 Now having a read, and it's grim. The likes of @wallywoo should hang their heads in shame.
"The Company was set up 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 dedicated to providing accommodation to homeless people."
but
"The Company has experienced very significant challenges as a result of the failings of its former advisers, including: poor condition of properties, a larger than expected proportion of the portfolio let as private rented sector (PRS) rather than supported housing, weak tenant covenant strength, significant mismanagement of properties by non-performing tenants, tenants failing to pay rent and disputing rent payments, connections between tenants (and connections between tenants and vendors) that were not disclosed to the Board, tenants entering liquidation and limited evidence of the Company's former advisers undertaking any detailed ongoing monitoring of tenants and properties."
ie very much what Viceroy Research said, some of which was provable with no more than 10 minutes on Google. Yet the Board repeatedly issued RNS's denying the allegations.
This is old ground, but well worth repeating. How many bought on the Board's refutations? Or due to the rampers on here?
SW:
"The Board and AEW have continued to engage with Scottish Widows, which has advised that its objective is for repayment of the loan balance in the short term and by no later than 31 December 2024. In addition, and as announced on 3 July 2024, Scottish Widows has revised the terms of the additional fee payable by the Company charged on the outstanding loan amounts, such that this will increase from 5.0 per cent. to 7.0 per cent. per annum until repayment of the loans. As of 31 July 2024, the Company had accrued £7.3 million for the additional unpaid fees being charged since August 2023."
So not only is the accrued fee already £7.3m, but "..By no later than.." implies SW is serious.
The circular goes on to talk about block sales, portfolio sales etc, not just the auctions. Suspect that's why Allsop is a lot quieter for next week - HOME are going to block dump some of what's left. The Mears portfolio seems an obvious place to start.
The great unknown is the legal actions against HOME, and any they eventually instigate against the likes of Alvarium. We could be no more than halfway through the HOME saga. |
Indeed, this was what they said on 5th August, which itself was already slippage from the previous statement, despite saying the audit was "..Substantially complete" in the RNS of 3rd July & would be published in August:
"The Company's audited results for the year ended 31 August 2022 ("FY22 Audit") are expected to be published during late August or early September 2024.
· The audited results for the year ended 31 August 2023 have been prepared in parallel and, along with interim results for the periods to 28 February 2023 and 2024 respectively, are expected to be published during the third quarter."
So if the circular's out now, does that mean early September has also slipped?
Ah yes, it has, from a search of the RNS this morning:
"The inspection programme has been critical to putting the Company in a position to publish its 2022 audited accounts, which are expected to be released by mid-September. "
So an audit that was "substantially complete" in early July, has now slipped 3x to mid-September, coincidentally right around the time holders will have cast their votes.
Note also:
"The audited results for the year ended 31 August 2023 have been prepared in parallel and, along with interim results for the periods to 28 February 2023 and 2024 respectively, are expected to be published during the fourth quarter. Upon publication of the results for all these periods, application will be made to the FCA for the restoration of trading of the Ordinary Shares. "
So the restoration of trading from late 2022 isn't going to be August, late August, or even September, but possibly during the fourth quarter. Or not. My guess is, more legal shenanigans and a possible failure to repay the SW loan on time - there's not nearly enough in this Allsops for the run-rate to cover it.
There's no doubt more in this morning's RNS but life's too short to read it all, not being a holder (other than of some former HOME properties). |
Optimise value for shareholders huh gerbils.Good luck with that with all the cash being sucked out by debt payments and defending the clowns running this shambles. |
I find it unusual they want to have the vote when the accounts won't be available. |
Interestingly, "We're not expecting any more from HOME this month" says my Allsop contact.
HOME are going to sail really close to the wind with this 31st December deadline (ie I doubt they'll meet it).
Doubt they'll collapse into insolvency - they're already paying penalty interest - if only because it'd be difficult for them to collapse much further. |
Ha, I'm certainly watching - but away the week of the auction unfortunately.
No internal viewings/knowledge of tenancies/condition doesn't seem to put people off, but at least some of the buyers are those who originally sold to HOME/Downing. |
I sense Spec you have Allsops on speed dial. The later they dump them on pre auction the better the bargains will be! |
Downing is the Venice geezer of course.
