TIDMHOME
RNS Number : 8625Y
Home REIT PLC
08 January 2024
8 January 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
December 2023.
Summary
The Company and AEW highlight the following updates, with
further detail on these items also provided below.
-- Rent collection including arrears representing 12% of rent invoiced during the month.
-- AEW continues to make progress in obtaining control of Home
REIT's assets in respect of non-performing tenants. AEW is pursuing
all strategies available to the Company including taking legal
action on selected tenants that are not engaging constructively and
continue to withhold payment of rent.
-- The Company had GBP15.8m cash balances as at 31 December 2023
of which GBP5.4m is unrestricted.
-- As announced on 20 December 2023, auction sales have
continued. A further 81 properties exchanged for GBP16.4m in
December with completion expected in January. Further receipts are
expected in respect of the properties which exchanged for sale in
September, November and December that have not yet completed.
-- Repayment of GBP25.6m of debt to the Company's lender in
December comprising a cash repayment of GBP23.1m and net break
gains of GBP2.5m applied to loan principal. Total borrowings
reduced to GBP172.7m (from GBP198.3m the prior month).
-- An additional 287 internal property inspections have been
completed in December taking the total to 1,515 as at 31 December
2023. The inspection programme is due to continue during January
and February.
-- On 20 December 2023, the Company announced an updated
valuation of the Company's property portfolio based on draft
valuation reports from JLL. The unaudited fair market value of the
2,473 properties held at 31 August 2023 was GBP412.9m.
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
-- As part of the stabilisation strategy AEW continues to
undertake a comprehensive review and data collection exercise of
the property portfolio. Analysis of the underlying property
condition is paramount as part of an exercise to determine
suitability, capital expenditure requirements and income and
capital returns prospects as AEW works to rationalise the
portfolio.
-- Of the 1,093 property inspections undertaken by Vibrant,
occupancy (at least one bed occupied) is 75% as at the date of the
property inspections with 25% being vacant (whole building).
-- The inspection programme requires significant co-ordination
with multiple parties and is due to continue throughout January and
February.
-- As previously announced on 20 December 2023, at a series of
public auctions held in December, the Company exchanged on the sale
of 80 properties. A further property exchanged post auction taking
the total anticipated sales proceeds to GBP16.4m with completion
expected in January. Sale proceeds will be used to provide working
capital and reduce borrowings.
-- AEW continues to focus on obtaining control of the portfolio
with legal action being taken against non-performing tenants. The
Company also continues to work constructively with many tenants to
facilitate restructuring of leases and rationalisation of the
portfolio.
Rent Collection, Financial position and related matters
-- Rent collected including arrears represents 12% of the rent
invoiced in the month of December. It is anticipated that rent
collection will vary month on month in the near term as AEW
continue to work on stabilising the portfolio. AEW is pursuing all
strategies available to the Company including taking legal action
on selected tenants that are not engaging constructively and
continue to withhold payment of rent.
-- Following previous announcements of exchanges at auction, 98
properties completed during December for a total of GBP26.5m and
162 properties remain exchanged for sale at total of GBP25.7m and
are expected to complete in January.
-- 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.
-- The Company has repaid GBP25.6m of debt to the Company's
lender in December comprising a cash repayment of GBP23.1m and a
net break gain of GBP2.5m also being applied in repayment of the
debt. Due to reductions in future interest swap rates the potential
value of the net break gains has reduced significantly.
-- As at 31 December 2023, the Company has total borrowings of
GBP172.7m, comprising a GBP82.4m interest-only term loan, repayable
in 2032, with a fixed rate of 2.07 per cent. per annum, and a
GBP90.3m interest-only term loan, repayable on 2036, with a fixed
rate of 2.53 per cent. 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 full
repayment of the loans.
-- The Company had GBP15.8m cash balances as at 31 December 2023
of which GBP5.4m is unrestricted.
-- Further sales are expected in the near term as part of the
strategy to stabilise the financial position of the Company.
Valuation, Publication of the annual and interim reports
-- On 20 December 2023, the Company announced an updated
property valuation following the issuance by JLL, as external
valuer, of draft valuation reports, 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
-- JLL has externally inspected 2,391 properties comprising 97
per cent. Of the Company's portfolio, in addition to 195 internal
inspections as at 20 December 2023.
-- The valuations for the periods referred to above were
prepared in accordance with the current Royal Institution of
Chartered Surveyors' Valuation - Global Standards, effective from
January 2022, incorporating the IVS, and the RICS Valuation -
Global Standards 2017 UK national supplement (the "RICS Red Book").
