Home Reit Share Discussion Threads

[elbrus55] 01/12/2022 18:41

Exactly. The people who have bought unwanted properties and helped get them ready for homeless accomodation should be applauded. Their profits are well deserved and they are fulfilling a much needed social and economic purpose. I hope they can sustain a living from itm I wouldn't be very interested in buying cheap properties m developing them and selling them on for just a £15k profit a unit. There are easier ways of earning £15k a month. It may look good in % terms,.but in $ terms it is pretty rubbish - there are easier ways of earning just £15k a month.

[wallywoo] 01/12/2022 18:33

Normally Elbrus, I would agree with you. However, every now and then, reits take a big down turn and normally correct back up over the next 12 months or so. This was true after the covid news, for example.


Over the last few months reits have been hit with rapidly increasing interest rates, ldi pension crisis, recession and short seller attacks like this one. The scenario here reminds me of BUR, Burford. Made me a few quid then, and I believe the same here.


This is down 60% in just a couple of months. That brings /makes them interesting now imo and especially since there is no debt issues here. Just my take.

[retailgains12] 01/12/2022 18:26

Hi Specto

In response to your post, 'However, I note that's the only one you've disputed from that post ;)'

It was the only one i disputed because it was the only one where you could actually see what Home's property looked like inside, how many bedrooms it had etc compared to the other houses in the area, rather than relying on pure speculation.

You are sounding like a bit of a crazy conspiracy theorist at times E.g

RE the 144 birches road 'But that's not really the point - the point is that some SPV paid £195k for a £150k starting bid house, in the knowledge they could flip it & others on at huge mark-up to a mug buyer.'

Did they really buy it for £195k knowing that they could sell it to a mug buyer Home for More? Or rather did they just see an auction about to start with a crazily low guide price of £150k for a property which the listing itself even says has a current rent reserved of £17,856 per annum with two vacanct rooms? If I saw that i'd buy it for £150k myself regardless of whether there was a potential mug buyer down the road or not, not all bargains point to fraud.

Also, again I think you are still too fixated about the profits of other businesses within the proverbial property supply chain, and not focussed enough on the merits of what they are actually buying. This Auction listing you've provided states that two years ago they could have achieved a fully let ERV of £26,160 per annum. This is pretty much confirmed by the RNS yesterday - The average weekly rent per room of home properties in the west midlands from the RNS Yesterday is £90 a week (And could be as high as £119 a week as looks like a decent spec, but i'll keep using the £90 number instead). Therefore this property is likely generating c.£28k per annum which will rise by 1-4% per year.

We know that Home's properties have been revalued up 6.4% on average, so on that basis they likely purchased this property for c.£365k. Does a property being purchased at £365k when its generating £28k+ of rental income per year, increasing by 1-4% a year really sound fraudulent to you? To me, given the charity backing and low weekly rents that sounds like a buy which is perhaps a little high but by no means horrible or fraudulent, or warrants a halving of the share price.

You need to stop focussing on what others have bought and sold the properties for and asses them based on their future returns.

[elbrus55] 01/12/2022 18:07

This sort of asset is mainly suitable for investors who might otherwise have bought uk government indexed-linked gilts. (Eg. Pension funds, ISA holders,.non-residents with personal allowances etc.). These government index-linkers have a pretty awful yield, it doesn't take that much to beat them. There are good reasons why pension investors want similar assets.It is pretty hard to imagine why anyone would hold this stock for any length of me if they are a UK taxpayer.If you are investing with some other intention.... then why? Don't. Why did you buy this in the first place?

[george stobbart] 01/12/2022 17:23

Why is this one trading at a massive premium to actual NAV of 15p?

[elbrus55] 01/12/2022 17:21

10k every 5 years doesnt sound very much. Depends on the age of the property whether it is worthwhile upgrading..Does the council reimburse the £10k fee anyway? They pay for everything don't they?

[elbrus55] 01/12/2022 16:40

When I was a UK landlord in London i put 200mm of extra insulation in my loft. I didn't get a new EPC. The cost of the inspection/certificate anf time organising would have been more than the insulation. It cost very little - I put in my car and rolled it out myself. It makes you itchyz so need a shower afterwards.Would I have been better off if I paid for a new EPC? I am extremely doubtful the tenants cared. I am glad I spent a tiny amount of time and money to keep my tenants warm and reduce their bills. Glad I didn't waste money on an unnecessary EPC.

[williamcooper104] 01/12/2022 16:27

Exactly - new standard comes in force 2025 - every other REIT is reporting on it - and it will effect cashflows as will have to spend on each property to get to EPC C; often material amounts too (and yes there's an exemption but that's a whole world of pain of having to spend £10k every 5 years and reapplying for the exemption) It also matters as it goes directly to the competence, or rather lack of, of the manager; nobody undertakes a major refurbishment without getting to C (or ideally B) And to not actually know; just as they don't know what the refurb costs were..... It's amateur

[elbrus55] 01/12/2022 16:21

Why is EPC so important? It is a piece of paper with no direct impact on the cash flows to HOME. It also takes time to do the inspection and do th3 report.However,.there is a new higher minimum rating to be enforced 2025 which they will need to comply with, which could impact some properties.

[spectoacc] 01/12/2022 16:19

@Retailgains12 re #422 - you're right, I'd missed that it was a 4-bed and so not particularly comparable with my 2-bed examples.

However, I note that's the only one you've disputed from that post ;)

Your calcs should include some of the costs as being part of the capital cost IMO. The calculation on what it would mean for HOME's overall NAV if repeated across the portfolio should also include the gearing effect.

(On that point - did occur to me that perhaps HOME started out with legitimate purchases, and that only the later ones have been a fiasco? But see below).

This isn't about me saying a house is worth £80k, and you/HOME/Knight Frank saying no, it's worth £120k. It's more like me saying it's worth £120k if done v well, hasn't been trashed by tenants, and in a good market, and HOME/Knight Frank saying no, it's worth £300k. That's the sort of quantum we're talking.

Also! Look at this - if you read the VR report, or HOME's comical defence, no.144 Birches Head Road, ST1 6LN, is the main property mentioned, due mainly to VR misunderstanding the way Land Reg reported the sale price of the portfolio between SPVs.

HOME correct them, and go on to say it was bought by the selling co for £200k, and sold to them/valued by Knight Frank at £390k.

That's bad enough, but:



Google is the gift that just keeps on giving.



That was September 2020. Fully licenced, renovated HMO. In auction for £150k, bought pre-auction for £195k, a fairly knock-out offer.

HOME then bought it all of two months later & reckon it's £390k.

Same postcode - yes, only 3-bed, no HMO licence:


But that's not really the point - the point is that some SPV paid £195k for a £150k starting bid house, in the knowledge they could flip it & others on at huge mark-up to a mug buyer. Probably not quite back-to-backed, but not far off - 15th Sept auction, likely October completion, transferred on to SPV2, bought by HOME from SPV2 in the December.

Can only assume SPV2 was used to hide the amount really paid by SPV1 - you won't see no.144's selling price on Rightmove for eg. HOME are open in their response about paying £7.3m for a portfolio that was put together for £3.2m, but that in itself is damning.

No.144 ooks nice, don't get me wrong, and potentially very income-producing and not like the Peterlee junk - but. Clearly next to nowt spent on it (no need - and no time), with no clear reason for HOME paying (literally) double the price of 2 months earlier. And remember - that was an "enhanced" price due to SPV1 knowing they had a willing buyer.

[williamcooper104] 01/12/2022 16:10

On EPCs they've admitted they haven't got the info - which is really really poor management But have primrosed to get it

[williamcooper104] 01/12/2022 16:10

Hmmn The circle admin is curious Seems it was a voluntary admin where the trustees felt the leases were onerous, Alvarium said that there were no incentives offered to One CIC who were assigned the tenancy If no incentives that means the net effective rent is actually about 4 percent higher (being 1 year rent free on 25 years) - find that surprising - but equally doubt we are being told outright lies Reading the admin report would be interesting

[williamcooper104] 01/12/2022 15:32

Thanks If you're on an iPhone - copy this into your safari browser stream.brrmedia.co.uk/broadcast/6386139e73df8630dd6e97b2

[bathcoup] 01/12/2022 15:20

Webcast Link for live presentation

For the invitations, please use this link (to registration page):

hxxps://stream.brrmedia.co.uk/broadcast/6386139e73df8630dd6e97b2

[williamcooper104] 01/12/2022 14:56

Nope - can't see anything on their web site

[tradez4dayz] 01/12/2022 14:54

Anyone got a link to 3pm call?

[williamcooper104] 01/12/2022 14:53

Yep - there isn't Key thing; total shareholder wipe out, given the balance sheet, is really hard to envisage - normally when a reit gets hammered it's the balance sheet - and normally best to stay well clear until the rescue rights issue or it goes bust Improving governance, replacing management, lots of things that can be done in short/medium term to improve the sp

[wallywoo] 01/12/2022 14:48

To me this is simple. You are taking a above average risk that more sh*t hits the fan. However, it will likely have a great yield and a share price that settles above 60p if it doesn't. There's never a easy win in the markets!!

[williamcooper104] 01/12/2022 14:34

Nope - talk the way I see it; with risks and opportunities; simple - it's a troubled asset class, it's over-rented, but balance sheet is great and share price has taken a huge hit - would I buy this at NAV - no chance - but at c50p I'm getting a projected > 10 IRR on a 35-40 percent rent haircut (DYOR my assumptions and even basic math may well be wrong) I'm generally very conservative, so if I'm bullish on something I'll always think of what could go wrong I would also far rather existing management acknowledged what's gone wrong, rather than delay pain and increase mistrust

[elbrus55] 01/12/2022 14:31

If you've leased an old property on tenant responsible maintenance for 25 years then I guess 90% of the value is in the lease and 10% is the residual value. After that time you may well be better knocking the thing down and selling the land for redevelopment. The residual value seems only important if the council doesn't have much demand for homeless accomodation at some point in the next 20 years or so. Why do you care how much the property is worth in alternative usage when you have no intention of selling it?Nobody asks Meta / Google how much their servers and software is worth if their advertising business model fails. They could reuse the hardware for bitcoin mining or something and get a fe cents on the dollar...If

[williamcooper104] 01/12/2022 14:23

Intending to build a long position; have just had a small nibble

[wallywoo] 01/12/2022 14:19

I don't understand, if you are not short and not long, why are you posting every 5 minutes???Imo no one spends so much time on a share BB unless they have a vested interest!!!

[williamcooper104] 01/12/2022 14:16

Anyone got the details for the call at 3 today