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HOME Home Reit Plc

38.05
0.00 (0.00%)
17 Jan 2025 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Home Reit Plc LSE:HOME London Ordinary Share GB00BJP5HK17 ORD GBP0.01
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 38.05 - 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Home Reit Share Discussion Threads

Showing 4401 to 4423 of 5550 messages
Chat Pages: Latest  186  185  184  183  182  181  180  179  178  177  176  175  Older
DateSubjectAuthorDiscuss
01/12/2022
10:21
I like how these Peterlee properties have been spruced up for sale. In the first one they've even removed most of the paper strewn all over the floor. And there's only 1 lump of concrete on the kitchen work surface.
hugepants
01/12/2022
10:20
Thanks Doddy for your ever insightful commentary. Brains of a rockinghorse comes to mind.Thanks Specto interesting analysis, will be interesting to see how it continues to unfold
tradez4dayz
01/12/2022
10:00
You need to find a link from someone at Home to any of the vendors/developers. Will always be some kind of money trail
dodddy
01/12/2022
08:04
Note "potential rent" of £350 pcm That's £40 per bed per week
williamcooper104
01/12/2022
07:39
@Retailgains12 re #394 - thanks for the detailed post, debate is more than welcome.

To be absolutely clear - Peterlee is not an area where house prices have boomed. Ever. This is the current state of the market in HOME's direct area:



You suggest having put the portfolio together for 326k (or 350k as per HOME), and having allegedly had 224k spent on them (bunkum, but we'll go with it), it has to be worth at least 570k.

It's true that we seemingly don't know what it's in the NAV at, and that's information that would definitely help, but here's an example of a nicely-renovated (rather than auction) property, very close to a HOME one:



The evidence from up there is that AHG1, by paying £326k for 10, actually bought good ones, not needing much refurb. I don't believe they spent much on them, but if they did, they wouldn't be worth much more than they paid - much less, if trashed by difficult tenants.

So why did HOME pay 850k? Obviously there's the large bung to the "charity" to cover 12 months of rent - that's the Ponzi allegation, the money in to HOME in rent is the same money that was paid out as capital to buy portfolios. Clearly there's also the huge profit for the co who put the portfolio together.

But ultimately, HOME's justification has to be "long term, inflation-linked rents to experienced operators". I'd say that's demonstrably false.

Was thinking in the night whether HOME's business model is remotely sustainable. If that model (& NAV) relies on the leases being long, I'd say it isn't. Can't get over how many characters and in some cases outright fraudsters are involved in the charity lessees. But is it the LA's they're doing over, rather than HOME itself? Do HOME get done over only at the sell-them-properties level? Will they keep getting their rent, at least for a time?

I wonder if there's even any fraud at HOME itself - just gross naivety?

And once again, back around to Knight Frank. Or is the Peterlee portfolio, the only one I know in depth, an isolated example? I fear it isn't.

Completely agree re VR btw. But I don't think they're wrong overall.


"Therefore i don't think its unfeasible that if you bought some development properties 2 years ago, benefited from the general market appreciation over the last two years plus added value above cost on a refurb then the margins you got if selling this year could be substantially higher than average, from good timing alone."

Pick a HOME Peterlee co (full list in the first VR report), go on Rightmove Sold prices, put in the postcode. This simply isn't the case up there. If AHG1 had bought 10 houses for £10k each (yes - they go for that), spent £200k on them to refurb, then sure - you'd end up with 10 houses of £30k each.

You need to know the area to know just how daft £848k is, even if a large chunk of that went to the lessee charity.

And yet the HOME response went on about alternative use/vacant value.

spectoacc
30/11/2022
23:09
Sorry - can't buy until BDO sign of and accounts publicised
williamcooper104
30/11/2022
22:50
@retailgains, I’m all for balance and objectivity but you’d have us believe that home have been behaving like Robin Hood!

As a chartered accountant how can you seriously claim it doesn’t matter how much you pay for an asset? How can you responsibly deploy shareholder capital if you don’t have any care or understanding for what something should be worth?

It’s a nonsensical argument in the context of this being a listed vehicle using someone else’s money to create value.

Sure, if an individual finds their dream home and wants to pay double the market value then that’s their decision, they aren’t interested in the financial return or impairment of their asset value. However, if a listed company pays way over the odds for a huge portfolio of properties then the shareholders will suffer sooner or later.

