REG - Home REIT PLC - Monthly Update

Home ReitAnnouncement

05/08/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240805:nRSE0754Za&default-theme=true

RNS Number : 0754Z  Home REIT PLC  05 August 2024

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

 

5 August 2024

Home REIT plc

("HOME" or the "Company")

 

Monthly Update

 

The Board of HOME and AEW UK Investment Management LLP ("AEW" or the
"Investment Manager") provide their monthly update in respect of July 2024.

Managed Wind-Down proposal

On 16 July 2024, the Company announced the proposed adoption of a managed
wind-down strategy (the "Managed Wind-Down") pursuant to which the assets of
the Company would be sold with the objectives of optimising remaining
shareholder value and repaying the Company's loan balance.  The
implementation of the proposed Managed Wind-Down will require a change to the
Company's investment policy and the Company expects to publish a circular in
the near future to seek approval from shareholders for this.

The Company will continue to provide regular updates during the Managed
Wind-Down, however this, and the level of disclosure included, will be
reviewed throughout the process in order to protect the Company's commercial
interests and allow disposals to be completed in a manner that preserves
shareholder value.

Monthly Summary

·    As announced on 2 August 2024, 226 properties exchanged for sale at
auction for a total of £26.5m at auctions held over the previous three days.

·    Repayment of £8.5m of debt to the Company's lender in July
comprising a cash repayment of £7.4m and net break gains of £1.1m applied to
loan principal. Total borrowings were reduced to £106.1m as at 31 July 2024.

·    Total income received for the month was £0.65m, which represents a
13% increase from the previous month.

·    The Company's audited results for the year ended 31 August 2022
("FY22 Audit") are now expected to be published in late August 2024 or early
September.

·    Lynne Fennah has notified the Company of her intention to step down
from the Board on the publication of the 2023 financial results, but will
continue to assist the Company, when necessary, on historic legal and FCA
matters.

 

Portfolio and Financial Highlights

 

 Financial Position (Unaudited)                                  As at                              As at

                                                                 31 August 2023                     31st July 2024
 Valuation:
 Draft August 2023 Valuation                                     £412.9m                            £282.1m (1)

 Number of properties                                            2,473                              1,560
 Cash and Borrowings:
 Unrestricted Cash                                               £0.8m                              £6.9m
 Total Cash                                                      £13.5m                             £14.2m
 Borrowings                                                      £220.0m                            £106.1m
 Net debt                                                        £206.5m                            £91.9m
 Income:
 Annual Contracted Operating Lease Rent                          £53.9m                             £15.3m
 Tenants (2, 3)                                                  29                                 23
 Properties under lease to tenants                               2,358                              751
 Properties under property management agreements                 115                                809

                                                                 To date                            Month

                                                                 1 September 2023 to                1 July 2024 to 31 July 2024

                                                                 31 July 2024
 Investment Activity:
 Properties sold in the period                                   £128.8m                            £16.4m
 Number of properties sold in period                             914                                124
 Properties exchanged in period/not yet completed                £34.1m (4)                         £26.5m (4)
 Number of properties exchanged not yet completed at period end  287 (4)                            226 (4)
 Rent Collection:
 Operating lease rent collection                                 3.8m                               £0.2m
 Operating lease rent collection (6) %                           11%                                19%
 Management agreement income collection                          £1.8m                              £0.4m
 Total income collected                                          £5.6m                              £0.6m
 Inspections:
 Completed (7)                                                   2,144                              -

 Occupancy: (at date of inspection on 1,577 Vibrant inspections)                                    78%

 Occupancy (at least one bed occupied)                                                              22%

 Vacant (whole building)

 

( )

(1) Proforma value at 31 July 2024 being draft valuation as at 31 August 2023
(as announced on 20 December 2023) less disposals in period.

(2) Excluding properties under separate management agreements

(3) Excluding properties under property management agreements with HOME having
direct AST leases with occupiers

(4) Including properties sold in the auction on 1(st) August 2024

(6) Rent collection - rent collected including arrears /rent invoiced for the
period

(7) Inspections - these are of the portfolio held as at 31 August 2023.

 

FOR FURTHER INFORMATION, PLEASE CONTACT:

 FTI Consulting (Communications Adviser)  HomeREIT@fticonsulting.com (mailto:HomeREIT@fticonsulting.com)

 Dido Laurimore                           +44 (0)20 3727 1000

 Eve Kirmatzis

 Oliver Harrison

 

The Company's LEI is: 213800A53AOVH3FCGG44.

