Home Reit Share Discussion Threads

[williamcooper104] 11/1/2023 23:50

Hence Alvarium running for the hills We aren't seeing account by 31 Jan Actually no reason why we can't, going concern/covenants shouldn't be an issue and the BoD could thus just let the valuers and auditors hit them with their worst Far better to kitchen sink it now when the share price is battered - and ofc change management

[williamcooper104] 11/1/2023 23:46

Staggering Looks like material mis-representation/false market type territory It's not that SPV flippers ran away with the money (bad as that obviously is) But rather that HOME/Alvarium clearly knew that that had happened when they responded to Viceroy

[tradez4dayz] 11/1/2023 21:08

https://www.cityam.com/home-reit-faces-legal-threat-from-biggest-tenant-over-5-5m-rent-relief-deal/

[wallywoo] 11/1/2023 08:55

Lol, current holdings were bgt at 34.1 and 37.4. I will get a 1.38p per share dividend in 9 days. I expect to get a higher dividend next month, and may then consider selling out if the share price is over 50+. At the end of the day shareholders own 2473 large hmo houses, valued at £211k each (roughly at this share price, incl debt). If this all falls apart the lease can be voided and houses sold or rented out elsewhere. It is even listed in the listing prospectus that the houses have these alternatives for added investor security. Imho, if a Tennant isn't getting funds from the original vendors they should be taking the vendor to court, not Home Reit and withholding rent. Just sounds like a Tennant making trouble and taking advantage to me. You don't stop landlords rent because they stop your housing benefit, for example. You sort it with the benefits office and either pay up or get out. I note that Noble tree's chairman has been to court and sued a number of times, including fraudulent activities (see Viceroys Research)


Sure I am taking a risk, but be careful who you feel sorry for! I see a lot of so called safe stocks taking a tumble. Dlg this morning with no dividend.


Where's there's muck there's brass, by thunder!!!

[tradez4dayz] 10/1/2023 17:29

Poor wally.I have to say this is one of the most fascinating reit stories in years. I want to know when results will release what bod will say and bdo or kf, seems like a game of Russian roulette at the moment

[spectoacc] 10/1/2023 14:27

@WC104 - wonder if there's very little HOME can do to get SPVs who don't pay up, to pay up.

Previously they could probably rely on them sticking to the agreement with an "If you don't, there'll be no more deals to be had from us with any other SPV you set up".

Now it's a case of HOME not having funds to do any more deals.

Finally caught up the Sunday Times this morning, an amusing snippet in the Business section reminding that M&G kept on buying after the allegations came out. I recall some on here used that as justification for the VR's allegations being unfounded.

Plenty on that above.


Edit - just done a quick search & apologies for this, can't resist:


"SpectoAcc - 27 Nov 2022 - 19:48:54 - 234 of 687

I absolutely have no faith whatsoever in Liontrust, M&G, or for that matter Schroders or any of the others. It isn't their money, and every scandal/scam/fraud has all of the big institutions on the register when it breaks.

As for them adding more - my guess is they've done naff-all DD. Absolutely naff-all. Perhaps been at school with some of the HOME directors and been assured all is fine."



"wallywoo - 30 Nov 2022 - 16:34:49 - 377 of 687

M&G own 15.4% of home. Many bgt in the last few weeks. Liontrust nearly another 5%, in the last week or so.

Do poster's really believe that this is fraud when such a respected institutions owns such a lot here. Do you think they do so little due diligence??

This will bounce, despite the huge number of derampers on here. All looks like a fear bear raid to me."

[adae] 10/1/2023 11:56

Two separate points from today's story:

- That at least one tenant hasn't received what was promised when they signed the lease (promised by whom?), and are withholding rent as a result

- That HOME appear to have deliberately hidden these costs within their purchase price. Not prima facie unreasonable to bear those costs, but not what shareholders thought and more crucially, perhaps not what the valuer or the auditor was told.