74tom
30/11/2022
22:44
Prior to today management/BoD couldn't buy shares However now their response is out they ought to be able to buy If, the share price is as they say "exceptionally low" then surely they'll fill boots
williamcooper104
30/11/2022
22:32
And to extent that you have had historic asset appreciation, every reit is trading at a discount to historic NAV, anticipating falls
williamcooper104
30/11/2022
22:17
They don't have Final Certs - they haven't got the standard documention that you would expect to see Be careful on house price inflation - it's made up of transactions; it's a market of winners, so the perfect holiday homes in Cornwall have traded, whereas as the blight ridden blocks of flats haven't - property is up over 2 years, but the sort of HMO like properties HOME are targeting aren't The value uplift over what HOMEs vendors paid come mainly from the value of SPV like charities with zero covenant strength - this is very like council paid for nursing homes that went seriously bust both during and after the GFC
williamcooper104
30/11/2022
22:12
HOME said that all their properties would be a C
williamcooper104
30/11/2022
22:06
You care that the building works have been completed yes, but you can see that when its viewed and through the survey information. However Its completely irrelevant what the seller themselves paid doing the building works.

E.g if the seller managed to find a cheap builder does that mean the final property is worth less than if a more expensive builder worked on it (assuming the same standard which is a different argument entirely)? I don't think so.

On what basis can you assume that the properties are worth half of what Home paid for it? I see no rational other than the fact that the property refurb companies have made a solid margin on it which given average house prices are up almost 30% in two years is hardly surprising.

retailgains12
30/11/2022
22:01
A point with regards to the low EPC's,by the look of some of their properties it may well cost too much to get them to a C so they may go the exemption route instead. I have quite a few older rental properties that are the same. It simply isn't possible to get to a C
dodddy
30/11/2022
21:54
There's a very simple measure Estimate what HOMEs vendors paid for the properties and then calculate NAV based on that If we think it's about half of what HOME paid then it's probably worth 40-50p Though could well be volatile Post the £263m equity raise in May they've spent about £227m - so their LTV should be about 6-7 percent - so not much risk their I wouldn't get fixated on earnings/divi yield as this is likely to fall
williamcooper104
30/11/2022
21:49
You absolutely care; they have not had Final Certifications that the building works have been completed The sl accounting point was sloppily made by VR - of course it's standard IFRS (shouldn't be - and is adjusted out under AFFO measures per US GAAP) - but HOME rely on it a lot more than most Fine if you have a long ground lease Not fine if you have it with a tenant with no EBITDAR coverage
williamcooper104
30/11/2022
21:45
Can’t we all just agree that this one is coming to daddy at 25p by Friday to catch a nice dead cat bounce
george stobbart
30/11/2022
21:25
But up until now why would they really care how much the seller bought it for or spent on it?

If objectively you saw a great opportunity to invest in something which provided a return you were more than happy with, and passed the basic surveys would you turn down investing in it just because someone might have bought it cheaper?

I'd like to think they decide whether something is worth buying based on the future return of it, not just how much the previous owner has spent on it

retailgains12
30/11/2022
21:16
Read HOME response carefully They don't know what was spent in most cases on refurbishments, most of the refurbs are estimates based on what they think it would cost or what the developer told them it would cost - where's their Final Certifications Ok - looks sloppy - actually very sloppy - why no Final Certs - but maybe ok But then why is the vast majority of their portfolio from what we can see EPC below C - that simply doesn't square with assets being extensively refurbished
williamcooper104
30/11/2022
20:43
I've no position here, but think its an interesting situation to watch.

I will say however there does seem to be quite the short bias on this board so far so ill consider some alternative points.

Spectoacc one of your basis for this being a ponzi seems to be that the Home have intentionally overpaid for property based on the fact that the selling companies have made such a mark up.

I think this point is being focused on far too much, your main issue seems to be with the peterlee properties going from 350k to being sold for 850k. In one of your posts you mentioned the fair value of the property now will be close to 350k, which doesn't really seem fair. Even stripping out the admittedly dodgy initial vendor contribution which i will come back to the developers have spent 224k on refurbs.

The developing companies wont have spent 224k refurbishing the properties for fun so I don't think you can really argue that the properties would be worth less than 570k.

Then add in the fact that if your whole company is property development you will likely be picking up bargains and if anything probably picking up the right properties for a good deal, a much better price than the average civilian.

