Residential Secure Income REIT | ESG

Gresham House is the alternative investment fund manager of Residential Secure Income plc (“ReSI plc”) and the ESG information on this page and policies reflect those of the Investment Manager.

Gresham House has a clear commitment to sustainable investment as an integral part of its business strategy.

Sustainable investment considerations are applied across the investment processes of the Group for all assets and involve the integration of ESG factors as well as the application of active stewardship responsibilities, including engagement and voting (where applicable).

Our Sustainable Investment Framework is based on ten core ESG themes and is used as the basis for the ESG assessment during the due diligence stages before an investment decision is made, as well as being used as a way to structure engagement activity carried out throughout the holding period.

The asset class specific ESG Decision Tools (the “Tools”) build on these themes by supporting the investment teams in identifying potential, material ESG risks that need to be managed and mitigated, and to help shape the due diligence process for individual companies prior to investment. The Tools also provide a way of summarising material ESG issues, which can then be tracked and monitored over time, and include actions that can be taken to mitigate those risks throughout the holding period.

At Gresham House, our approach to sustainable investment is embedded across our business and involves ESG analysis, active stewardship, and outcome measurement.

Our commitment is demonstrated through the integration of sustainable investment practices across our strategies, through our proactivity in seeking to make a positive social, economic, or environmental impact alongside delivering strong financial returns and by being a responsible and ethical employer.

Our approach to sustainable investment across each asset division is based on five core components:

01 Sustainable Investing Committee (SIC)

02 Sustainable investment commitments

03 Sustainable investment policies

04 Sustainable Investment Framework (SIF)

05 Asset class specific ESG Decision Tools

We also are also members of a range of industry bodies which inform and support our sustainable investment approach, and work with some service providers who develop and implement certain aspects of our sustainable investment activities.

These aspects are all managed within our sustainability governance structure which includes our Board, Management Committee, and Sustainable Investing Committee.

ReSI’s wholly owned subsidiary, ReSI Housing, is authorised by the Regulator of Social Housing (“RSH”) as a for-profit Registered Provider (“RP”) and holds ReSI’s shared ownership investments.

Operating ReSI Housing enables ReSI to benefit from best in class governance process combining the financial rigour of the business world with the regulatory framework for Registered Providers.

The RSH regulatory framework ensures good governance, financial viability, minimum maintenance and environmental standards, and protection of residents’ welfare, thus supporting ReSI’s goal of maximising social benefit

Non-executive directors of ReSI Housing have enhanced powers and can veto any action that threatens compliance with the RSH’s regulatory standards.

ReSI offers a unique opportunity to invest into a highly scalable solution to the problem of a lack of affordable housing in the UK. This allows affordable, high quality, safe homes to be delivered whilst ensuring long-term stability of tenure for residents, and secure inflation linked income for shareholders.

ReSI aims to deliver stable, inflation-linked returns through investing in affordable shared ownership and retirement rentals across the UK.

• Shared ownership provides an affordable route to home ownership for people on lower and middle incomes.
• Independent retirement rental provides fit for purpose homes for retired people, allowing them to maintain their independence for longer, whilst freeing up larger homes for families.

We integrate ESG considerations into the lifecycle of each investment in line with our UK Housing Sustainable Investment Policy as follows:

01 Sector analysis and strategy setting

Integration of sustainability considerations starts at the point we design our investment strategies. The UK Housing sector covers a broad spectrum of sub-sectors so choosing the most appropriate areas to invest is key. All our funds share a similar underlying strategy focusing on housing that is affordable for the UK mid-market.

02 Desktop analysis

The initial stage of due diligence is based on all relevant available material; this allows the investment team to assess whether the proposed investment meets agreed ESG objectives.

The ESG Decision Tool is used to identify material ESG risks that need to be mitigated and monitored, and to identify ESG opportunities that have the potential to drive value, now or in the future.

03 Execution

More detailed review of previously identified fundamentals through a combination of site visits, engagement with professional advisors, and discussions with any operational partners. Investment Committee submissions include an assessment of material ESG risks, opportunities and mitigation requirements identified in due diligence which are then factored into the decision-making process.

04 Holding period

We work closely with managing agents to ensure they operate in line with best practice standards and deliver on expectations. Certain ESG related KPIs are monitored and if applicable we will continue to monitor operational partners.

ReSI aims to increase the provision of affordable housing by providing long-term capital to developers, housing associations and local authorities. This allows high quality, safe homes to be delivered while ensuring long-term stability of tenure for residents.

By raising capital to invest into new and existing social and affordable housing, ReSI makes accommodation available to those who may otherwise be excluded by open market mechanisms.

Actions ReSI is taking:

• Raising capital from investors with aligned interests
• Building relations with RPs and other strategic partners
• Financing of new affordable housing development
• Acquisition of existing social housing

Direct result of the actions of the ReSI:

• Shared ownership
  • Door opened to home ownership
  • More affordable housing brought into the market
  • Households have lifetime security of tenure
• Retirement rental
  • Retired households living with peers and with onsite support
  • Retired households housed with long term security of tenure

Changes that directly impact people’s lives:

• Shared ownership
  • Improved stability through security of tenure for those who cannot afford to buy in the open market
  • Change in household expenditure
• Retirement rental
  • Supporting independent living
  • Alleviation of loneliness
  • Equity released for other needs

The Investment Manager has also established a shared ownership customer charter and a shared ownership environmental charter that together aim to make the shared ownership sector more sustainable, socially beneficial and environmentally aware.

The Good Economy completed a social impact analysis of our housing assets. They found: 

• ReSI plc's shared ownership portfolio is bringing new properties into social and affordable housing that would otherwise be for sale on the open market.
• ReSI has a diversified portfolio providing support to multiple groups of beneficiaries with a range of positive outcomes, including security of tenure for residents, improved wellbeing and financial savings.

Representatives from ReSI participated in workshops with The Good Economy and Big Society Capital to contribute towards the development of the Equity Impact Project (EIP). The EIP has developed a set of globally aligned standards for equity investments in social and affordable housing. ReSI plc was one of the first funds to report against the standard as part of its report for the year-ending September 2022.

In 2023, ReSI worked with The Good Economy to produce its third annual Impact Report, an independent advisory firm specialising in impact measurement and management. The report covers the 12-month period to 30 September 2022. The report provides TGE’s assessment of ReSI’s performance against its stated impact objectives, as well as the target outcomes to which it aims to contribute.

An overview of Gresham House's UK Housing division's (including ReSI) approach to managing climate-related risks and opportunities can be found in Gresham House's 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report.