn’t just number-crunching – it’s a testament to disciplined operational focus during a strategic transition.
Financial Fortitude in Focus
The standout figures tell a story of resilience:
- Rent Growth: 4.0% like-for-like rental increases, with shared ownership rents rising 3.3% in April 2025 – inflation linkage in action.
- Earnings Surge: Adjusted earnings jumped to £5.1m (from £4.5m), fuelled by cost vigilance and lower finance expenses.
- Dividend Strength: Coverage at 134% (up from 117%) signals income reliability despite the wind-down.
Valuation Headwinds vs. Realisable Value
Yes, EPRA NTA fell 12% to 66p – driven by those pesky elevated gilt yields pushing property valuations down 4.8%. But look deeper:
- The “Maximum Realisable NAV” stands at 70.2p. This hypothetical figure (factoring in sales costs and debt break costs) is the Board’s transparent benchmark for potential shareholder returns upon disposal.
- Loan-to-Value remains manageable at 50%, backed by debt with a 21-year average maturity.
Operational Excellence: Bricks, Mortar & People
Behind the numbers lies operational grit:
- Occupancy Records: 97% in retirement living (peaking at 98%) and 100% in shared ownership.
- Rent Collection: Stuck stubbornly near 100%.
- Asset Management Wins: Selling 40 retirement properties at a 21% premium to book value while acquiring 14 new ones at a juicy 8.0% net yield shows shrewd capital recycling.
The Wind-Down Machine: Gearing Up
The orderly realisation strategy is visibly progressing:
- Local Authority Exit: Fully divested, fetching £15m (slightly ahead of book).
- Debt Discipline: Floating rate debt cleared; Santander facility cancelled and replaced with cheaper Shawbrook financing (4.20% margin).
- Portfolio Marketing: Jones Lang LaSalle actively engaged, with “meaningful dialogue” underway with multiple potential buyers for the retirement and/or shared ownership portfolios.
Leadership Transition: Smooth Handover
Ben Fry steps down as lead fund manager on 31st July 2025, having shepherded ReSI since IPO and kickstarted the wind-down. The baton passes seamlessly to Mike Adams and Sandeep Patel, backed by Gresham House – ensuring continuity for disposals and resident stewardship.
The Bottom Line: Orderly, Not Ordinary
ReSI’s H1 performance proves a wind-down needn’t mean winding down effort. Delivering 15% earnings growth while actively marketing £294.5m of assets requires sharp execution. The 70.2p “Maximum Realisable NAV” provides a clear north star for shareholders. With portfolio fundamentals strong, buyer interest reportedly solid, and a stable team at the helm, ReSI’s managed exit strategy looks increasingly like a case study in doing it right. The market will watch those disposal announcements closely – the real test of value crystallisation is yet to come.
