Home Reit Share Discussion Threads

[cruelladeville] 23/8/2023 10:53

There's a TV documentary is this mess once it's eventually all worked through.

[williamcooper104] 23/8/2023 09:54

Lol "Longer fraud duration"

[spectoacc] 23/8/2023 08:25

Interesting @LB. So the alleged business model was:

- The geezer now in Venice goes around gobbling up every HMO he can lay his hands on
- These are flipped a couple of times between SPVs, often within weeks, before being sold to HOME at c. double the price paid
- HOME leases them to a CIC, often with same/similar people involved
- Venice chap gives some of the proceeds to the CIC, to pay the first year's rent to HOME
- CIC leases some of them on to Mears, but at a curiously lower rent
- In theory, Mears + rent gift should have kept the show on the road enough years to avoid HOME imploding too quickly, with HOME continually raising new money to add new stock with longer fraud duration
- In practice, many couldn't even manage their first year of rent, almost all (~93%) are now paying nothing, and CapEx/maintenance fallen way behind for some.


All done in plain sight, much of it easily confirmed by those us of on here after the VR allegations first emerged. Yet seemingly the HOME board knew nothing, even when told what was going on.

[wskill] 23/8/2023 08:20

No this board will never leave they must stay until they have covered all saves All the problems for Alverium as well.

[williamcooper104] 23/8/2023 08:09

Why we need a new board now and a chief litigation officer

[little beaker] 23/8/2023 07:44

This has been known for some time, last year the ft reported at
, as follows:

One missing piece relates to social housing group Mears, which has sublet the Circle portfolio for ten years. Home Reit says the transfer required a kickback from an unidentified property developer 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 sublease to Mears.

Peel Hunt’s team is not convinced by Home Reit’s rebuttal around apparent conflicts of interest, particularly where charity directors are involved in property development, and questions the company’s choice of rent affordability measures. (“We note that the price per bed per week that Home Reit charges for refurbished homes appears to be circa 35 per cent higher than those charged by PRS Reit for new-build properties.”)


So if you read back to HOME's comedy rebuttal of viceroy, you'll see it there:

Circle Housing and Support ("Circle"): Circle is currently in solvent administration. The circumstances surrounding Circle's solvent administration were driven by a change of strategic direction by Circle's management. Circle's properties are largely sub-let to Mears Group Ltd ("Mears") on ten-year sub-leases. Mears manages over 17,000 homes for local and central government. The Vendor provided a contribution to Circle referred to in the Report 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. The Company announced the solvent administration on 1 November 2022, further noting that rent due continues to be paid on time and in full, with no impact to residents. Circle's existing leases were reassigned on the same rental terms and the remaining Vendor's contribution referenced above was transferred to One CIC on 25 November 2022, demonstrating the resilience of Home REIT's business model and its ability to continue to provide critical housing to its vulnerable occupants due to the protective statutory framework that the Homelessness Reduction Act 2017 created.

[spectoacc] 23/8/2023 07:08

Not bad news, but quite funny - so One CIC had sublet to Mears, for a rent below what they were meant to be paying HOME, and weren't paying that rent anyway.

2/3rds of the income they were meant to be getting, and be very interesting to know if Mears are responsible for the upkeep/any dilaps. It should cover AEW's fee for a few months anyway.


"Transfer of sub-leases

The Company announces that One (Housing & Support) CIC ("One CIC") has agreed to surrender its leases on 100 properties comprising a total of 418 beds (the "Properties").


Mears Limited, guaranteed by Mears Group PLC, the housing and social care provider, has been occupying the Properties on a sub-lease from One CIC. These sub-leases will now transfer to Home REIT, with Mears Limited becoming a direct tenant for the remaining lease term of c.6.6 years with an initial contracted rental income of £891,155 per annum.


The surrender agreement allows the Company to receive a sustainable income stream from a strong tenant covenant and is expected to generate significantly higher rent collection than has previously been received from One CIC in relation to the Properties, despite a lower headline rent (previously £1,227,405 per annum).


The Company continues to work constructively with One CIC to find sustainable solutions for the other 234 properties it currently rents from Home REIT. This transaction reduces the Company's exposure to One CIC from 13.5% to 9.5% by number of properties and 14.2% to 11.9% by contracted rent roll (as at 31 July)."

[triskelion] 21/8/2023 20:12

Proposed investment policy [change] adopted and AEW UK Investment Management LLP appointed as the Company's AIFM and Investment Manager replacing Alvarium Fund Managers (UK) Limited.

[tradez4dayz] 21/8/2023 14:18

Anyone go to the egm/agm today?

[spectoacc] 17/8/2023 16:28

:)

Be interesting to see what the BoD's insurance covers. Going to be a lot of finger-pointing and back covering.

