Home Reit Share Discussion Threads

[spectoacc] 18/6/2024 07:06

Strewth. I've 5 up there, and that's enough. Did you get out of them all OK? HOME would have paid you double MV for them ;)

[frazboy] 18/6/2024 07:02

Yes, NE. He had 50 or so properties nearly all mortgaged in his sole name.

[spectoacc] 18/6/2024 06:02

I believe they've been selling as fast as they can, presumably to mitigate SW's costs and prevent them taking control. SW appear to have lost patience.

The reason we've not had eg 500 sold at once is that HOME haven't had control of them - and in some cases, still don't. AEW have been busting the CIC's as fast as they can.

Proof of that - the latest Allsop ones only came in a few weeks ago. They'd had next to none due in when I spoke to them after the previous auction. Also very few pictures, and frequently don't know if there's a sitting tenant or not, updating the auction pack as they go along.

All of that may still mitigate against eg 300 dropping at once, but I think that's where we're at - the loan needs clearing. "Short term" is not medium term, & IMO means this year.

Bearing in mind the leases at Land Reg are taking 2-3 months to bust - none of mine completed inside that. So if you take short term to be by the end of this year, they need to sell c.£110m in the next 3 months. Going to be very interesting.

(LR delays explain why HOME have £27m still to come in).

[nexusltd] 17/6/2024 18:50

I’m not surprised at the failure of finding a lender.

Lenders to small propcos, will require an interest cover to rent ratio as an element to the loan covenant. Numbers to evaluate max loan for a propco that is in good health:
1. A typical ICR of 185%,
2. Home’s last monthly rental receipt of 126K = 1512k p.a.
3. Interest rate 8% p.a.

Max loan would be: c. 10mn.
Current borrowings: c. 132mn

Home is not in good health. Monthly cash flow negative. A usurious interest rate would be demanded and the board rightly refuses to enter into such an agreement.

The key issue here as I see it, is that besides Mears, there are very few lease agreements in force at the present time. I’m inclined to think the “search” for a replacement lender to SW was an image exercise to show willing to SW. In my view the asset disposal rate will likely remain steady to avoid a glut, and to try and deliver the best possible outcome to shareholders while AEW scramble to negotiate more leases.

[cc2014] 17/6/2024 06:51

the Board has now concluded that it will not be able to secure a re-financing of the existing facility with the Company's lender, Scottish Widows, on terms that it could recommend to shareholders, despite extensive and advanced discussions with a potential lender.

A potential lender not potential lenders

Kind of suggesting wants anything to do with it...

[flyer61] 17/6/2024 06:13

You bought to soon Spec….a Tsunami of property is on its way!

[flyer61] 12/6/2024 07:07

Rinse and repeat just got a little more difficult......and rightly so.

[spectoacc] 12/6/2024 06:06

Ha.

"Although investor demand has been strong, it fell short of the £250 million minimum fundraise required for the IPO to proceed. Having considered their options, the Board did not believe it would be in the best interests of investors to reduce the minimum fundraise below £250 million given the nature of the market opportunity and pipeline."

[flyer61] 11/6/2024 19:14

Welcome to the UK….

[tradez4dayz] 11/6/2024 17:09

Guess we find out whether Simon lee is Teflon tomorrow if his ipo gets away. Still think it's criminal someone who was involved in this can launch another fund

[flyer61] 07/6/2024 13:25

You are going to be busy this weekend Spec. ;-))

[spectoacc] 06/6/2024 06:14

Guessing the big drop in rent % is due to previous numbers being bolstered by arrears. Presumably the longer the arrears last, the lower the recovery. Probably as shown by how long it's taking to get some of the CIC's into administration.

I can only talk about the NE property I've bought from HOME (they do seem to have a lot of it), where I'd say the average rent is c.400 pcm. That would be to the CIC, who'd pay less up to HOME (often none!). Lowest was 320 pcm for a 2-bed.

Management cost - say 15%? ie once HOME take it in-house. That's pre-CapEx.

CapEx - it's finger-in-the-air, one property needed zero, one running at 30% (so far). Whether AST tenanted with a non-social tenant, or completely wrecked/former "grow", makes all the difference. But HOME will surely offload the wrecked ones.

They also have eg some giant HMOs where the monthly rent must be huge (just not to HOME!).

Mears portfolio probably the only way to come up with a finger-in-air calculation - legitimately run, rent going up to HOME.

Nothing I've seen yet makes me change my original 10p-20p estimate, if/when they relist after 18 months. Top end of that if they can deal with the remaining debt. The NAV's seemingly there, even written down, but sales seem to be slowing.