What's interesting is dates - pre-float in 2020 - Alvarium; and the alleged fee of £900k for selling £8.25m of North East property (which presumably went on to HOME at more like c.£15m), as well as the CIC being Big Help Project.
Only £700k won in court, but what a racket. Effectively a 10% fee just for being a provider of properties.
I still want to know how Knight Frank are staying out of the press/courts.
HOME has a long way to run.
Suspended since the end of 2022, but due back in the next few weeks - odds on that actually happening?
What must the professional advisor fees be like?
29th August Allsop quite small so far - if HOME don't dump a load more in this week, repaying SW by 31st December is going to be a struggle due to extended completion dates. |
Just tell me where to send the money! What could possibly go wrong.... |
I thought I'd google Christopher Downing as the Time article didn't have much detail and this is what I found
I suspect there will be difficulties down the road |
First HOME-related court case I've seen. Note Downing's £92m, also that this pre-dates HOME's set-up and has Alvarium's hands all over it. |
And another surreal HOME RNS. Did no one tell the RNS-writer that HOME are winding down?
"The majority of the properties are occupied by private rented sector ("PRS") tenants on Assured Shorthold Tenancies ("ASTs"). These ASTs will now transfer to Home REIT, enabling the Company to directly collect the underlying income from these properties, increasing rent collection and facilitating asset management opportunities.
The Company will be appointing Property Managers to the surrendered Properties, who will be responsible for the day-to-day management and rent collection."
If the CIC was "..Non-performing", ie not paying any rent, what do they think the 68 properties are going to be like? Trashed/empty/problem tenants/non-payers? If not, what has the CIC been doing with the rent? This has gone on for years in some cases - AEW should have had it resolved in months. |
173 Lots in the end-August Allsop already (won't all be HOME's, but a lot are). Not noticing a lot of difference from everything that's gone before, which could be a good sign for shareholders.
Think it's finally dawning on AEW that they need to get cracking, having not even inspected all the properties yet, and often being clueless whether tenanted or not. |
£282m of property, with a run-rate real income of £2.4m pa annualised, not remotely enough to cover running costs.
22% entirely vacant, 78% where "..At least one bed" occupied. Meaningless really.
Operating lease collection 19%.
£106m debt, c.£92m net debt, should be c.£25m coming off that over the next few months when completion happen (less expenses).
So say £75m still to raise, by 31st December, which it'll eventually dawn on them means this month and next month auctions.
Pay off the debt, see what's left. Should be the Mears portfolio, plus assorted junk they've been unable to sell off.
An optimist would point to £282m-£106m leaving a return to shareholders, even selling at 8% below NAV.
But HOME always seem to underperform the lowest expectations - they've constantly surprised me to the downside. Was a decent auction last week but still 8% below lowest revised NAV, with more market saturation to come. |
More to digest in today's monthly RNS, particularly occupancy, but - gasp:
"The Company's audited results for the year ended 31 August 2022 ("FY22 Audit") are now expected to be published in late August 2024 or early September."
There's a surprise, they're not even likely to make August. |
"Gross proceeds for the sales were £26.5m, representing c.9% of the Company's portfolio by value (based on JLL's August 2023 draft valuation). The gross proceeds from the Sale Properties are 8.1% below the draft August 2023 values"
Have to say, the auction was really busy the past 3 days - I had a load to bid on, two I'd have really quite liked, but came away with nothing.
A typical one was a 29-bed block, no details as to tenancies (HOME won't know), worth c.£1.9m if OK, last sold in 2019 at £1.7m, Guide £400k, went for £900k (plus fees, stamp, legals etc) after some very competitve bidding.. Not one I was bidding on but someone's going to make a tidy half million or so, even if it's been wrecked (no viewings).
That, HOME shareholders, was your half a million. Actually, far far more - isn't clear what they paid but guessing north of £3m.
So more than a quarter of the way to the loan target - next two auctions will need to be larger IMO, before they're pushing time for 31st December completion.
8.1% below supposedly kitchen-sinked valuations doesn't IMO include HOME's many costs - legals, Allsop fees etc. |
True, but HOME are incurring heavy penalties already, how much higher will those be after 31st December? SW have stated that date even with the increase in interest rate.
