TIDMHOME
RNS Number : 2684A
Home REIT PLC
23 May 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
23 May 2023
Home REIT plc
("Home REIT" or the "Company")
Appointment of AEW as Property Adviser and Investment
Manager
Further to the announcement on 5 April 2023, the Board announces
that it has entered into an agreement with AEW UK Investment
Management LLP ("AEW") under which, effective immediately, AEW will
act as the Company's Property Adviser. AEW will become the
Investment Manager and Alternative Investment Fund Manager ("AIFM")
to the Company following Alvarium Fund Managers (UK) Limited
ceasing to act as AIFM of the Company, Alvarium Home REIT Advisors
Limited ceasing to act as Investment Adviser to the Company,
receipt of the required FCA approval for AEW to take on the AIFM
functions and adoption by the Company of a revised investment
policy.
Selection process
AEW's selection follows a competitive process in which the Board
received a total of seven proposals and conducted detailed
discussions and negotiations with three short-listed parties. AEW
was selected based on its expertise both in property, including
managing residential for rent, and in managing listed funds, as
well as its depth of immediately available resource, the strength
of its network in the real estate marketplace, and its experience
in taking on investment management mandates, amongst other
factors.
The Company's lender has given its consent to this
appointment.
Background on AEW
AEW is a highly experienced real estate asset manager and part
of the AEW group, which has GBP74.5 billion of assets under
management globally as at 31 December 2022. AEW is the investment
manager of AEW UK REIT plc, AEW UK Real Return Fund and AEW UK Core
Plus Property Fund, in addition to a number of separate account
mandates. AEW represents the real estate asset management platform
of Natixis Investment Managers, one of the largest asset managers
in the world, with GBP980 billion of assets under management as at
31 December 2022.
Immediate priorities and proposed amendments to investment
policy
AEW's immediate priorities will be to undertake a thorough
review of the Company's assets to help inform a longer-term
strategy for the portfolio, as well as dealing with a number of
short-term requirements, including preparing for the potential sale
of a limited number of properties and engaging with the Company's
current tenant base regarding issues with their properties that may
have been previously unaddressed, while improving rent collection
efficiency. As announced on 15 March 2023, the Board will write to
shareholders as soon as practicable setting out the proposed
changes to the Company's investment policy, which will include
enabling the Company to enter into shorter-term leases with
tenants, and details of how shareholder approval will be
sought.
Terms of appointment
Effective immediately, AEW will act as Property Adviser to the
Company. AEW will become the Investment Manager and AIFM to the
Company following Alvarium Fund Managers (UK) Limited ceasing to
act as AIFM of the Company, Alvarium Home REIT Advisors Limited
ceasing to act as Investment Adviser to the Company, receipt of FCA
approval and adoption by the Company of a revised investment
policy. Alvarium Home REIT Advisors Limited continues to work
closely with the Board and its advisers, and is committed to
delivering an orderly handover. Simpact is continuing to assist the
Company on a rolling three-month contract.
As part of this process, the Company has sought to reduce the
level of the management fees from their previous level. Following
its appointment as Property Adviser (and until its appointment as
AIFM), AEW will be entitled to a property advisory fee of GBP3
million per annum. During the first two years of its appointment as
AIFM (the "Initial Period"), AEW will be entitled to (i) a fixed
base asset management and AIFM fee of GBP3 million per annum
(increasing annually in line with inflation by a maximum of 5 per
cent. per annum), (ii) a variable management fee for disposals of
GBP422 per bed for every property sold and (iii) a variable
management fee to incentivise rent collection of 10% of all rent
collected, subject to an aggregate cap of GBP10 million for the
Initial Period. Following the Initial Period, AEW will instead
become entitled to an investment management fee equal to 0.75% of
NAV per annum on an ongoing basis, subject to a minimum fee of GBP3
million per annum (increasing annually in line with inflation by a
maximum of 5 per cent. per annum). Under certain circumstances,
including a takeover of the Company completing during the initial
period (which would cause the Investment Management Agreement to be
terminated), AEW will be entitled to receive a termination payment
of GBP9 million, less any fees already paid or payable to AEW under
the Investment Management Agreement. This compares favourably with
a management fee of approximately GBP7 million per annum that would
have been payable to Alvarium Home REIT Advisors Limited under the
existing investment advisory agreement.
Current trading and additional updates
On 16 February 2023, the Company announced that, for the quarter
ended 30 November 2022, only 23% of rent had been collected,
meaning that out of a GBP14.8 million quarterly rent roll, only
GBP3.4 million had been paid. During the five months ended 30 April
2023, the Company collected a total of approximately GBP3.4
million, including sums in relation to rent arrears, from tenants.