 

For more information, please visit the Company's website: www.homereituk.com
(http://www.homereituk.com/)

 

 

Investment Activity

·    Following announcements of exchanges at auction in previous months,
124 properties completed during July for a total of £16.4m.

·    As announced on 2 August 2024, 226 properties were exchanged for sale
at auctions over the previous three days for a total of £26.5m.

·    Since August 2023, the Company has completed on the sale of 914
properties and exchanged on a further 287 properties. The gross proceeds from
properties sold and exchanged totals £162.9m, which in aggregate is in line
with the August 2023 draft valuation.

 

Financial Position and Related Matters

·    The Company had a cash balance of £14.2m as at 31 July 2024 of which
£6.9m is unrestricted.

·    The Company repaid £8.5m of debt to the Company's lender in July
comprising a cash repayment of £7.4m and a net break gain of £1.1m also
being applied in repayment of the debt. A total of £113.9m of debt has been
repaid since the Company entered the stabilisation period during August
2023.

·    As at 31 July 2024, the Company has total borrowings of £106.1m,
comprising a £15.8m 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.

·    As mentioned in previous announcements, 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
increased from 5.00% to 7.00% from 1 July 2024 until the full repayment of the
loan.

·    The lender expects to be fully repaid no later than 31 December
2024.

·    The Company continues to service interest payments in full as they
fall due.

 

Valuation, Publication of the Annual and Interim Reports

·    The Company's audited results for the year ended 31 August 2022
("FY22 Audit") are expected to be published during late August or early
September 2024.

·    The audited results for the year ended 31 August 2023 have been
prepared in parallel and, along with interim results for the periods to 28
February 2023 and 2024 respectively, are expected to be published during the
third quarter.

·    The Board and AEW remain committed to the restoration of trading in
the Company's ordinary shares as soon as is practically possible.

 

 

Rent Collection and Tenant Engagement

·    Due to the recent tenant surrender deals and the subsequent increase
in properties under management agreements, rent collection is now being
reported on two bases: operating lease rent and management agreement income.

·    Rent collection on operating leases for the month of July was £0.2m,
representing 19% of the rent invoiced for the period. AEW continues to work
with selected tenants on payment plans.

·    Total net income collected for the month of July from properties
under management agreements was £0.4m. The income reported is net income, as
the income is still to be reconciled by the Property Managers due to the
extensive onboarding process underway. Once this exercise is complete, both
the gross and net income received will be reported.

·    Total income received for the month of July was £0.65m, this is a
13% increase from the previous month.

·    The Company is progressing legal action against selected
non-performing tenants.

 

Shareholder Engagement

·    AEW continues engagement with the Company's shareholders. The next
Webinar update will be held in September the date of which will be announced
following publication of the Investor Circular.

 

Potential Litigation

·    No changes to the potential litigation position occurred during the
month.  Any relevant announcements in this regard will continue to be made to
the market at the appropriate time.

 

Board Succession

·    As previously announced Marlene Wood, Simon Moore and Peter Cardwell
have advised the Company that they will step down from the Board on the
publication of the 2023 financial results. Lynne Fennah, has now also notified
the Company of her intention to step down at the same time but will continue
to assist the Company, when necessary, on historic legal and FCA matters.

 

 

Portfolio and tenant breakdown

 

 Geographic Region         Number  of Properties   Number of Properties (%)

 As at 31 July 2024
 North East                424                     30.1%
 North West                347                     21.4%
 Yorkshire and the Humber  212                     13.5%
 East Midlands             165                     9.9%
 West Midlands             152                     9.0%
 South West                103                     6.2%
 London                    69                      4.3%
 South East                52                      3.1%
 Wales                     18                      1.4%
 East of England           18                      1.1%
 Total                     1,560                   100.0%

 

 Operating Leases - Top 10 Tenants  Number of Properties  % of portfolio annual contracted rent

 As at 31 July 2024
 One (Housing & Support) CIC        110                   26.3%
 Mears Ltd                          177                   12.6%
 LTG Vision CIC                     171                   11.8%
 Gen Liv UK CIC(1)                  44                    9.1%
 Community Restore CIC              46                    6.5%
 Supportive Homes CIC(1)            34                    5.7%
 Mansit Housing CIC                 68                    5.2%
 Lifeline (NW) CIC                  10                    3.8%
 Complete Homes NW CIC              20                    3.5%
 Concept Housing Association CIC    4                     3.5%
 Total                              684                   88.0%

(1) In liquidation

Tenants in liquidation (Gen Liv UK CIC, Supportive Homes CIC and Marigold
Housing) account for 17.0% of the annual contracted rent as at 31 July 2024.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCKZGGRNDZGDZM