Response to media reports

RNS Number : 7535N

Home REIT PLC

25 January 2023

 

25 January 2023

Home REIT plc

("Home REIT" or the "Company")

Response to media reports

Home REIT notes recent press coverage regarding delays in the approval of exempt housing benefit applications to one of its tenants, Lotus Sanctuary CIC ("Lotus"), from local authorities, and comments around its viability as a going concern.

Lotus was founded in 2018 and provides over 2,000 beds in aggregate to house vulnerable people. As at 31 August 2022, Lotus represented 12.2% of the Company's overall rent roll, providing 939 beds predominantly to vulnerable women. As at 31 December 2022, the Company's properties let to Lotus were 55% occupied (by beds), inclusive of properties undergoing refurbishment.

As previously announced, all rent due to 31 August 2022 has been paid, with final payments for the August quarter received in October 2022. The Company confirms that Lotus has not paid any rent for the quarter to 30 November 2022. Historically, rent payments have been made between two weeks to two months post invoice date.

The Company is working constructively with Lotus to ameliorate the operational issues it is currently facing, including by providing advice from Simpact Group, which was recently appointed by Alvarium Home REIT Advisors Limited to accelerate a detailed ongoing review of the Company's portfolio. In particular, this advice is focused on increasing the levels of referrals to increase underlying occupancy levels and decreasing the time delay in regards to receiving approval for exempt housing benefit applications. It should be noted that following approval of an exempt housing benefit claim, the payment from a local authority is typically backdated to the initial date of the claim, including the amount due for rent, thereby assisting a tenant in clearing landlord arrears that may have accrued as a result.

Should Lotus not be viable as a going concern and, for example, enter administration or liquidation, the Company will seek to assign leases to alternative providers. In these circumstances, the Company notes its assets are rented at or around Local Housing Allowances levels and it has a successful track record in this regard with the assignment of the Circle Housing leases in November 2022. Alternatively, the Company could grant leases to local authorities or registered housing associations on a short-term basis to ensure continuity for the underlying residents.

As noted in the announcement made on 12 January 2023, the Company has witnessed a deterioration in its rent collection position, with a significant number of its tenants in arrears in regards to the quarter to 30 November 2022. The Investment Adviser, assisted by Simpact Group, is establishing the reasons behind this deterioration and the Company has issued a number of statutory demands to tenants this month. The Company does not wish to prejudge this legal process and will provide a further update to the market by mid-February when this process has concluded. At this point the Investment Adviser and Simpact will also provide the initial results of their detailed review of the portfolio and strategy to resolve these operational issues.

FOR FURTHER INFORMATION, PLEASE CONTACT:

FTI Consulting (Communications Adviser) Dido Laurimore Eve Kirmatzis Ellie Perham-Marchant Oliver Harrison

[e-mail] [phone]

The Company's LEI is: 213800A53AOVH3FCGG44.

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

About Home REIT plc

Home REIT plc seeks to contribute to the alleviation of homelessness in the UK, whilst targeting inflation-protected income and capital returns, by funding the acquisition and creation of a diversified portfolio of high-quality accommodation assets across the UK which are dedicated to providing accommodation to homeless people. The accommodation assets are let or pre-let on very long (typically 20 to 30 years) leases, containing inflation-linked or fixed uplift rent review provisions, to registered charities, housing associations, community interest companies and other regulated organisations which have a proven operating track record in providing low-cost accommodation to homeless people and which receive housing benefit or comparable support from local or central government to fund the provision of such accommodation to homeless people.

There is a critical need for further accommodation for homeless people in the UK, due to an increasing homeless population and a lack of available and affordable high-quality, fit-for-purpose stock to address the problem. Local housing authorities are under a statutory duty to secure accommodation for individuals who are unintentionally homeless and in priority need but current accommodation for homeless people is limited in quantum and often sub-standard and uneconomical.

The Company focuses on investing in and creating well-located properties that provide a sustainable level of rent for the tenant. Within the homeless accommodation assets, there is a focus on care, support, training and rehabilitation to provide vulnerable homeless people with the skills and confidence to find long-term accommodation and enable them to reintegrate back into society. Savings are expected to be made to local authorities and other providers of accommodation to homeless people via lower rents versus more expensive alternative accommodation.

The Company is listed on the premium segment of the Official List of the UK Financial Conduct Authority and its Ordinary Shares were admitted to trading on the main market of the London Stock Exchange, premium segment, on 12 October 2020.

 

END

 

 

SPCPPUMCGUPWPGC