TIDMHOME
RNS Number : 4132S
Home REIT PLC
06 November 2023
6 November 2023
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
October.
Summary
The Company and AEW highlight the following updates, with
further detail on each of these items also provided below.
-- At a public auction held on the 2 November 2023, the Company
has exchanged on the sale of a further 14 properties for
GBP8,982,500. Further property disposals are expected at two
auctions this week.
-- Rent collection including arrears representing 18% of rent invoiced during the month.
-- AEW continues to develop its strategy for non-performing
tenants during the stabilisation period. For those tenants that do
not engage constructively and continue to withhold payment, AEW is
assessing all strategies available to the Company which has
included serving statutory demands and section 146 notice of
forfeiture on selected tenants.
-- GBP15.3m cash balances as at 31 October of which GBP2.7m is unrestricted.
-- 534 internal property inspections now completed to 31 October
2023, assessing the condition, compliance and occupancy of
properties. The inspection programme is due to continue throughout
November and December.
-- The Company's valuer has externally inspected 2,247
properties and internally inspected 131 properties as at 27 October
2023. Currently, the Company expects to publish valuation
information by the end of the year.
-- The Company and AEW have now reviewed 1,690 of the historical
2,473 property transactions to apply revised accounting policies
back to inception.
-- Due to the application of the revised accounting policies,
the ongoing inspection programme and BDO enhanced audit
requirements, the Board currently anticipates publication of the
outstanding accounts in early 2024.
-- The Board and AEW remain committed to the restoration of the
trading in the Company's ordinary shares as soon as is practically
possible.
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
Portfolio assessment and tenant engagement
-- At a public auction held on the 2 November 2023, the Company
has exchanged on the sale of 14 properties for GBP8,982,500, with
completion expected in approximately one month's time. The 14
properties were identified as liquid assets primarily due to the
condition, occupancy and location, and have been sold at a value
representing an average of 51% of their purchase price. Sale
proceeds will be used to provide working capital and reduce
borrowings. Further properties are expected to be sold via two
auctions this week and the Company will publish details of these
disposals when the auction process has completed.
-- AEW continues to work constructively with those tenants which
are experiencing deterioration of financial strength and unable to
meet in full rent demands and pay arrears.
-- AEW continues to develop its strategy for non-performing
tenants during the stabilisation period. For those tenants that are
not engaging constructively and are continuing to withhold payment,
AEW is assessing all strategies available to the Company which has
included serving statutory demands and section 146 notice of
forfeiture on selected tenants.
-- As at 31 October 2023, 534 properties had been inspected by
Vibrant Energy Matters Limited ("Vibrant"), a subsidiary of
Connells Limited. The process of inspections is taking longer than
initially anticipated. Inspections require significant
co-ordination and communication between all the relevant parties
including tenants, property managers and individual occupiers. As
at 31 October 2023, 335 inspections have been aborted due to
Vibrant being unable to obtain access when attending properties.
The inspection programme is due to continue throughout November and
December. AEW intends to provide further analysis on inspection
results in future monthly updates.
-- Jones Lang LaSalle Limited ("JLL") as the external valuer has
externally inspected 2,247 properties and internally inspected 131
properties as at 27 October 2023. Currently the Company expects to
publish valuation information by the end of year.
Rent collection, financial position and related matters
-- Rent collected including arrears represents 18% of the rent
invoiced in the month of October. Whilst this is an increase on the
previous period's collection of 3%, rent collection will vary month
on month in the near term as some tenants continue to experience
deterioration of financial strength and inability to meet rental
payments and pay arrears. In addition, late payments from previous
months can impact the total received in a particular month.
-- As announced on the 29 September 2023, the Company exchanged
contracts on the sale at auction of 137 properties for GBP22.8m. 37
of these have completed with the remaining expected to complete
over the coming two weeks.
-- 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 at 31 October 2023, the Company had total borrowings of
GBP216.2m, comprising a GBP116.2m interest-only term loan,
repayable in 2032, with a fixed all-in rate of 2.07%. per annum,
and a GBP100m interest-only term loan, repayable on 2036, with a
fixed all-in rate of 2.53% per annum.
-- As at 31 October 2023, the Company had cash balances of
GBP15.3m including amounts held on account with the Company's
lender and subject to certain restrictions regarding its
availability; the Company had GBP2.7m of unrestricted cash.
-- Further sales are expected in the near term as part of the
strategy to stabilise the financial position of the Company.
Publication of the annual and interim reports
-- The independent valuation reports of JLL as at 31 August
2022, 28 February 2023 and 31 August 2023 on the bases of market
value and market value on the special assumption of vacant
possession are key to the publication of the annual and interim
reports.
