Home Reit Share Discussion Threads

[dodddy] 30/11/2022 15:17

All well and good but bottom line is they have massively overpaid and overstated assets. The ongoing maintenance on this type of tenant/property is huge and they will also have no deposits from tenants. This model along with HMO's always look like great yields,but it's hugely intensive and not easy to manage.

[tradez4dayz] 30/11/2022 15:01

If in 2 or 10 years time the tenant is still paying rent then this strategy does indeed work. I don't see councils letting housing groups fail, it just wouldn't happen.As is shown by circle where the leases have just notated on the same terms to a new group?I don't think it will fall and worrying about what vp is, is an illogical answer. Apply that to sheds, or supermarkets? What's the vp value of a shed in Doncaster vs what going rate is now (or was 9 months ago) even to a shoddy tenant?This is an income stream reit not one where you are trying to buy and sell assets.

[spectoacc] 30/11/2022 14:42

CSH have their own problems.

The issue is surely the lessee tenants, and the fact the rents aren't sustainable (4% uplifts, utility bills, CapEx - am told some of the houses at this end of the market get trashed).

That, and the alleged false NAV. And the need to fund a lessee's first 12 months of rent.

I think there's a reason public markets haven't done this sort of thing before. And there's a reason the sector (at the lessee end) is full of "colourful" characters running "charities".

The money's been extracted at the point HOME buy the properties. If the prospectus said "we'll raise £1bn, and spend it to buy £500m of properties", I think you'd say you were out.

Is HOME salvageable? Honestly don't know. VR's response should be interesting, I hope they don't persist with the parts they obviously got wrong.

[williamcooper104] 30/11/2022 14:33

Given the LTV (net of blocked cash) is c11 percent this isn't a zero VR haven't claimed that - and shorts aren't usually shy about that It's pretty clear that the external manager/BoD are at fault here But that can be changed Rebase rents to sustainable levels, change management - there's a ready to go team sitting in Atriato; who've spent ages working up a sustainable model Consolidate HOME with CSH/SOHO and you've then got a proper REIT > £1bn with a lower cost of equity

[george stobart] 30/11/2022 14:32

this baby will be 25p by Friday, I will be scooping upshares to catch a dead cat bounce and make quick money

[williamcooper104] 30/11/2022 14:24

The bank valuation will absolutely have VP values Technically that belongs to the bank; but lenders usually share their valuations The BoD can get VP/alternative use values

[williamcooper104] 30/11/2022 14:20

I kept getting cut out of the call But I asked them what proportion of their assets were EPC rated C and above Given they've all been "refurbished" the answer should be > 90 percent

[sunshine today] 30/11/2022 14:17

Rather a lot of speculators bought in after todays updates.

It appears they have been cooked in under 6 hours

[sunshine today] 30/11/2022 14:14

It looks as if this could go down the pan, as confidence evaporates.

The short seller will no doubt have plenty of dry powder to be published in the next day or two.

You only want to hold an asset rich company if the assets are real.

In the event of a fire sale you need to have cover, if not, the whole exercise of asset safety, has done you nothing, but harm.

[spectoacc] 30/11/2022 13:58

They also said today:
"...Benefit from residual value and alternative use characteristics".

So is it just a feeling, rather than numbers?


This made me chuckle too, when talking about VR's Land Reg allegations (which we'd already established as wrong):


"..This gives the misleading impression that the price of that single property had increased from £0.2 million to £5.9 million. The actual market value of this specific property, which is the value used in the Company's NAV calculations and has most recently been determined by Knight Frank, is £0.39 million (as at 31 August 2022)."


Don't worry, it hasn't really gone from £0.2m to £5.9m - it's gone from £0.2m to £0.39m.

Again - KF are balls-deep in this IMO.

[bondholder] 30/11/2022 13:33

In todays webinar a question was asked about the vacant possession value of the properties. The answer given was that they do not have that data. I remember the following from the update investor presentation page 23:• Robust portfolio with secure long-dated inflation linked income underpinned by built property assets with a very low spread to vacant possession valueHow were they able to assert a very low spread if they don't have the data ?

[74tom] 30/11/2022 13:31

*This should clearly unwind in future valuations

@Marben100, I don't really understand why it would ever be part of the NAV though? It has absolutely no relevance to the value of the property and is cash which should have remained with Home REIT but has in fact been been diverted to the tenants. If the tenants had been well established then they wouldn't have needed the rent advances, it's only because they are brand new / financially weak that this is required.

What we need to know is the total value of rent advances provided to tenants since inception. If the 5.2% of average property spend in the today's disclosed reconciliations is applicable to the whole portfolio then surely this is a material amount of money which should have been clearly disclosed in the annual report...

So a question for tomorrow's call will be;

'Can you confirm whether total rent advances provided to tenants since Home REIT's IPO are higher than total rent income recognised in the financial statements?'

