Annual Financial Report Director Change

Home REIT PLC

14 January 2025

 

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

14 January 2025                                                 

Home REIT plc

("Home REIT" or the "Company")

2023 Annual Report and Accounts and Directorate Changes

Home REIT's Annual Report and Accounts for the year to 31 August 2023 is today being made available to shareholders and published on its website at https://www.homereituk.com/. The Report has also been submitted to the Financial Conduct Authority's National Storage mechanism and will be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Michael O'Donnell, Chair of Home REIT, commented:

"The publication of the 2023 Annual Report and Accounts is a further positive step toward the relisting of the Company's shares. We remain focused on optimising the value of the portfolio and maximising returns to shareholders, while keeping disruption to underlying residents to a minimum, in line with the Company's Managed Wind-Down strategy. The Company has made significant progress in recent months, with debt now fully repaid and the remaining portfolio launched for sale. I would like to once again thank shareholders for their ongoing patience as we continue to work towards the resolution of the remaining challenges facing the Company.

"The publication of these accounts also marks the point when Lynne Fennah, Marlene Wood, Peter Cardwell and Simon Moore stand down from the Board. I would like to take this opportunity to thank them for their support since I took the Chair role in January last year."

Financial Results

The 2023 Annual Report and Accounts shows a decrease in Net Asset Value (NAV) from £345.9 million (31 August 2022) to £216.9 million as at 31 August 2023, driven by several key factors:

·      A decrease in fair value of investment property of £71.4 million, reflecting the assessment of tenant covenant strength and the condition of the assets for new acquisitions

·      Provision for doubtful debts of £49.5 million

·      Write-off of lease related assets of £31.0 million

·      Write-off of remaining seller's works of £14.2 million

·      Recognition of a gain on revaluation of borrowings of £14.5 million

·      Dividends paid of £10.9 million

The NAV per Share decreased to 27.43 pence as at 31 August 2023, a decrease of 37.3% from the 43.76 pence as at 31 August 2022.

The loss before tax of the Group for the period to 31 August 2023 was £118.2 million (2022: £474.8 million), driven by several key factors:

·      A decrease in the fair value of investment property of £71.4 million (2022: £452.9 million)

·      Gross rental income of £57.6 million (2022: £38.2 million) against which the Group recognised provisions for doubtful debts of £49.5 million (2022: £1.9 million) so that net rental income was £8.1 million (2022: £36.4 million)

·      Write-off of Seller's Works not initiated of £14.2 million (2022: £11.9 million)

·      Impairment charges on lease inducements and straight-line assets of £31.0 million (2022: £31.3 million)

·      General and administrative expenses of £19.2 million (2022: £9.9 million)

·      Recognition of a gain on the revaluation of bank borrowings of £14.5 million

JLL has independently valued the Group's portfolio and, as at 31 August 2023, the Group's portfolio had a market value of £412.7 million (versus £414.3 million as at 31 August 2022). This represented 40.7% of the historic acquisition costs of £1,014.3 million including purchase costs.

The reduction in property valuation between the end of the 2022 and 2023 financial years reflects the re-assessment of tenants' covenant strength, several of which entered into liquidation either during or post-period end, as well as a re-assessment of the quality of assets acquired during the period.

The assessment of the covenant strength of tenants and the condition of the properties as at 31 August 2023 resulted in 88.3% (2022: 39.1%) of the portfolio by number of properties being valued on a vacant possession basis for the 31 August 2023 valuation.

Further details on these re-assessments and on the Company's financial performance during the period can be found in the relevant sections of the Annual Report and Accounts.

Post-period end activity

As announced on 28 November 2024, following the completion of recent property sales at auction, the Company has now fully repaid its Scottish Widows loans, having completed the final repayment of £28.6 million on 27 November 2024, comprising a £24.9 million cash repayment and a net break gain of £3.7 million. A further payment was made to Scottish Widows in December 2024 in respect of the Additional Fees, which amounted to approximately £9 million, at which point Scottish Widows released its charge over the Company's remaining assets.

Since August 2023, the Company has completed or exchanged on the sale of 1,622 properties for £244.1 million, with the total gross proceeds from properties sold and exchanged in aggregate in line with JLL's August 2023 and February 2024 draft valuations. The Company's remaining property portfolio of 851 assets is currently being marketed for sale, quoting in excess of £175 million.

As previously advised, the Company intends to bring legal proceedings against those parties it considers responsible for wrongdoing.  The Company issued pre-action letters of claim to Alvarium Fund Managers (UK) Limited and AlTi RE Limited on 12 April 2024 and to Alvarium Home REIT Advisors Limited (in liquidation) on 29 May 2024 and correspondence has continued between the parties.

A pre-action letter of claim has been received by the Company from Harcus Parker Limited on behalf of a group of current and former shareholders of the Company. No legal proceedings have been issued at this stage. The Company has issued a comprehensive response to this pre-action letter and correspondence is continuing between the parties. The Company intends vigorously to defend itself in respect of the threatened litigation and has denied the allegations made against it.

The Company cannot comment any further on these issues at this stage as to do so may prejudice the Company's position in any potential proceedings. Any relevant announcements in this regard will be made at the appropriate time.

Financial results for historic and subsequent periods

The unaudited interim results for the periods to 28 February 2023 and 29 February 2024 have been prepared in parallel (the "Historical Accounts"). The Group intends to publish the remaining Historical Accounts and the audited annual results for the year ended 31 August 2024 during Q1 2025. The Board and AEW remain committed to the restoration of trading in the Company's ordinary shares as soon as is practically possible.

Board Composition

As previously announced on 18 January and 5 August 2024, Peter Cardwell, Lynne Fennah, Simon Moore and Marlene Wood had indicated that they would step down from the Board upon the publication of the 2023 financial results and have therefore today stepped down from the Board.

They have confirmed they will continue to assist the Company, when necessary, on historic legal and regulatory matters, and Lynne Fennah will be employed on a part-time basis to provide additional support in relation to these matters. The Company confirms that the remaining directors will continue to serve on the Audit Committee (Chair: Rod Day), Management Engagement Committee (Chair: Peter Williams, Senior Independent Director) and the Nomination Committee (Chair: Michael O'Donnell, Chair of Home REIT).        

FOR FURTHER INFORMATION, PLEASE CONTACT:

FTI Consulting (Communications Adviser) Dido Laurimore Bryn Woodward Oliver Harrison

[e-mail] [phone]

The Company's LEI is: 213800A53AOVH3FCGG44.

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

 

END