-- As announced on 4 September 2023, the Board and AEW have
determined revised accounting policies for revenue recognition and
acquisition accounting to better reflect the substance of the
historical acquisitions and lease arrangements. The revised
policies have been presented to the Company's auditors BDO LLP
("BDO") and are being finalised.
-- The Company with AEW is undertaking the extensive exercise of
reviewing all 2,473 property acquisitions in order to apply the
revised accounting policies with 1,690 reviews having been
completed as at 27 October 2023. The resulting adjustments will
involve restatement of the 2021 accounts and will be applied to the
2022 and 2023 accounts.
-- With the revised accounting policies being applied back to
inception and the inspection programme continuing through November
and into December, the Board currently anticipates publication of
the outstanding accounts in early 2024. As previously announced,
BDO is conducting an enhanced audit, the Board and AEW will
continue to work with BDO to publish the results as soon as
practically possible.
-- The Board and AEW remain committed to restoration of trading
in the Company's ordinary shares as soon as is practically
possible.
Shareholder engagement
-- AEW continues engagement with the Company's shareholders.
-- The first quarterly online presentation open to all retail
shareholders was held on the 19 October 2023 and a copy of the
presentation is available on the Company's website.
-- To enable continued engagement with all shareholders, AEW
intends to provide quarterly presentations open to all retail
shareholders.
-- The next monthly update is expected to be announced on 5 December 2023.
Board succession
-- Further to the Company's announcements on 4 September and 2
October 2023, Fidelio Partners has made good progress in
identifying a new independent Non-Executive Chair and the Company
is therefore well placed to make this proposed appointment in
advance of the restoration of the listing of its shares. It is
expected that the whole Board will transition entirely within 12
months as announced on 4 September 2023.
-- The appointment of a new Chair is being overseen by Mark
Davies who has been acting as a Senior Advisor to the Board since
March 2023. Mark is independent from the Board, has many years'
experience in capital markets and is well known to the Company's
largest shareholders, having met with those representing 37% of the
share register to discuss the recruitment process, proposed
skillset and timing of appointing a new Chair, with a new
independent Board to follow.
-- It is expected that as soon as the new Chair is appointed
that they will oversee the appointment of a new independent Board
of directors.
Portfolio Metrics
Set out below are certain unaudited key portfolio metrics at 31
October 2023.
As at: 31 August 2023 31 October 2023
Number of properties 2,473 2,416
Number of beds 11,861 11,615
Number of tenants 29 28
Annual rent roll (1 2) GBP53.9m GBP50.2m
In period: 1(st) June 2023 1 October 2023
to 30 September to 31 October 2023
2023
Properties sold 41 16(3)
Properties exchanged for 137 -
sale
Number of assets with asset 246 -
management initiatives completed
Rent collected in period GBP1.2m GBP0.7m
(2)
Rent collection % (4) 7% 18%
(1) Contracted rent as at period end
(2) Excluding 184 properties under separate management
agreements
(3) A further 22 property disposals completed on 1(st) and 2(nd)
November
(4) Rent collection - rent collected including arrears /rent
invoiced
Geographic Region Number Number Number of
As at 31 October 2023 of Beds of Properties Properties
(%)
-------------------------- --------- --------------- ------------
North East 2,525 790 32.7%
North West 1,998 416 17.2%
Yorkshire and the Humber 1,885 337 14.0%
East Midlands 1,398 275 11.4%
West Midlands 1,161 199 8.2%
South West 833 139 5.8%
London 679 87 3.6%
East of England 516 82 3.4%
South East 494 68 2.8%
Wales 126 23 0.9%
-------------------------- --------- --------------- ------------
Total 11,615 2,416 100.00%
Top 10 Tenants Number Number of % of portfolio
As at 31 October 2023 of Beds Properties annual contracted
rent
------------------------------------- --------- ------------ -------------------
One (Housing & Support) CIC 1,200 234 13.1%
Big Help Project Ltd 1,303 353 12.3%
Supportive Homes CIC * 1,046 209 12.2%
GEN LIV UK C.I.C. * 548 103 6.8%
Bloom Social Housing CIC 645 94 6.1%
CG Community Council 386 54 5.6%
Dovecot & Princess Drive Community
Association 396 52 5.0%
Noble Tree Foundation Limited 527 143 5.0%
LTG Vision CIC 627 192 4.4%
Mears Ltd 747 177 3.9%
TOTAL 7,425 1,611 74.4%
* In liquidation
Tenants in liquidation (Supportive Homes CIC, GEN LIV UK C.I.C.
and Serenity Support CIC ) account for 20.4% of the annual
contracted rent as at 31 October 2023.
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END
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