7 May 2024
Home REIT plc
("HOME" or the
"Company")
Monthly Update
The Board and AEW UK Investment Management LLP
("AEW" or the "Investment Manager") provide their monthly update in
respect of April 2024.
Summary
· As
announced on 19 April 2024, 65 properties exchanged for sale at
auction for a total of £15.9m with completion expected during
May.
·
Repayment of £3.9m of debt to the Company's lender in April
comprising a cash repayment of £3.3m and net break gains of £0.6m
applied to loan principal. Total borrowings reduced to
£140.1m.
· Progress continues
on refinancing, as part of the strategy for the long-term financial
stability of the Company.
· An
additional 106 internal property inspections have been completed in
April, taking the total to 2,077 as at 30 April 2024. The
inspection programme is due to continue into May.
· The Company is
progressing legal action against selected non-performing
tenants.
· The
Company intends vigorously to defend itself in respect of the
threatened litigation and has denied the allegations made
against it.
· As
previously announced, the Company intends to bring legal
proceedings against those parties it considers are responsible for
wrongdoing.
Portfolio and Financial
Highlights
Financial
Position (Unaudited)
|
As at
31 August 2023
|
As at
30 April 2024
|
Valuation:
|
|
|
Draft August 2023 Valuation
|
£412.9m
|
£329.3m
1
|
Number of properties
|
2,473
|
1,920
|
Cash and
Borrowings:
|
|
|
Unrestricted Cash
|
£0.8m
|
£7.5m
|
Total Cash
|
£13.5m
|
£10.6m
|
Borrowings
|
£220.0m
|
£140.1m
|
Net debt
|
£206.5m
|
£129.5m
|
Income:
|
|
|
Annual Contracted Rent
|
£53.9m
|
£36.9m
|
Tenants 2 3
|
29
|
26
|
Properties under lease to tenants
|
2,358
|
1,739
|
Properties under separate management
agreement
|
115
|
127
|
Properties under property management agreements
- Direct Let (PRS)
|
-
|
544
|
|
|
|
|
To date
1
September 2023 to
30 April
2024
|
Month
1 April
2024 to
30 April
2024
|
Investment
Activity:
|
|
|
Properties sold in the period
|
£83.6m
|
£3.9m
|
Number of properties sold in period
|
553
|
97
|
Properties exchanged in period/not yet
completed
|
£27.6m
|
£15.9m
|
Number of properties exchanged not yet
completed at period end
|
219
|
65
|
Rent
collection:
|
|
|
Rent collection 4 %
|
11%
|
11%
|
Rent collection total
|
£3.1m
|
£0.3m
|
Inspections:
|
|
|
Completed5
|
2,077
|
106
|
Occupancy: (at date
of inspection on 1,556 Vibrant inspections)
Occupancy (at least one bed
occupied)
Vacant (whole building)
|
79%
21%
|
1 Proforma
value at 30 April 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 Rent collection - rent collected including arrears /rent
invoiced for the period
5 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 May.
Vibrant and AEW continue to prioritise completion of the inspection
programme with 84% of the portfolio inspected as at 30 April
2024.
Investment Activity
·
Following announcements of exchanges at auction in previous
months, 97 properties completed during April for a total of £3.9m
and 219 properties remain exchanged for sale for a total of £27.6m
with completion expected in May.
· As announced on 19 April
2024, 65 properties exchanged for sale at auction for a total of
£15.9m, in line with the draft JLL August 2023 values.
· Since August 2023, the
Company has completed on the sale of 553 properties and exchanged
on a further 219 properties. The gross proceeds from properties
sold and exchanged totals £111.3m, 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 with legal
action being taken against selected non-performing tenants. The
Company 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 collected on operating leases including arrears
represents 11% of the rent invoiced for the month of April. 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.
· AEW
continues active dialogue with a number of providers who have
significant demand for properties for Supported Living and other
forms of Social Use accommodation.
· AEW continues
undertaking a comprehensive onboarding process for these new
providers and property managers which involves qualitative and
quantitative assessments including desktop and physical assessments
of their operations and existing stock.
· 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
·
Although AEW continues to implement strategies to increase
rental income, further sales are expected in the near term to
support the Company's cashflow and to reduce debt.
· The Company had
£10.6m cash balance as at 30 April 2024 of which £7.5m is
unrestricted.
· The
Company repaid £3.9m of debt to the Company's lender in April
comprising a cash repayment of £3.3m and a net break gain of £0.6m
also being applied in repayment of the debt. A total of £79.9m of
debt has been repaid since the Company entered the stabilisation
period during August 2023.
·
As at 30 April 2024, the Company has total borrowings
of £140.1m, comprising a £49.8m 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, Scottish Widows Limited,
through regular meetings and continue to service interest payments
in full as they fall due.
·
The Company's lender has, however, 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. The
Directors consider that a refinancing of the existing facility with
an alternative lender is the most appropriate option for the
Company to maintain a suitably sized and diversified portfolio upon
which stabilisation may be achieved and allowing, in turn, the
Company's long-term objectives to be continued.
Valuation, Publication of the Annual
and Interim Reports
·
JLL, as external valuer, is undertaking valuations of the
properties as at 29 February 2024 on the bases of fair value.
Relevant announcements on the portfolio valuation will be made in
due course.
·
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 both 31 August 2022 and 31 August
2023, during the second quarter of 2024.
· 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, which
includes its most recent retail shareholder webinar which was
held on 26 April 2024. The presentation for this is available on
the Company's website.
· The
next monthly update is expected to be announced on Wednesday
5th June.
Potential Litigation
· As announced on 18
April, the Company has recently issued a comprehensive response to
a pre-action letter of claim received from Harcus Parker Limited,
on behalf of certain shareholders. The letter of claim alleges that
the Company, along with certain other parties, provided information
to investors which was false, untrue and/or misleading.
· The
Company intends vigorously to defend itself in respect of the
threatened litigation and has denied the allegations made against
it.
· As
previously announced, the Company intends to bring legal
proceedings against those parties it considers are responsible for
wrongdoing. To that end, in April the Company issued pre-action
letters of claim to Alvarium Fund Managers (UK) Limited (its former
alternative investment fund manager) and AlTi RE Limited, its
former investment adviser's principal*. The Company
intends to issue further pre-action correspondence in due
course.
· 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.
* Correction:
the RNS announcement dated 18 April 2024 referred to AlTi RE
Limited as the Company's former investment adviser's "appointed
representative".
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.
Portfolio and tenant
breakdown
Geographic
Region
As at 30 April
2024
|
Number of
Properties
|
Number of Properties
(%)
|
North East
|
624
|
32.6%
|
North West
|
380
|
19.8%
|
Yorkshire and the Humber
|
254
|
13.2%
|
East Midlands
|
190
|
9.9%
|
West Midlands
|
174
|
9.1%
|
South West
|
110
|
5.7%
|
London
|
75
|
3.9%
|
South East
|
68
|
3.5%
|
Wales
|
23
|
1.2%
|
East of England
|
22
|
1.1%
|
Total
|
1,920
|
100.0%
|
Top 10
Tenants
As at 30 April
2024
|
Number of Properties
|
% of portfolio annual contracted
rent
|
Big Help Project Ltd
|
352
|
16.4%
|
One (Housing & Support)
CIC
|
185
|
15.2%
|
CG Community Council
|
54
|
7.7%
|
Dovecot & Princess Drive
Community Association
|
52
|
7.0%
|
Noble Tree Foundation
Limited
|
143
|
6.9%
|
Bloom Social Housing CIC
|
77
|
6.7%
|
LTG Vision CIC
|
180
|
5.6%
|
Mears Ltd
|
177
|
5.3%
|
Gen Liv UK
CIC1
|
46
|
4.0%
|
Supportive Homes CIC
1
|
47
|
3.4%
|
Total
|
1,313
|
78.2%
|
|
|
|
1 In
liquidation
Tenants in liquidation (GEN LIV UK CIC, Supportive Homes CIC,
Marigold Housing and Eden Safe Homes CIC) account for 8.7% of the
annual contracted rent as at 30 April 2024.