Home Reit Share Discussion Threads

[williamcooper104] 19/7/2024 14:10

Widows will likely agree to a rolling standstill and just let AEW carry on doing what they'd only have to get someone else to do at greater cost if they put it into admin AEW given no skin in the game unlikely to play hard ball with SW; which equally means SW less likely to want to replace them Admin in CRE is usually not because of insolvency but a break down in trust between borrower and lender

[spectoacc] 19/7/2024 13:55

Still not that much in the latest Allsop - there's a risk August's is going to have to be humungous, for all that says about pricing.

Alternatively - surely AEW will sell off the Mears-rented HOME stock? Anyone know how much they're in the NAV at? I've a memory of it being c.£700k pa rent, so won't be worth that much.

I don't think HOME will be able to repay SW by 31st December - AEW seem to be unaware how long completion is taking. They've this auction, the August one, at most the September one (with 3 months completions extending into the Xmas break, really?) to raise c.10x what they'd get from a usual Allsops.

[triskelion] 17/7/2024 14:13

"...While Home REIT said it intends to return cash to shareholders after the sale of its portfolio, it was uncertain whether any money would be available given the scale of costs associated with a slew of legal challenges and a probe from the Financial Conduct Authority...."


"...Gerbils are typically not aggressive, and they rarely bite unprovoked or without stress. They are small and easy to handle, since they are sociable creatures that enjoy the company of humans and other gerbils.... [image] Pet gerbil eating toilet paper..." - wikipedia

[terminator101] 16/7/2024 06:35

Wind down strategy huhThe gerbils will be raging.

[spectoacc] 16/7/2024 06:09

"...Which has advised that its objective is for repayment of the loan balance in the short term and by no later than 31 December 2024."


As predicted above. What they don't say - and continue to mislead about - is that selling at auction isn't taking the usual 28 days to completion, because of the CIC leases still on the titles at Land Reg. it's taking c.3 months, which means they have a couple of auctions remaining this year to raise c.£100m. The latest Allsop has less in so far than last month.


£6.6m of extra fees accrued to SW so far.


How AEW can get away with taking fees out of HOME for so long, I don't know. How many times has it been said on here that they need to wind up?

Still only been in 90% of the properties - and don't yet have control of them all.

Selling beyond the SW debt problem is going to go well into 2025.

Accounts coming out next month allegedly, and a relisting would be very interesting..

Starting to think any shareholder returns at all rely on the legal actions not taking longer than the co takes to disappear.


Edit - wonder if they can shift the Mears portfolio more quickly - not sure what it's in the books at, certainly not £100m, but one of the few parts of HOME with value.

[spectoacc] 03/7/2024 07:38

Oh now, come on:

"Total income received for the month of June was £0.6m, which represents a 60% increase from the previous month."


Er, except £300k of that was "Management agreed rent collection", by which I assume (but don't know) they mean arrears. So actual rent collection was £300k. Doubt that even covers the additional penalty SW have started charging them, & certainly not a ~60% improvement:

"The existing lender has revised the terms of the additional fee charged on the outstanding loan amount and the 5% fee will increase to 7% from 1 July 2024 until the full repayment of the loan. "


This should give pause for thought for those saying SW aren't going to bust them out/penalise "the homeless" too much.


Also:

"The Company continues to remove non-performing tenants from the portfolio and has now re-gained control of c.70% of the Company's portfolio by number of properties..."


Say what? So after all this time, money, bringing in outside consultants, AEW still don't have control of 30% of the properties HOME owns?

And what does that say about future sales and repaying the loan? There's plenty of NAV - in theory, even allowing for all the auction sales being below it (whatever they claim), and the many costs (Allsop; legals) - but can they access enough of it to sell?


I still think the next couple of Allsops could be huge - remembering it's 3-4 months to actually get the cash in, due to Land Reg. So if they "sell" a load at end of August, it could be Christmas until the money's repaid to SW, who have upped their additional fee from 5% to 7% already.


Edit:
" As announced on 21 June 2024, 133 properties exchanged for sale at auction for a total of £11.4m with completion expected during July."

Completion won't be during July, and that was a pretty large 133 HOME properties in a single auction. Yet it only raised £11.4m, likely before fees/costs. They need 10x that amount to cover the debt. In fact, they need to sell as many properties in arguably the next few months, as they've sold in total so far.

It just gets worse.

[cc2014] 28/6/2024 06:33

I agree Specto.

And it's not like they don't now have a whole load of auction data to use as a valuation basis.

I suspect getting the accounts right is more to do with any legal action against former employees that follows.

[spectoacc] 28/6/2024 06:10

It shouldn't be difficult to audit, isn't a complicated business. Owns freeholds, let on long leases to CICs; a few properties let directly; & the Mears portfolio.

Bank accounts, some very low rent collection, and the ones going through long legal processes post-auction.

It's a day's work, a week if you're being really careful - show me the Land Registry details, show me the bank statements, show me your systems. This isn't the week after firing Alvarium, AEW have been "running" HOME for a long while now.

An audit isn't an in-depth investigation, and even that shouldn't take this long.

The fees will be interesting.

[spectoacc] 21/6/2024 06:07

Only HOME could continually make auction sales at below the August valuation, yet tell us that overall sales have been in line with it, every time.

c.£11m more due in a few months hence - there's a long way to go to pay off SW "...In the short term".

[frazboy] 18/6/2024 15:28

Specto - PM'd you

[cc2014] 18/6/2024 07:46

There's no real concern here for SW. NAV is £314m and debt is £132m.

The fund manager is acting responsibly with regard to the situation and has been paying down the debt on a regular basis.

Even with break fees, legal costs and everything else it's hard to see SW not getting their money back within a year.

What's left for shareholders is another matter...

[williamcooper104] 18/6/2024 07:29

That's right - zero point they'd just pay a lot more to get done what the board are getting done and it would take time to get the admin appointed and up to speed

[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."