Deal could help improve investor sentiment towards the property investor
Thursday 04 Apr 2019 Author: Tom Sieber

Real estate investment trust Residential Secure Income (RESI) is acquiring 132 new build apartments in London’s Clapham Park, significantly boosting its exposure to shared ownership homes.

This type of asset, where a first-time buyer acquires a portion of a property below market value and rents the rest, can be attractive because it provides two separate sources of return.

This includes rental payments and service charges on the portion of the property the buyer does not own and a value uplift if said buyer takes up their option to buy more of the property at market value.

This is the second shared ownership purchase by RESI, which listed in July 2017, after a £16.5m acquisition of 54 homes from housebuilder Crest Nicholson (CRST) in October.

It could help narrow a discount to net asset value of 12.3% at the current 91.8p. The investment trust team at broker Numis comment: ‘A criticism of RESI, in our view, was the slow deployment of its IPO proceeds and a lack of shared ownership investments.’

These concerns will, at least partly, be addressed by this deal which will see more than a quarter of the portfolio in shared ownership schemes and 85% of its funds deployed. Numis notes the REIT’s selective approach ‘may result in a more defensive income stream over the long-term’.

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