Edit - 15 Peterlees in the next Allsop:


Allegedly all vacant (they often change this), with no internal pictures. Lots 91 & 150A are worth a look for some of the sh*te they have. There's a suggestion the numbered streets in Peterlee may be set for demolition.

Edit #2 to Lot 91. 146 also amusing. How has it taken this long to get those up for sale?
I don't own any in Peterlee - wouldn't want to own there - but HOME's original purchase/Knight Frank's valuation of the Peterlee portfolio is what started me off here.
Isn't nearly enough opprobrium heaped on Knight Frank, who valued without looking at the properties. Even now, HOME haven't been inside all they own.

[nexusltd] 05/6/2024 21:21

“The Board and AEW are committed to continuing to work with BDO to publish the audited results for 31 August 2022 during the second quarter of 2024, with 31 August 2023 to follow soon after.”

We ought to see the FY23_08 AR in the next three weeks. Excited?

Updated Metrics:

Period NAV LTV GIY%
Feb24 25.4pps 40.9% 11.4%
May24 24.4pps 38.9% 6.9%



Period, AverageContractedRent, MearsRent, OtherRent, Interest, Expenses
3 months to Feb24 40,400k 406k 706k 940k 7,854k
3 months to May24 31,933k 406k 307k 821k 6,365k

Notes:
1. NAV & LTV estimates account for 5% accumulating covenant breach liability.
2. The rent metrics use given % of stated annual contract rent received as we don’t know the age of the arrears in actual rental income received in the month.
3. May24 sees a very large drop on April’s annual contracted rent (41%), far more than explained by the Nobel Tree lease surrender (7%). Prior to that the GIY ranged between 13.1% (Aug23) and 11.2% (April24) on a gradually declining trend.
4. Interest on borrowings metric excludes the accumulating 5% penalty.
5. Expenses estimate calculated by backing out: receipts from asset sales and associated auction costs (4.5%), borrowings cash repayments, interest charges, change in cash balance.

Have a question?
Want to see a different metric?



@Williamcooper #1391 & SpectoAcc #1392

Thank you both for pitching in with your comments.

@Williamcooper #1391. To be clear. Is it your view that a 5 year lease does not materially enhance asset value wrt vacant possession? Asset valuation will impact how much debt Home can carry at a reasonable price. I’m thinking 25% leverage.

@SpectoAcc #1392.
Would 10% of asset value be a reasonable guess for remedial capex?
I get that rental income even within the same city can vary hugely. For Home can we not set well defined boundary conditions that will define the type of property it can hold and hence rental income expectation?
• An occupier demographic with limited or no financial resources.
• A LA with a fixed per bed contribution allowance.

So I thought that my question regarding expected rental levels was not senseless. Mid-market accommodation PRSR rental is in the region £850-950/month.

[spectoacc] 05/6/2024 11:16

:))

Curious how sales seem to slowing - when what's left is barely paying any rent, and debt still needs addressing. Something doesn't add up.

[flyer61] 05/6/2024 09:45

And you pay the bank back (who are calling all the shots)and its called a 'gain'.....:-).

[spectoacc] 05/6/2024 09:08

They've sublet a load to Mears, have sold off a load of underperforming, and have been taking action to recover arrears - how on earth can rent collection still be so low?

Even for the giant scam we all know HOME to be, you'd think some of the tenants would be paying, and some of the CIC's returning at least some of the rent to HOME. But I can't see it's much more than the directly-held Mears properties that are paying.

Debt is still £131m.

[cc2014] 05/6/2024 08:46

Rent collection gone to £0.2m a month.

Which suggests to me they've written off some debts as it can't be that low.

[flyer61] 04/6/2024 12:48

are the previous Directors being investigated....??

[triskelion] 04/6/2024 11:54

No interest then from Blackstone et al. in HOME's lower end (non-viable?) portfolio:





"Blackstone and Regis Group have inked a deal to buy 1,700 homes from developer Vistry... will shell out £580m for the portfolio of new build homes across the South East of England.

Vistry is in the process of selling off old properties from its house building arm, following a decision by the business to focus on becoming a solely affordable [sic] property developer.

...the majority of homes expected to complete within the next two years and would be managed by Leaf Living. ..."

[spectoacc] 04/6/2024 06:14

Bid on one last auction, see no more than a single one of any interest this time. They have a seemingly endless supply of Peterlees!


Noble Tree finally gone, how long did that take?

"In line with the Company's Investment Policy to stabilise the portfolio and increase rent collection, the Company will either relet the properties to a social use provider or appoint a property manager, who will be responsible for the day-to-day management and rent collection."


AKA Allsop will be kept busy/in clover for a good while yet.

HOME/AEW will be waking up to the cost of "..Day-to-day management.." on low-rent, low-spec, junk housing.