Home REIT PLC Response to media reports (7535N)
January 25 2023 - 2:00AM
UK Regulatory
TIDMHOME
RNS Number : 7535N
Home REIT PLC
25 January 2023
25 January 2023
Home REIT plc
("Home REIT" or the "Company")
Response to media reports
Home REIT notes recent press coverage regarding delays in the
approval of exempt housing benefit applications to one of its
tenants, Lotus Sanctuary CIC ("Lotus"), from local authorities, and
comments around its viability as a going concern.
Lotus was founded in 2018 and provides over 2,000 beds in
aggregate to house vulnerable people. As at 31 August 2022, Lotus
represented 12.2% of the Company's overall rent roll, providing 939
beds predominantly to vulnerable women. As at 31 December 2022, the
Company's properties let to Lotus were 55% occupied (by beds),
inclusive of properties undergoing refurbishment.
As previously announced, all rent due to 31 August 2022 has been
paid, with final payments for the August quarter received in
October 2022. The Company confirms that Lotus has not paid any rent
for the quarter to 30 November 2022. Historically, rent payments
have been made between two weeks to two months post invoice
date.
The Company is working constructively with Lotus to ameliorate
the operational issues it is currently facing, including by
providing advice from Simpact Group, which was recently appointed
by Alvarium Home REIT Advisors Limited to accelerate a detailed
ongoing review of the Company's portfolio. In particular, this
advice is focused on increasing the levels of referrals to increase
underlying occupancy levels and decreasing the time delay in
regards to receiving approval for exempt housing benefit
applications. It should be noted that following approval of an
exempt housing benefit claim, the payment from a local authority is
typically backdated to the initial date of the claim, including the
amount due for rent, thereby assisting a tenant in clearing
landlord arrears that may have accrued as a result.
Should Lotus not be viable as a going concern and, for example,
enter administration or liquidation, the Company will seek to
assign leases to alternative providers. In these circumstances, the
Company notes its assets are rented at or around Local Housing
Allowances levels and it has a successful track record in this
regard with the assignment of the Circle Housing leases in November
2022. Alternatively, the Company could grant leases to local
authorities or registered housing associations on a short-term
basis to ensure continuity for the underlying residents.
As noted in the announcement made on 12 January 2023, the
Company has witnessed a deterioration in its rent collection
position, with a significant number of its tenants in arrears in
regards to the quarter to 30 November 2022. The Investment Adviser,
assisted by Simpact Group, is establishing the reasons behind this
deterioration and the Company has issued a number of statutory
demands to tenants this month. The Company does not wish to
prejudge this legal process and will provide a further update to
the market by mid-February when this process has concluded. At this
point the Investment Adviser and Simpact will also provide the
initial results of their detailed review of the portfolio and
strategy to resolve these operational issues.
FOR FURTHER INFORMATION, PLEASE CONTACT:
FTI Consulting (Communications HomeREIT@fticonsulting.com
Adviser) +44 (0)20 3727 1000
Dido Laurimore
Eve Kirmatzis
Ellie Perham-Marchant
Oliver Harrison
The Company's LEI is: 213800A53AOVH3FCGG44.
For more information, please visit the Company's website:
www.homereituk.com
About Home REIT plc
Home REIT plc seeks to contribute to the alleviation of
homelessness in the UK, whilst targeting inflation-protected income
and capital returns, by funding the acquisition and creation of a
diversified portfolio of high-quality accommodation assets across
the UK which are dedicated to providing accommodation to homeless
people. The accommodation assets are let or pre-let on very long
(typically 20 to 30 years) leases, containing inflation-linked or
fixed uplift rent review provisions, to registered charities,
housing associations, community interest companies and other
regulated organisations which have a proven operating track record
in providing low-cost accommodation to homeless people and which
receive housing benefit or comparable support from local or central
government to fund the provision of such accommodation to homeless
people.
There is a critical need for further accommodation for homeless
people in the UK, due to an increasing homeless population and a
lack of available and affordable high-quality, fit-for-purpose
stock to address the problem. Local housing authorities are under a
statutory duty to secure accommodation for individuals who are
unintentionally homeless and in priority need but current
accommodation for homeless people is limited in quantum and often
sub-standard and uneconomical.
The Company focuses on investing in and creating well-located
properties that provide a sustainable level of rent for the tenant.
Within the homeless accommodation assets, there is a focus on care,
support, training and rehabilitation to provide vulnerable homeless
people with the skills and confidence to find long-term
accommodation and enable them to reintegrate back into society.
Savings are expected to be made to local authorities and other
providers of accommodation to homeless people via lower rents
versus more expensive alternative accommodation.
The Company is listed on the premium segment of the Official
List of the UK Financial Conduct Authority and its Ordinary Shares
were admitted to trading on the main market of the London Stock
Exchange, premium segment, on 12 October 2020.
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