Fair point re auctions - and what we've seen already. They'd also never get more than a fraction of it away - the main buyers for a couple of years were HOME.

[williamcooper104] 17/8/2023 16:19

Indeed now is well past the time for a new board and maybe a CLO - Chief Litigation Officer :)

[williamcooper104] 17/8/2023 16:16

It would be a disaster - far better to stabilise the assets and then sell either as simple HMOs, or as social housing but with properly capitalised tenants Else you'd be literally fire sale dumping them at auction LBG/Widows would get their money (and fees) back, shareholders would get screwed

[spectoacc] 17/8/2023 14:50

If HOME had a larger creditor than the relatively small Scot Widows loan, I'm sure it'd be in administration already.

What it needs is a new Board, to manage a wind-down. It didn't need the same board, and the large, well-regarded, but in this instance inexperienced AEW appointing to strip out another layer of fees for themselves.

It's very WPCT/SUPP/INOV-esque. Appoint a "name", then watch them dip into your pocket.

Suspect there's plenty more to come on HOME. Another dump of properties I reckon, since the few million raised won't last long.

[triskelion] 17/8/2023 14:11

I don't know the ins and outs of administration but wondered if there are any well known cases of them being conducted where it realised value for shareholders/saved the company as a going concern rather than, for instance, also screwing the rest of the claimants too and "liberating" the assets to some predator free and clear of the liabilities. A glance at random websites suggests it's essentially instead a creditor-centric process e.g.

[alwaysvalue] 17/8/2023 12:55

If I was a share holder here I think I'd be happier if a credible administrator was appointed to realise whatever value is left which might just be a wind down. The longer it drags out the more will get swallowed in interest payments, fees and salaries until there is nothing left.

[williamcooper104] 16/8/2023 04:17

Totally agree A qualified going concern set of accounts is hardly the worst thing that's happened to HOMESo get the accounts published, re-list and sue Alvarium

[triskelion] 16/8/2023 02:43

hxxps://www.cityam.com/home-reit-facing-fresh-calls-for-overhaul-over-huge-exposure-to-wolverhampton-charity-group/

“Shareholders have many unanswered questions but are currently left with a suspended stock, no up to date valuation or audit of annual accounts and no clear line of sight to a recommencement to trading.”

[williamcooper104] 05/8/2023 16:25

Yep Care homes only worse

[spectoacc] 05/8/2023 16:04

I think what makes the business model unsustainable is the attempt to insert an (often dodgy) operator into the model, and expect them to maintain, rent-collect, and rent-pay.

If HOME have to go into the operations business, for c.3,500 separate properties say, that's a totally different business, at a totally different cost level. Think of the number of employees they'd need, the management, middle management, works team, CapEx. Not on newbuild or even updated houses, but on sweated HMO junk.

Can't see Lynne Fennah in a hard hat - striped pyjamas, maybe..

There's a reason yields are so high in HMO.

Press reporting some of the sold HOME properties as being boarded, and one without even a front door. The problem is that it isn't only 1.6% of the portfolio in that state. 93% of it isn't paying any rent.

[williamcooper104] 05/8/2023 10:42

On viability it could end up being that the investment value as homeless accommodation is less than the vacant possession value As in there ought to be a rental level that makes it viable but that level could well be below the market rent for normal ASTs

[williamcooper104] 05/8/2023 10:39

Was wondering if the sold ones were the worst, or about average Don't think they'll sell them all; they'll likely narrow it down to a core portfolio that does what it was meant to do; with HOME basically becoming an operator Scot Wids will be keen also to see that that happens least they get it in the neck for making the homeless homeless

[spectoacc] 04/8/2023 19:30

@Wc104 - absolutely.

Bearing in mind rent collection is what - 7%? - I can see this being reflected across much of the portfolio. They paid circa double market when buying, as commented on above, and have allowed properties to deteriorate, so c.40% could be about right.

No wonder Scot Widows were swiping the cash out of escrow.

These won't have been the absolute worst properties, and there's going to be a limited market for so many of them - 1.4% can be slipped away, but the remaining 98.6%? Perhaps half of those could be sold?

HOME seriously distorted the market on purchase, they'll do the same on sale.

I had 20p as likely, but think this lowers it. I don't think the business model has ever been viable. Some CIC/charity tenants had been getting into difficulty as soon as their 12 month gift of rent ended.

On the plus side, this is crucial working capital to keep HOME going a while longer.

No wonder Knight Frank were keen to exit - what a farce their valuations were.

[williamcooper104] 04/8/2023 11:17

And you can all think Viceroy/short activists for stopping HOME reit before they had actually spent the cash Then we'd be at a zero