[williamcooper104] 10/1/2023 10:09

YesWas thinking that - it looks like the developer - or rather the flipper - has run away with the money leaving recourse to an SPV and that Nobble are claiming of HOME in the expectation that morally/reputationally HOME will cover it - Indeed as they should - Far better for HOME to have received the rent, passed it back to the tenant and then sued the SPV (not that they would get anything but would look better optically; and wouldn't have ended up in the Times) Seems unlikely that the accounts are going to be produced anytime soon

[williamcooper104] 10/1/2023 10:03

Indeed; plus a relevant post balance sheet event to disclose to auditors

[williamcooper104] 10/1/2023 10:02

As was pointed out on this thread from Alveriums answers/responses it was clear that they didn't know how much money was spent on their properties and that indeed it was possible that monies meant to be spent hadn't been as the most basic and normal controls hadn't been carried outWonder if the first the BoD knew about it was reading todays Times This smacks of just basic incompetence

[spectoacc] 10/1/2023 08:20

Indeed - the timings will be interesting, tho suspect the HOME board will claim either ignorance (there's a lot they don't seem to know) or that eg the withheld rent was for a later period than covered by their "..Continuing to receive 100%.." statement.

Either way, it's clearly a material change, not communicated to the market.

And it seems to open up a second front:

"A Home Reit spokesman said: “It is incorrect that the lease contains a tenant incentive. As mentioned previously in the rebuttal, the tenant receives rent cover from the vendor, usually equivalent to 12 months, but this is not from Home Reit nor contained in the lease.”"


We knew already that HOME were effectively gifting 12 months of rent in the capital sum paid for the properties (did KF know that?), but there's also a sink fund for refurb too? Fine, but the second front is - none of this is seemingly in the lease between HOME and the charity lessees.

So Noble Tree are withholding rent, but HOME are saying "not us, guv", responsibility technically lying with the SPV who sold the properties to HOME.

But hang on - some of the people involved in the SPVs, are also involved in some of the charity lessees.

And there's multiple SPVs, so what chance do the lessees have of enforcing these payments. The whole point of SPV is "Single Purpose Vehicle", you use it and then fold it. Few will have anything left on the balance sheet.

Again:
"Matt Fearnley, the charity’s chief executive, said he would prefer not to be withholding rent from Home Reit, but “we have no choice because they won’t talk to us about this”. He said Noble Tree had received £800,000 towards upgrading the properties so that they could house vulnerable clients, but “the lease promised more”."


Consider what this actually means - the more-than-double prices HOME have been paying for many properties effectively included 12 months of rent (known), but also further funds for eg upgrading properties (we'd suspected all along that little to no CapEx had been done by the SPV owners, particularly when some properties the SPVs bought were flipped again within weeks, and many were already tenanted - and also from the lack of change in the EPCs).

But here's the rub - none of that was in the leases between HOME and the charities. So is it fair to assume Knight Frank weren't told? What about BDO?

How do the lessees enforce the payments? Noble Tree clearly one of the better lessees, and have broken cover, but they're likely wrong that this can be enforced against HOME and will ultimately fail in withholding rent. And perhaps ultimately fail, Circle-style.

In which case, what does the agreement between HOME and the SPV look like, is it enforceable, do any SPVs have any money remaining in them?

What about those lessees who have the same people involved, do we think the bloke wearing his SPV hat has paid out any of his profits to the lessee he set up, for any property improvements?

[74tom] 10/1/2023 07:54

Yep I read the same article Specto, the charade is rapidly falling apart. I doubt this returns from suspension anytime soon, maybe never if more of the 'charities' follow the lead from Noble Tree and decide to withhold rent...

Quite why such withholding of rent wasn't deemed to be price sensitive information whilst this was still trading is utterly beyond me, maybe even @wallywoo would have seen this for what it is... or maybe not!

[spectoacc] 10/1/2023 07:05

@1tx - from over a month ago? Commented on above.


The Times this morning (for @wallywoo):



"...Flaws in Home Reit’s execution of its business meant that the only winners from the present situation were the vendors selling properties at “inflated prices. Everyone else is losing — the taxpayer, the pension fund holder, the charities and the people at the very bottom because the money required to refurbish their homes isn’t there.”

Exactly my sentiments.

[1tx] 09/1/2023 19:26

The full letter can be found on theboatmancapital.com website;it can be accessed from their homepage currently first item.

[williamcooper104] 09/1/2023 18:36

https://www.cityam.com/bdo-in-the-spotlight-over-home-reit-audit/?amp=1

[tradez4dayz] 09/1/2023 16:47

I can't see it on their website do you have a link

[1tx] 09/1/2023 15:07

Boatman Capital,"activists", have written an open letter to BDO re HOME available on their website.

[spectoacc] 08/1/2023 15:20

@wallywoo - this has all been discussed above. It shouldn't be rocket science to see that if you start with 12 months of rent in advance, that can cover shortfalls for years (albeit not in Circle's case - the surprise is how quickly that one went under).

You might also question what the properties are in the NAV at (a NAV that is above issue price) when a year's rent has effectively made up part of the purchase price.

£211k per house - again, you've not looked at the portfolio, this is extensively discussed above.

Forget the obvious alleged fraud in paying double or more the market value for HMOs, and consider instead whether the business model - gift a year's rent, to some highly dubious and often connected lessees, then count that as income as it comes back in - is viable. The CQC suggest it may not be.

If it isn't, what does that say about 25-35 year leases.

All in the price? Perhaps, but what's going to happen when KF, BDO, Board, or officialdom admit to it?

We'll find out, soon enough, hopefully before the end of the month. One of the above is going to crack IMO.

[mikesmythe] 08/1/2023 14:26

Great news item in daily mail about the short seller making £4million Big respek to that guy

[wallywoo] 05/1/2023 12:51

1 year ago Home owned 1580 properties. Today they own 2473. I believe part of the sale price deal was that 12 months rent was provided by the original vendors to the Tennant companies. This was to cover rent while the houses were established. I guess we will hear the auditors opinion on this when the results come out. It is not clear how many houses had this deal and whether it is fraudulent or not. Technically the vendor paid the rent not Home Reit. A bit like a cash back deal. Eg Home spend £400k on a property, vendor gives £20k to Tennants, Tennants gives it back to Home, who pay shareholders a dividend.


So less than 900 homes are currently on this 12 month deal, with less each month. The rest pay rent. All indicators are that all rent is being collected, so far. But let's wait for the results.


Since each house averages 4.8 people per house, the current mkt cap and debt gives a rough value of £211k per house for shareholders. That's what shareholders own here when they purchase at this share price.

[loglorry1] 05/1/2023 12:26

Trouble with rents as an indication is that HOME have been paying first years rent in many cases!

[wallywoo] 05/1/2023 12:03

How about DX Group dx., suspended for 11 months. I bgt it at 21p when relisted, now trading at 30p.


There are lots of shares that recover after suspension. Especially those who carry on trading and relist when results finally come out.


The main thing here is rent, if that continues to come in, dividends continues to flow. Then the share price will recover. Will they continue? About 90% chance they will imo!

[spectoacc] 05/1/2023 11:32

The management change needs to happen at the charity/CIC level - that's where the interaction with vulnerable tenants, maintenance (or not), rent collection, operational issues occurs.

Not so much political football as rightly querying these "lessees" and their sometimes very dubious members, some of whom are were behind the SPVs.

Agree HOME has assets (& some debt), but does it have a viable business model - time will tell. If not, what is realisable - something, surely.

But you'd have to consider the main buyer for these sort of properties was these REITs - HOME pumping in £900m (even if only for c.£400m of property) can't have left the market unaffected.

All ground previously covered. Let's see what BDO & Knight Frank make of their reputations.

[williamcooper104] 05/1/2023 11:14

Acceptance of a loss is a good thing but don't fall for the sunk cost fallacy It is a political football; and a very operational heavy asset class (a hotel with more challenging guests) all the more reason why the management really really matters But with the low LTV and the fact that there are actual assets, even if worth a lot less than book value, suggests this shouldn't go to zero Boatman Capital have the right idea; they are lobbying for changes and indicating that they'll invest more when they see change happening

[wad collector] 05/1/2023 10:16

Been a while since I ever saw a significant recovery after a suspension, but all situations are different so there aren't many rules. Mentally , I have written off my holding here , having done the classic PI thing and held onto a plunging share. HOME seems to have become a political football more than a badly run Investment Trust.