I see part of your issue is that the rise has been so quick, over the last two years or so. Sorry to break it to you but have you not seen the housing market as a whole over that time? Since Covid the average house price has risen by 27.7% - The Average.

Therefore i don't think its unfeasible that if you bought some development properties 2 years ago, benefited from the general market appreciation over the last two years plus added value above cost on a refurb then the margins you got if selling this year could be substantially higher than average, from good timing alone.

Have Home overpaid - quite likely, but does that mean there is fraud afoot and this is a ponzi? I'm not so sure.

I also don't really agree with the assertion that Home is generally a bad company to invest in because they don't develop the properties themselves and essentially give some profit to another company to do it instead. Thats a similar concept to saying mcdonalds are a bad company and you should never invest in them because they don't grow their own potatoes? You leverage other companies time, scale and resource to do things you cant or don't want to do, thats part and parcel of business. Home's business is essentially generating a steady income stream, not pure property development.

With regards to the aforementioned initial vendor contribution, i do agree with you this does raise some red flags and the fact its not been mentioned previously isn't great. However, from an audit point of view these figures are material enough that the auditors must have reviewed how these contributions are treated and agreed with it, if they haven't then that is sheer negligence and no doubt there will be an investigation to follow. Perhaps as a chartered accountant myself i have too much faith in other chartered professionals though! I'd be interesting to see just how these are accounted for though, think they could do with clarifying this better on the call tomorrow.

I think the short report does raise some good points which whilst may not be down to fraud do warrant some additional clarification, but I cant help feel like some of the really basic and completely incorrect points discredit the short selling report. E.g The fact they don't know that a company has to straight line their income under IFRS is pretty laughable, extremely basic and makes you question the level of research they have really done if they couldn't even comprehend that. To me it looks like they have gone a few things don't seem quite right here but we haven't got enough points to really make it tank, lets try and flesh out the report with anything we've got.

Viceroy doesn't even mention this in their response to Home today, which seems a pretty weak response to me filled with more fluff. A case of 'oh home have clarified some points here how can we flesh out the response a bit more? Oh I know lets moan about their EPC ratings instead'.

retailgains12
30/11/2022
19:19
there's a good Alphaville summary here
jonals
30/11/2022
18:40
If housing benefits are cut and/or the charities are forced to operate on a minimum operating surplus Then the charity goes into admin; the administrator offers HOME a lower rent, HOME can reject that but then it's left with the much lower alternative use value
williamcooper104
30/11/2022
18:34
Yep - that's an interesting price point - not least as PRSs new builds will be new builds with EPC Bs 35 percent premium for what looks like inferior properties (note the NOI is likely to be c10-15 percent less for PRS, so the total delta in NOI could be c50 percent) I get that HOME rents are cheaper than B&B per night costs But what's to stop the benefits being cut to a level that leaves HOME with a rent that's materially lower than passing rent but still at a premium to alternative use (especially when the alternative use is not only lower rents but yields >10)
williamcooper104
30/11/2022
18:13
Some broker feedback;



"Commenting after Home’s conference call, Peel Hunt analyst Anthony Leatham agreed the rebuttal was ‘fairly comprehensive’. He said there were unanswered questions raised by the collapse of Circle Housing and the transfer of its leases, which were sub-let to Mears Group(MER), the housing and social care provider, to One CIC.

‘The properties were sublet to Mears on a ten-year lease and the report states that the original vendor provided a donation to Circle “to cover the difference over the course of the lease between the cost of the head lease to Home Reit and the cost of the sub-lease to Mears”.

‘Whilst these leases (and the donation) have since been transferred to One CIC, it is not clear why the difference in rent exists, whether this impacts the valuation of those assets, and what happens at the end of the Mears sub-lease. Noble Tree, another tenant also sub-lets to Mears, and it is unclear if similar issues exist here,’ the analyst said.

Leatham was also concerned by the:

potential conflict for interest with some of the directors of charities leasing Home properties also engaged in property development;
affordability of rents with Home charging 35% more for refurbished properties than PRS Reit (PRSR) did on new-build homes;
18%-42% net profit margins of developers of Home properties which, while well below the gross margins calculated by Viceroy and challenged by Home, still appeared ‘generous’."

The affordability comments vs PRS Reit's new builds are interesting.

74tom
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