If the answer to that question is yes then it'll not be a good look!

[marben100] 30/11/2022 13:10

"Chairwoman of HOME is Lynne Fennah who destroyed shareholder value when managing Empiric Student REIT and she got booted out recently.

She has long track record of incinerating value for investors."

Please could you elaborate on that accusation. I am not familiar with ESP in any detail but observe that (unsurprisingly) its share price was hammered when Covid struck but has since recovered to close to its pre-covid value.

How is that "incinerating value"?

[spectoacc] 30/11/2022 13:05

Thanks @marben100, that final point is the key one.

There's no way AHG1 spent £636k, but even if they did, the £213k margin is a direct loss of value to HOME shareholders, and the average c.£84k per renovated (but not to high EPC) house is simply nuts.

Lots of questions, lots of allegations, but the ones we thought were true have largely been confirmed today by HOME, & I think the share price reaction says it all.

[marben100] 30/11/2022 13:00

Re Peterlee, as the rebuttal points out £326k vs £848k is not a fair comparison.

The £848k figure (which is the amount paid by HOME for the portfolio, not the current valuation) includes the following, in addition to the original purchase cost:

- £191k of refurbs
- £54k of initial vendor rent contribution*
- £33k of other developer costs

*This should clearly unwind in future valuations

Total estimated costs incurred by the developer, before selling this portfolio to HOME were £636k. Admittedly that still leaves a handsome but not outrageous margin of £213k for the developer.

I have asked HOME to publish Knight Frank's report on their website, so we can see what the current valuation of the individual portfolios they have acquired (e.g. Peterlee) is.

[george stobart] 30/11/2022 12:59

Chairwoman of HOME is Lynne Fennah who destroyed shareholder value when managing Empiric Student REIT and she got booted out recently.

She has long track record of incinerating value for investors.

is her HOME REIT ponzi heading to £0 or not?

when is the official delisting date?

[wallywoo] 30/11/2022 12:58

This is a interesting situation, imo.Does society have a major problem with homelessness and is it getting worse; yep!Is it likely that reit investments are fudged to try and support homes for the homeless; yepDoes that mean this is worthless as an investment?? ??? Complicated, charity's, councils, society, etc need it to work. Against it's a bit of a fudge. I have stuck a few quid in at 51.7, for a bounce but don't think I will hold for long!

[loglorry1] 30/11/2022 12:52

@marben there is no such thing as a partial fraud. If this is a fraud, I'm not totally convinced either way to be fair, then they won't leave anything behind for shareholders no matter what the debt level is.

At the moment it is very hard to see how the BoD could have been blind to a lot of what seems to be going on.

[marben100] 30/11/2022 12:33

A key question I asked is this:

"I estimate that HOME REIT’s LTV is currently around 11%, based on your published news reports. That gives me some comfort that even in the event of impairments to property values, the current discount to NAV of the shares more than accounts for that. However, your target LTV is 35%. Will you consider pausing deploying further funds and increasing your debt burden until your tenants have better demonstrated their ability to meet their lease obligations?"

Alvarium responded that they are indeed pausing further acquisitions and have no current intention to increase leverage towards their 35% maximum.

ISTM that that gives a fair margin of safety, even in the event of writedowns, at the current share price/discount to NAV.


Alvarium indicated that a recording of the call will be published on the HOME website. Most of the call was dedicated to answering questions, of which there were many!

[spectoacc] 30/11/2022 12:30

@tr200g - "...No KF don't use the price paid as starting point. That's the point about an independent valuation."


KF are in deep. Agree it's possibly better to have a roof over your head in Peterlee, than be homeless - but it's marginal :)) A lot of wrecks, a lot boarded up, and bottom line - these houses haven't gone from being worth £326k to £848k in less than a year, particularly not with part of that 848k not even being for the bricks & mortar. There is no "alternative use" that could ever justify that price, whatever HOME have said this morning.

The most brilliantly appointed house in that Peterlee portfolio might fetch £50k in a really strong market. Plenty available at £15-30k. Ergo, KF's valuation is bunkum, and so is HOME's NAV.

Only Peterlee? I don't know - VR's report mentioned others. Perhaps all the rest of nearly a billion quid of property they've bought is correctly-valued, and these 20-47% mark-ups by the selling co just reflect their brilliant acquisition skills.

[williamcooper104] 30/11/2022 12:13

Well done Alas my feed keeps cutting out

[williamcooper104] 30/11/2022 11:59

Buybacks - with what Most cash is blocked with Widows

[williamcooper104] 30/11/2022 11:54

It's a simple red book based on market comps Problem is - what if the whole market is working on same business model - eg CSH and SOHO

[marben100] 30/11/2022 11:27

Home REIT's call is now open to all investors (after some persuasion by me/ShareSoc):

Register here: