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Potential Home REIT buyer values company at just £32m
A firm that specialises in distressed assets has emerged as a potential buyer for Home REIT and has made an offer valuing the company at just £32m.
Southey Capital revealed the multimillion-pound tender offer, which values Home REIT’s shares at 4p each.
Home REIT, a listed firm that specialises in accommodation for people experiencing homelessness, has found itself in trouble over mounting debts and the falling value of its portfolio.
In response to the announcement, Home REIT told the stock market it had not been contacted directly by Southey Capital about the offer and “cannot comment on its validity”.
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In a trading update, the beleaguered firm said it had now repaid all its debt and was currently marketing the remainder of its property portfolio for sale.
It intends to publish historical accounts for the year up to August 2023 by the end of this year, with results published in the first quarter of next year.
In October, the investment trust posted a pre-tax loss of £475m.
Trading in the firm’s shares was suspended in January 2023 after it missed a deadline to publish its annual report.
Last December, the firm revealed that its properties were worth almost 60% less than the £977m it had paid for them.
In July this year, property consultancy JLL inspected 97% of Home REIT’s 2,473 properties and estimated they had a combined value of just £412.9m.
The inspections also revealed that 88% of homes were either empty or occupied by such an unreliable tenant that they were valued on a “vacant possession basis”.
Home REIT, which is in the process of winding down, has since sold 1,208 properties and exchanged on 293, raising £216.9m as part of an effort to clear its debts.
The company is also facing the threat of legal action from some of its shareholders and a probe by the Financial Conduct Authority (FCA), the financial regulator.
Home REIT said: “The company has adopted a managed wind-down strategy with a view to making timely returns of capital to shareholders upon completion of the sale of the remaining property portfolio, although the ability of the company to make distributions to shareholders may be constrained whilst the company faces potential shareholder litigation and an FCA investigation.
“As announced on 14 October 2024, the company remains committed to seeking a restoration of the company’s shares to trading on the London Stock Exchange as soon as practicable upon publication of the half-year and annual accounts for the years ended 31 August 2023 and 31 August 2024.
“The financial information to be published by the company will provide shareholders with an updated property valuation and net asset value per share ahead of the expected restoration of trading in its shares.”
The firm’s remaining property portfolio of 850 assets is currently being marketed for sale for an amount in excess of £175m.
In addition, Home REIT has exchanged on properties for which gross proceeds of £17m are expected, in addition to rental income, to be available to fund the company’s operational expenses and fees in the medium term, including the payment of an additional £9m fee to a lender.
Home REIT, which floated on the London Stock Exchange in 2020, has been rocked by multiple problems in the past two years, ever since short-seller Viceroy Research published a report raising doubts about its business model in 2022.
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