UK property company Home REIT has announced plans to wind down operations in a controlled manner to maximize shareholder value and repay its loan.
Shareholders will vote on a new investment plan for this process at a meeting on 16 September. If approved, the company will sell all its properties to repay loans to Scottish Widows and return money to shareholders, maximizing asset value.
The company has reduced its debt from £220 mln (€258 mln) to £106 mln (€125 mln) and plans to sell more properties worth £34 mln (€40 mln). As of 29 February 2024, the draft valuation of 2,079 properties, prepared by JLL, amounted to £341 mln (€403 mln). The sales will be conducted through auction, private treaty, portfolio, and individual asset sales. In August alone, the company sold 226 properties for £26.5 mln (€31.3 mln).
Corporate costs from 1 September 2023 to 16 August 2024, amounted to £17.1 mln (€20.2 mln), primarily due to higher-than-usual legal fees related to financing and lawsuits from shareholders. These costs are expected to remain elevated over the next 12 months.
Additionally, Home REIT is subject to an investigation by the Financial Conduct Authority.
Home REIT said it plans to sue its former managers, Alvarium Fund Managers, AlTi RE, and Alvarium Home REIT Advisors, for wrongdoing, adding it has enough money to continue operating and pursue legal action.
Home REIT was established in 2020 to address homelessness in the UK by acquiring and developing a diversified portfolio of high-quality accommodation assets. It sought to generate inflation-protected income and capital returns.
The listed company has encountered significant challenges due to the failures of its former advisers, including substandard property conditions, a higher-than-expected proportion of the portfolio leased as private rented sector rather than supported housing, weak tenant financial stability, significant property mismanagement, tenant rent defaults, and disputes, undisclosed tenant connections, tenant liquidations, and insufficient ongoing monitoring of tenants and properties by the former advisers.
The trading of the company's shares was suspended on 3 January 2023, due to the failure to publish its annual report and accounts for the year ended 31 August 2022, within the required timeframe. Home REIT now expects to release the 2022 audited accounts by mid-September, while the audited results for the year ended 31 August 2023, and the interim results for the periods to 28 February 2023, and 2024, respectively, will be published in Q4.
Following the appointment of AEW UK Investment Management in August 2023 as investment manager, a stabilization strategy was adopted to stabilize the portfolio and financial position. Many properties were found to require extensive renovation before they could be occupied or reconfigured to meet local market or social use requirements. In December 2023, the Board announced an unaudited valuation demonstrating a material reduction in the portfolio's value.