But yes, doubt anyone else will wind it up quicker - AEW still haven't gotten control of 10% of the property :)) |
Widows will likely agree to a rolling standstill and just let AEW carry on doing what they'd only have to get someone else to do at greater cost if they put it into admin AEW given no skin in the game unlikely to play hard ball with SW; which equally means SW less likely to want to replace them Admin in CRE is usually not because of insolvency but a break down in trust between borrower and lender |
Still not that much in the latest Allsop - there's a risk August's is going to have to be humungous, for all that says about pricing.
Alternatively - surely AEW will sell off the Mears-rented HOME stock? Anyone know how much they're in the NAV at? I've a memory of it being c.£700k pa rent, so won't be worth that much.
I don't think HOME will be able to repay SW by 31st December - AEW seem to be unaware how long completion is taking. They've this auction, the August one, at most the September one (with 3 months completions extending into the Xmas break, really?) to raise c.10x what they'd get from a usual Allsops. |
"...While Home REIT said it intends to return cash to shareholders after the sale of its portfolio, it was uncertain whether any money would be available given the scale of costs associated with a slew of legal challenges and a probe from the Financial Conduct Authority...."
"...Gerbils are typically not aggressive, and they rarely bite unprovoked or without stress. They are small and easy to handle, since they are sociable creatures that enjoy the company of humans and other gerbils.... [image] Pet gerbil eating toilet paper..." - wikipedia |
Wind down strategy huhThe gerbils will be raging. |
"...Which has advised that its objective is for repayment of the loan balance in the short term and by no later than 31 December 2024."
As predicted above. What they don't say - and continue to mislead about - is that selling at auction isn't taking the usual 28 days to completion, because of the CIC leases still on the titles at Land Reg. it's taking c.3 months, which means they have a couple of auctions remaining this year to raise c.£100m. The latest Allsop has less in so far than last month.
£6.6m of extra fees accrued to SW so far.
How AEW can get away with taking fees out of HOME for so long, I don't know. How many times has it been said on here that they need to wind up?
Still only been in 90% of the properties - and don't yet have control of them all.
Selling beyond the SW debt problem is going to go well into 2025.
Accounts coming out next month allegedly, and a relisting would be very interesting..
Starting to think any shareholder returns at all rely on the legal actions not taking longer than the co takes to disappear.
Edit - wonder if they can shift the Mears portfolio more quickly - not sure what it's in the books at, certainly not £100m, but one of the few parts of HOME with value. |
Oh now, come on:
"Total income received for the month of June was £0.6m, which represents a 60% increase from the previous month."
Er, except £300k of that was "Management agreed rent collection", by which I assume (but don't know) they mean arrears. So actual rent collection was £300k. Doubt that even covers the additional penalty SW have started charging them, & certainly not a ~60% improvement:
"The existing lender has revised the terms of the additional fee charged on the outstanding loan amount and the 5% fee will increase to 7% from 1 July 2024 until the full repayment of the loan. "
This should give pause for thought for those saying SW aren't going to bust them out/penalise "the homeless" too much.
Also:
"The Company continues to remove non-performing tenants from the portfolio and has now re-gained control of c.70% of the Company's portfolio by number of properties..."
Say what? So after all this time, money, bringing in outside consultants, AEW still don't have control of 30% of the properties HOME owns?
And what does that say about future sales and repaying the loan? There's plenty of NAV - in theory, even allowing for all the auction sales being below it (whatever they claim), and the many costs (Allsop; legals) - but can they access enough of it to sell?
I still think the next couple of Allsops could be huge - remembering it's 3-4 months to actually get the cash in, due to Land Reg. So if they "sell" a load at end of August, it could be Christmas until the money's repaid to SW, who have upped their additional fee from 5% to 7% already.
Edit:
" As announced on 21 June 2024, 133 properties exchanged for sale at auction for a total of £11.4m with completion expected during July."
Completion won't be during July, and that was a pretty large 133 HOME properties in a single auction. Yet it only raised £11.4m, likely before fees/costs. They need 10x that amount to cover the debt. In fact, they need to sell as many properties in arguably the next few months, as they've sold in total so far.
It just gets worse. |
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