5 June 2024
Home REIT plc
("HOME" or the
"Company")
Monthly Update
The Board of HOME and AEW UK Investment
Management LLP ("AEW" or the "Investment Manager") provide their
monthly update in respect of May 2024.
Summary
· As
announced on 10 May 2024, 76 properties exchanged for sale at
auction for a total of £14.6m with completion expected during
June.
·
Repayment of £8.3m of debt to the Company's lender in May
comprising a cash repayment of £7.1m and net break gains of £1.2m
applied to loan principal. Total borrowings reduced to £131.8m from
£220.0m in the last nine months.
·
Negotiations continue on a refinancing as part of the
strategy for the long-term financial stability of the
Company.
· An
additional 47 internal property inspections have been completed in
May, taking the total to 2,124 in the last nine months.
· As
announced on 29 May, the Company surrendered leases from tenants on
over 30% of the Company's portfolio by number of properties. The
tenancies have now transferred to Home REIT, enabling the Company
to directly collect the underlying income from these properties,
increasing rent collection and facilitating asset management
opportunities.
· The
Company is progressing legal action against selected non-performing
tenants.
· As
previously announced, the Company intends to bring legal
proceedings against those parties it considers are responsible for
wrongdoing and has now issued a pre-action letter of claim to its
former investment adviser, Alvarium Home REIT Advisors Limited (in
liquidation).
Portfolio and Financial
Highlights
Financial
Position (Unaudited)
|
As at
31 August 2023
|
As at
31 May 2024
|
Valuation:
|
|
|
Draft August 2023 Valuation
|
£412.9m
|
£315.2m
1
|
Number of properties
|
2,473
|
1,772
|
Cash and
Borrowings:
|
|
|
Unrestricted Cash
|
£0.8m
|
£7.5m
|
Total Cash
|
£13.5m
|
£12.9m
|
Borrowings
|
£220.0m
|
£131.8m
|
Net debt
|
£206.5m
|
£118.9m
|
Income:
|
|
|
Annual Contracted Rent
|
£53.9m
|
£21.6m
|
Tenants 2 3
|
29
|
20
|
Properties under lease to tenants
|
2,358
|
1,005
|
Properties under separate management
agreement
|
115
|
1154
|
Properties under property management agreements
- Direct Let (PRS)
|
-
|
652
|
|
|
|
|
To date
1
September 2023 to
31 May
2024
|
Month
1 May
2024 to 31 May 2024
|
Investment
Activity:
|
|
|
Properties sold in the period
|
£97.5m
|
£13.8m
|
Number of properties sold in period
|
701
|
149
|
Properties exchanged in period/not yet
completed
|
£28.2m
|
£12.9m
|
Number of properties exchanged not yet
completed at period end
|
145
|
75
|
Rent
collection:
|
|
|
Rent collection5 %
|
11%
|
7%
|
Rent collection total
|
£3.1m
|
£0.2m
|
Inspections:
|
|
|
Completed6
|
2,124
|
47
|
Occupancy: (at date
of inspection on 1,563 Vibrant inspections)
Occupancy (at least one bed
occupied)
Vacant (whole building)
|
79%
21%
|
1 Proforma
value at 31 May 2024 being draft (as announced on 20 December 2023)
less disposals in period at 31 August 2023 valuation.
2 Excluding
properties under separate management agreements
3 Excluding properties under property management agreements with
HOME having direct AST leases with occupiers
4 12 properties have been sold since last month's
reporting
5Rent collection - rent collected including arrears /rent
invoiced for the period
6 Inspections - these are of the portfolio held as at 31 August
2023.
FOR
FURTHER INFORMATION, PLEASE CONTACT:
FTI Consulting (Communications
Adviser)
Dido Laurimore
Eve Kirmatzis
Oliver Harrison
|
HomeREIT@fticonsulting.com
+44 (0)20
3727 1000
|
The Company's LEI is:
213800A53AOVH3FCGG44.
For more information, please visit
the Company's website: www.homereituk.com
Portfolio Assessment
· AEW
continues to undertake its comprehensive review and data collection
exercise of the property portfolio. Analysis of the underlying
condition of the properties is paramount to determine suitability,
capital expenditure requirements and income and capital returns
prospects for each asset as AEW works to rationalise the portfolio
as part of the stabilisation strategy.
· The
inspection programme continues to require significant co-ordination
with multiple parties and is due to continue throughout June.
Vibrant and AEW continue to prioritise completion of the inspection
programme with 86% of the portfolio inspected as at 31 May
2024.
Investment Activity
·
Following announcements of exchanges at auction in previous
months, 149 properties completed during May for a total of
£13.8m.
· As
announced on 10 May 2024, 76 properties exchanged for sale at
auction for a total of £14.6m. One of these properties also
completed in May for £1.7m.
·
Since August 2023, the Company has completed on the sale of
701 properties and exchanged on a further 145 properties. The gross
proceeds from properties sold and exchanged totals £125.7m, which
in aggregate is in line with the August 2023 draft
valuation.
·
Sale proceeds continue to be used to reduce borrowings and
provide working capital.
Rent Collection and Tenant
Engagement
· AEW
continues to focus on obtaining control of the portfolio and is
progressing negotiations with a number of tenants to facilitate
restructuring of leases and rationalisation of the portfolio,
further announcements will be made in due course.
·
Rent collection on operating leases from 1 September 2023 to
31 May 2024 is 11% of the rent invoiced for the period. AEW
continues to work with selected tenants on payment plans. It is
anticipated that rent collection will vary month on month in the
near term as AEW continue to work on stabilising the portfolio and
pursues legal action.