Rent demanded during the same period was GBP25.9 million. With
AHRA, the Company has developed a number of initiatives to improve
rent collection, which AEW will now take forward under a revised
investment policy. As at 19 May 2023, the Company had a cash
balance of GBP18.9 million. The Company's cash balance reflects the
repayment of GBP30 million of cash held in a restricted account to
its lender, as announced on 5 April 2023. The Company's lender has
been supportive throughout this operationally challenging
period.
Following the appointment of AEW, the Board intends to proceed
with the sale in the near term of a number of properties, as the
Company works to stabilise its property portfolio, provide
additional liquidity and reduce its borrowings.
Home REIT has agreed terms with Bill Starn, a highly experienced
turnaround CFO, as a consultant to the Company. Following AEW's
appointment as Investment Manager, he is expected to transfer as a
consultant to the AEW team.
The Company has been given six months' notice by its property
valuer, Knight Frank, such that Knight Frank's contract to provide
valuation services to the Company will terminate from 3 November
2023. AEW will assist the board with the selection and appointment
of a new property valuer.
Lynne Fennah, Chair of Home REIT, said: "The appointment of a
new Investment Manager is an important step. AEW brings deep fund
management and property expertise that will be critical in enabling
the Company to stabilise its property portfolio, maintain its
mission of providing accommodation to vulnerable people and
maximise value for shareholders. The Board has run a thorough
process to enable it to make this change in Investment Manager. AEW
has undertaken detailed diligence before taking on the mandate and
is well placed to hit the ground running. I am delighted with the
appointment and look forward to working together."
Nick Winsley, Head of AEW UK, said: "We are committed to working
with Lynne and the Board to protect the interests of all of Home
REITs stakeholders, shareholders, the Company's lender and the
residents. While our immediate priority will be to address a number
of short-term requirements, we will also undertake a thorough
review of the Company's assets that will allow us to formulate a
longer-term strategy for the entire portfolio, which we will
propose to the Board in due course."
Further updates will be provided in due course, as
appropriate.
The person responsible for arranging the release of this
announcement on behalf of the Company is FTI Consulting.
FOR FURTHER INFORMATION, PLEASE CONTACT:
For Home REIT:
Smith Square Partners (Financial
Adviser)
John Craven
Toby Rolls +44 (0)20 3696 7260
FTI Consulting (Communications HomeREIT@fticonsulting.com
Adviser) +44 (0)20 3727 1000
Dido Laurimore
Eve Kirmatzis
Ellie Perham-Marchant
Oliver Harrison
F or AEW:
AEW
Stefano Bassi, AEW stefano.bassi@eu.aew.com
FTI Consulting
Richard Sunderland richard.sunderland@fticonsulting.com
The Company's LEI is: 213800A53AOVH3FCGG44.
For more information, please visit the Company's website:
www.homereituk.com
About AEW
AEW is one of the world's largest real estate asset managers,
with EUR84.9 billion of assets under management as at 31 December
2022. AEW has over 800 employees, with its main offices located in
Boston, London, Paris and Singapore and offers a wide range of real
estate investment products including comingled funds, separate
accounts and securities mandates across the full spectrum of
investment strategies. AEW represents the real estate asset
management platform of Natixis Investment Managers, one of the
largest asset managers in the world.
As at 31 December 2022, AEW managed EUR38.5 billion of real
estate assets in Europe on behalf of a number of funds and separate
accounts. AEW has over 470 employees based in 10 offices across
Europe and has a long track record of successfully implementing
Core, Value-Add and Opportunistic investment strategies on behalf
of its clients. In the last five years, AEW has invested and
divested a total volume of EUR21.9 billion of real estate across
European markets.
www.aew.com
Inside Information
The information contained within this announcement is deemed by
Home REIT to constitute inside information as stipulated under the
Market Abuse Regulation (EU) no. 596/2014 (as it forms part of
domestic law by virtue of the European Union (Withdrawal) Act
2018). On the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Disclaimer
Smith Square Partners LLP ("Smith Square"), which is authorised
and regulated in the United Kingdom by the Financial Conduct
Authority, is acting for Home REIT and no one else in connection
with the matters set out in this Announcement. In connection with
such matters, Smith Square will not regard any other person as its
client and will not be responsible to any persons other than Home
REIT for providing the protections afforded to clients of Smith
Square, or for providing advice in relation to the contents of this
announcement or any other matter referred to herein. Smith Square
does not owe or accept any duty, liability or responsibility
whatsoever (whether direct, indirect, consequential, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Smith Square in connection with this announcement,
in any statement contained herein or otherwise.
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