Fund managers behind for-profit ReSI Housing plan wind-down and sale

ReSI said that its board and the trust’s fund manager, Gresham House Asset Management, have engaged with ReSI’s shareholders and advisors to consider “the optimal route forward to realise shareholder value”. 

ReSI said: “Accordingly, the board has concluded that a proactive approach, executing a managed wind-down and portfolio realisation strategy, which prioritises maximisation of proceeds from portfolio sales whilst ensuring the interests of residents are protected, and a subsequent return of capital to shareholders is the appropriate course of action and in the best interests of the company’s shareholders.”

On the sale of ReSI Housing, Ben Fry, managing director of housing at Gresham House, said that ReSI’s board believes that another long-term owner of the portfolio will be “better placed to grow and invest in ReSI Housing”.

As of 30 June, the for-profit owned 757 shared ownership homes.

“The board of ReSI is very explicit that they will take their time on the sales process and consider the needs of all stakeholders, always ensuring that the interest of residents are protected,” Mr Fry said.

ReSI said the fund’s portfolio will continue to be actively managed to deliver “robust earnings growth”.

To implement this proposal, the board intends to propose resolutions to change ReSI’s investment policy and will send a circular to shareholders in “due course”, the trust said.

ReSI said that its board remains aware of its duties to stakeholders, as well as its obligations to pay out distributions as a REIT, and that it will continue to provide updates as the process develops.

Rob Whiteman, chair of ReSI, said: “The headwinds for smaller listed real estate businesses have been well flagged, and there are no quick fixes. The board and fund manager are focused on maximising returns to all shareholders.

“Having explored a range of options with our advisors, the board has decided that the best course of action is a proactive managed wind-down and portfolio realisation strategy over an appropriate time period. We will be asking shareholders to approve this at a general meeting in due course.”

Since launching in 2017, ReSI has assembled a residential portfolio across the independent retirement rental, shared ownership and local authority accommodation sub-sectors.

As at 30 June 2024, its portfolio comprised 3,125 homes, made up of 2,234 independent retirement rental homes, 757 shared ownership homes and 134 homes providing local authority accommodation.

ReSI said its sole remaining local authority asset has now exchanged for sale at a price “marginally in excess of book value”. Completion is scheduled to happen by the end of 2024, enabling the full repayment of the trust’s floating rate debt.

This will concentrate ReSI’s portfolio in what it has said are its two preferred residential sub-sectors – independent retirement rental and shared ownership.

ReSI said it has continued to be “significantly impacted” by the wider adverse macroeconomic environment prevailing since the Mini Budget in September 2022 and the pressures affecting the real estate investment trust sector generally.

ReSI added that its shares have traded at a “persistent discount” to its prevailing NAV per share, greatly restricting ReSI’s ability to raise further capital, develop its portfolio and attract a wider range of investors. 

“The challenges we’ve experienced are no different to those affecting many other listed property companies,” Mr Fry said. 

“That said, now that interest rates have plateaued and are on a falling trajectory, we are starting to see that trading volumes in the investment property market are starting to increase. 

“Buyers are targeting high-quality real estate portfolios with strong inflation-linked revenue streams, such as the ReSI portfolio. That should facilitate an orderly realisation of assets. We will seek long-term trusted custodians for ReSI’s portfolio, always ensuring that the interests of residents are protected.”

Gresham House also manages a second registered provider, ReSI Homes, which is not affected by yesterday’s announcements. The for-profit was registered in March 2020, and is backed by a separate fund, Gresham House Residential Secure Income LP.

Mr Fry added that Gresham House continues to see “strong demand” from investors for its private funds, and continues to grow and deploy funds from Gresham House Residential Secure Income LP and its registered provider ReSI Homes.