JLL expects to report values in the region of those set out in the
table below. They may be subject to further amendment due to the
ongoing inspection programme and subject to completion of the
formal valuation process. These valuations are unaudited.
31 August 2023 28 February 31 August
2023 2022
Number of properties 2,473 2,473 2,239
--------------- ------------ ----------
Portfolio valuation GBP412.9m GBP422.9m GBP414.4m
--------------- ------------ ----------
-- The draft valuation of the Company's property portfolio as at
31 August 2023 represents 42.3% of the unaudited historical
acquisition costs of GBP977.0m (excluding purchase costs). The
reduction in the property valuation is principally a result of a
re--assessment of the quality of the assets through the on--going
inspection programme, and of the covenant strength of the tenants,
several of which entered liquidation in 2023.
-- The issuance of the valuation reports is a key step in the
process for the audit and publication of the Company's annual
results for the periods ending 31 August 2022 and 31 August 2023.
However, the audit process remains on-going and is subject, amongst
other things, to the completion of the valuation process, the
continuing internal inspection programme (which requires
significant co-ordination with multiple parties), and the
application of revised accounting policies back to inception.
Accordingly, the Company is not in a position to publish an
estimated net asset value at this time. The Board and AEW are
committed to continuing to work at pace with BDO to publish the
audited results in a timely manner.
-- 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 5 February 2024.
-- The second quarterly online presentation open to all retail
shareholders is expected to be held on 26 January 2024. Further
details will be provided in due course.
Board succession
-- Further to the Company's previous announcements, the Company
has made good progress in identifying a new independent
Non-Executive Chair. Following a comprehensive search and process,
a preferred candidate has been selected and the individual is
currently completing their own due diligence. The Company remains
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.
Portfolio Metrics
Set out below are certain unaudited key portfolio metrics at 31
December 2023.
As at: 31 August 2023 31 December 2023
Number of properties 2,473 2,209
Number of beds 11,861 10,416
Number of tenants (1) (2) 29 27
Annual rent roll (1 2 3) GBP53.9m GBP42.1m
In period: 1 June 2023 to 30 1 December 2023
November 2023 to 31 December
2023
Properties sold 165 98
Properties exchanged for
sale 179 (4) 81
Number of assets with asset 284 -
management initiatives completed
Rent collected in period GBP2.3m GBP0.4m
(1 2)
Rent collection % (1) (2
5) 9% 12%
(1) Excluding 157 properties under separate management
agreements (184 properties as at 30 November 2023)
(2) Excluding 38 properties under property management agreements
with HOME having direct AST leases with occupiers
(3) Contracted rent as at period end
(4) 2 properties previously exchanged for sale have fallen
through
(5) Rent collection - rent collected including arrears /rent
invoiced
Geographic Region Number Number Number of
As at 31 December 2023 of Beds of Properties Properties
(%)
-------------------------- --------- --------------- ------------
North East 2,475 775 35.1%
North West 1,912 402 18.2%
Yorkshire and the Humber 1,555 289 13.1%
East Midlands 1,162 226 10.2%
West Midlands 1,083 190 8.6%
South West 757 125 5.7%
London 566 76 3.4%
East of England 286 35 1.6%
South East 494 68 3.1%
Wales 126 23 1.0%
-------------------------- --------- --------------- ------------
Total 10,416 2,209 100.0%
Top 10 Tenants Number Number of % of portfolio
As at 31 December 2023 of Beds Properties annual contracted
rent
------------------------------------ --------- ------------ -------------------
One (Housing & Support) CIC 1,200 234 15.7%
Big Help Project Ltd 1,303 353 14.7%
Bloom Social Housing CIC 645 94 7.3%
CG Community Council 386 54 6.7%
Dovecot & Princess Drive Community
Association 396 52 6.2%
Noble Tree Foundation Limited 527 143 6.0%
Supportive Homes CIC* 436 85 5.7%
Gen Liv UK CIC* 351 66 5.1%
LTG Vision CIC 598 187 5.0%
Mears Ltd 747 177 4.6%
Total 6,589 1,445 77.0%
* In liquidation
Tenants in liquidation (Supportive Homes CIC, GEN LIV UK C.I.C.
and Serenity Support CIC, Marigold Housing account for 12.2% of the
annual contracted rent as at 31 December 2023).
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END
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