Home REIT makes progress with tenants and disposals

4th Sep 2023 10:38

(Sharecast News) - Home REIT updated the market on its last month of activities on Monday, reporting that its property adviser AEW had completed tenant engagement across its entire portfolio.

The London-listed firm said the purpose of the outreach was to comprehend the tenants' financial conditions, the occupancy rates of the leased properties, and their ability to meet rental obligations.

It said the focus was on boosting rent collection, and re-tenanting assets where necessary.

Due diligence was being continually conducted on all tenants, and it said AEW was planning to rationalise the tenant mix during what they termed the 'stabilisation period'.

Furthermore, AEW was negotiating with the liquidators of non-performing tenants Redemption Project CIC and Serenity Support CIC to explore re-tenanting options and other asset management opportunities.

To ensure quality control and asset valuation, Home REIT said it had engaged Vibrant Energy Matters to inspect all 2,473 properties in the portfolio.

Vibrant, a subsidiary of Connells, was aiming to complete that task by mid-November.

Simultaneously, Jones Lang LaSalle (JLL) had been appointed to undertake portfolio valuations, with a target completion date set for mid-November as well.

Financially, Home REIT was continuing to actively collaborate with its lender to service interest payments in full.

As of 31 August, the company said it had a cash balance of £13.5m, including restricted amounts.

The low unrestricted cash balance of £0.8m was expected due to recent interest payments, and was expected to improve with incoming proceeds from property sales.

It said it successfully exchanged contracts for the sale of 40 properties at £4.8m, slated for completion in early September.

Additional sales were in the pipeline as part of Home REIT's financial stabilisation strategy.

Home REIT also surrendered 100 leases in the One Housing & Support CIC portfolio, entering into direct leases with existing sub-tenant Mears.

That move, the board said, was expected to generate £0.9m per annum in rent receipts.

Home REIT added that it was in the process of finalising revised accounting policies, and did not expect to publish its outstanding annual reports until late 2023 at the earliest.

The delay was partly due to ongoing property valuations and inspections.

To enhance shareholder engagement, AEW, as property adviser, had reached out to a significant portion of Home REIT's shareholder register.

The company was also planning to conduct quarterly presentations open to all shareholders, starting from mid-October, and would release monthly updates on the first Monday of each month.

On the corporate governance front, the board said it had initiated a formal and phased succession process.

An unnamed individual with significant listed company experience was reportedly being considered for the role of senior independent director to lead that process.

Reporting by Josh White for Sharecast.com.