News28.03.24by Alex DanielEmbattled investment trust Home REIT has sold off 63 properties as it presses on with plans to reduce its debts.Picture: AlamySharelinesHome REIT sells off more than 60 properties as it continues with plan to reduce borrowing #UKhousing The company, which specialises in accommodation for homeless people, said it has exchanged on the sale, which will bring proceeds of £6.1m.
Home REIT has been selling homes by the hundreds since August 2023, as part of a plan to bring its debt under control. An update on 5 March said it owed £149.1m to lenders.
In December, it revealed that its 2,473 properties were worth an estimated £412.9m, almost 60% less than the £977m it paid for them, following a major round of inspections from JLL. The inspections, which began in July, 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”.
The £6.1m proceeds from the latest round of sales are £0.5m, or 7.7%, below the valuations given in August.
Home REIT’s update today added that because the majority of properties sold are below average size for its portfolio, there may be “greater percentage variation” when comparing the sale price to the valuation.
It debuted on the London Stock Exchange in October 2020, but has been rocked by difficulties since November 2022, after Viceroy Research, the short-seller, raised doubts about its business model.
The fund leases more than 10,000 beds across 135 local authorities to charities to provide accommodation for homeless people. Trading in Home REIT’s shares was suspended in January 2023 after it missed a deadline to publish its annual report.
In May 2023, property adviser AEW told bosses that a “larger than expected” proportion of its portfolio was classed as in the private rented sector rather than homeless accommodation backed by exempt rents from local authorities.
Since the subsequent JLL inspections last summer, the company has sold 451 properties and exchanged on a further 257. It has made £95.5m from the sales so far.
“Sale proceeds will be used to reduce borrowings and provide working capital,” it added.
At the start of this year, the firm revealed that legal action was being taken against a number of its tenants who have stopped paying rent.
The listed firm said that its investment manager, AEW, is “pursuing all strategies” to help Home REIT stabilise its property portfolio.
This includes “taking legal action on selected tenants that are not engaging constructively and continue to withhold payment of rent”, the stock market filing said. The identity of the tenants was not disclosed.
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