· On
29 May 2024, the Company announced that it has reached an agreement
with a number of tenants for the surrender of leases on over 600
properties, equating to circa. 30% of the Company's portfolio by
number of properties. The Company and AEW have diligently analysed
the properties and their various tenancies to ensure there is a
comprehensive handover with minimal disruption to occupiers. The
tenancies have now transferred to Home, enabling the Company to
directly collect the underlying income from these properties,
increasing rent collection and facilitating asset management
opportunities.
· AEW
is in active dialogue with a number of prospective providers who
have significant demand for properties for Supported Living and
other forms of Social Use accommodation.
· AEW
continues to make good progress with the stabilisation strategy and
further announcements on re-tenanting will be made in due
course.
Financial Position and Related
Matters
· The
Company had a cash balance of £12.9m as at 31 May 2024 of which
£7.5m is unrestricted.
· The
Company repaid £8.3m of debt to the Company's lender in May
comprising a cash repayment of £7.1m and a net break gain of £1.2m
also being applied in repayment of the debt. A total of £88.2m of
debt has been repaid since the Company entered the stabilisation
period during August 2023.
· As
at 31 May 2024, the Company has total borrowings of £131.8m,
comprising a £41.5m interest-only term loan, repayable in 2032,
with a fixed rate of 2.07% per annum, and a £90.3m interest-only
term loan, repayable on 2036, with a fixed rate of 2.53%per
annum. An additional fee of 5.00% per annum is charged on the
aggregate outstanding loan balances, with the fee accruing on a
daily basis from 30 November 2023. The additional fee is
payable at the earlier of 28 June 2024 or on full repayment of the
loans.
· The
Board and AEW continue to engage proactively and constructively
with the Company's lender, through regular meetings and continue to
service interest payments in full as they fall due.
· As
previously announced the Company's lender has advised that their
objective is for repayment of the loan balance in the short
term.
· On
5 February 2024, the Company announced that it had commenced a
refinancing process to consider alternative finance options. Work
on the refinancing strategy continues.
Valuation, Publication of the Annual
and Interim Reports
· The
audit process remains on-going with AEW dedicating very substantial
resource to complete this key workstream. The completion of the
audit is primarily subject to the continuing internal
inspection programme, the associated finalisation of the
valuation for the relevant financial periods and the application of
revised accounting policies back to inception. Access
constraints remain a significant challenge for the completion of
the internal inspections.
· The
Board and AEW are committed to continuing to work with BDO to
publish the audited results for 31 August 2022 during the second
quarter of 2024, with 31 August 2023 to follow soon
after.
· The
Board and AEW remain committed to the restoration of trading in the
Company's ordinary shares and fulfilling Home REIT's mission
of providing accommodation to vulnerable people as soon as is
practically possible.
Shareholder Engagement
· AEW
continues engagement with the Company's shareholders. The next
monthly update is expected to be announced on Wednesday 3 July
2024.
Potential Litigation
·
Further to the announcement on 18 April 2024, the Company has
now issued a pre-action letter of claim to its former investment
adviser, Alvarium Home REIT Advisors Limited (in liquidation).
Shortly before issuance of the pre-action letter of claim the
Company was made aware that Alvarium Home REIT Advisors Limited had
appointed joint liquidators for the purpose of winding up the
company. Notwithstanding this event, it remains important that all
means of potential financial recovery are fully considered and that
any wrongdoing is thoroughly investigated. The Company cannot
comment any further at this stage, as to do so may prejudice the
Company's position in any potential proceedings. Any relevant
announcements in this regard will be made at the appropriate
time.
Board Succession
·
Good progress continues to be made in identifying a new Chair
of the Audit Committee with the process being overseen by Michael
O'Donnell. The Company remains well placed to conclude this process
in advance of the restoration of the listing of its shares and
further announcements will be made in due course.
Portfolio and tenant
breakdown
Geographic
Region
As at 31 May
2024
|
Number of
Properties
|
Number of Properties
(%)
|
North East
|
520
|
29.3%
|
North West
|
369
|
20.8%
|
Yorkshire and the Humber
|
234
|
13.2%
|
East Midlands
|
186
|
10.5%
|
West Midlands
|
171
|
9.7%
|
South West
|
109
|
6.2%
|
London
|
74
|
4.2%
|
South East
|
67
|
3.8%
|
Wales
|
23
|
1.3%
|
East of England
|
19
|
1.1%
|
Total
|
1,772
|
100%
|
Top 10
Tenants
As at 31 May
2024
|
Number of Properties
|
% of portfolio annual contracted
rent
|
One (Housing & Support)
CIC
|
161
|
24.7%
|
Bloom Social Housing CIC
|
78
|
11.9%
|
Noble Tree Foundation
Limited2
|
143
|
11.8%
|
LTG Vision CIC
|
172
|
9.2%
|
Mears Ltd
|
177
|
9.0%
|
Gen Liv UK C.I.C.1
|
45
|
6.6%
|
Community Restore CIC
|
54
|
5.2%
|
Supportive Home's
CIC1
|
37
|
4.6%
|
Mansit Housing CIC
|
68
|
3.7%
|
Lifeline (NW) CIC
|
10
|
2.7%
|
Total
|
945
|
89.4%
|
|
|
|
1 In
liquidation
Tenants in liquidation (Gen Liv UK CIC, Supportive Homes CIC and
Marigold Housing) account for 13.10% of the annual contracted rent
as at 31 May 2024.
2 As announced on 4
June 2024, Noble Tree Foundation Limited has entered into
administration