Home REIT racks up pre-tax loss of £475m

The listed firm, which specialises in accommodation for people experiencing homelessness, said it exchanged on the properties at public auctions last week, for proceeds totalling £36.9m.

Since August last year, the London-based company has sold 1,208 properties and exchanged on 293, as part of an effort to clear its debts. So far, it has raised £216.9m from offloading homes.

Home REIT is in the process of winding down. It announced the move in July, saying it would be in the “best interests” of shareholders.

In a filing this month, the company said it was “encouraged” that the prices agreed for properties had been in line with draft valuations from property company JLL.

In London, it said sale prices had “exceeded draft valuations”. A month before it revealed plans to wind down, Home REIT announced it had been unable to secure refinancing of its existing debts on terms it could recommend to shareholders.

Earlier this month, the trust announced it had reached an agreement with Mansit Housing CIC to surrender leases on 68 properties.

It came a week after One (Housing & Support) CIC, a lessee of 110 of Home REIT’s properties, agreed to enter into administration after being deemed “non-performing”.

Michael O’Donnell, chair of Home REIT, said: “Whilst the board is pleased to finally be in a position to publish the report and accounts, we share shareholders’ frustrations about the progress of the company.

“Despite substantial efforts to stabilise the business, the company continues to face extensive financial and operational challenges. Against this backdrop and reflecting the expected reduced size of the company’s portfolio, the board concluded that the best course of action to optimise remaining shareholder value is the managed wind-down.

“Our priority now is to optimise the value of the portfolio and maximise returns to shareholders, while keeping any disruption to residents to an absolute minimum.

“Despite the challenges faced by the company, the work undertaken over the past 12 months by AEW, including asset management initiatives to enhance value, regaining control of most properties and rolling out a re-tenanting programme, has created a portfolio that, while subscale to continue as a standalone quoted entity, represents an attractive investment opportunity for investors seeking to enter the supported living and private rented sectors.”

Home REIT, which floated on the London Stock Exchange in 2020, has been rocked by multiple issues in the past two years.

In 2022, short-seller Viceroy Research published a report raising doubts about the firm’s business model.

Trading in Home REIT’s shares were suspended in January 2023 after it missed a deadline to publish its annual report, which is still to be published.

Home REIT is also facing being sued by some of its shareholders, while the firm itself is taking legal action against Alvarium, its former investment advisor.

The Financial Conduct Authority, the regulator, launched an investigation into Home REIT in February.

Mr O’Donnell added: “It should be noted, however, that the fees incurred in defending the company against threatened litigation from a group of current and past shareholders will directly reduce the amount of capital ultimately returned to all shareholders and may impact the timing of any distribution to shareholders.

“I also would again like to thank shareholders for their ongoing patience and support as we strive to address, and seek redress for, the issues facing the company.”

The trust’s audited results for the year that ended on 31 August 2023, along with the interim results for the periods to 28 February 2023 and 29 February 2024, respectively, are expected to be published before the end of this year.