Home Reit Share Discussion Threads

[gbcol] 18/10/2021 07:58

Good to see they have put a good chunk of the funds to work so quickly after the fund raise. I expect more acquisitions will be tied up in next few weeks/months as they obviously have been getting them lined up since before the raise.

[gbcol] 25/9/2021 09:45

Although the issue was oversubscribed, I appear to have been issued with the full allocation I applied for through AJ Bell.

This is my 1st dip into this sector but as I’m in the market for decent divis, this looked of interest.

[jonwig] 25/9/2021 07:14

Politicising an argument is rarely fruitful, though it can impact on the investment case, as when Corbyn caused a shudder in the PFI department.

Here's an article about HOME, and the short-selling attack on Civitas (CSH). There's also another social housing REIT raising IPO funds (Responsible Housing REIT):



This summarises the CSH issue:

[raptor_fund] 24/9/2021 17:25

Haha, Yes I totally agree with you. That's the role of rentier capitalism, hunting out the area's where you can easily transfer wealth from the poor to the rich. I have my preferred level of exposure to this 'sector' but I'll happy to look at Home if I want an increase. It's not my fault the government's too stupid to stop funding it.

[williamcooper104] 24/9/2021 15:33

Just like PFI - couldn't think, from an investor perspective, of a better accolade :)

[raptor_fund] 24/9/2021 15:11

There's no service this company is supplying, just expensive capital (just like I'm not helping anyone scalping my 3% on this capital raise). Bluntnib is correct; it makes no sense that the council pays 5% inflation linked to rent these for 30 years when the government can borrow @ 1.5% to buy it for 30 years. These are just like PFI contracts. Crazy! Anyway enjoy your ESG company, I'm off to scalp something else.

[gbcol] 23/9/2021 07:44

Very good result, with issue oversubscribed although that means there will be scaling back.

I suspect some will take the 3-4% share price premium in first few days, so may have a chance to top up if share price falls back a bit.

[jonwig] 23/9/2021 07:12

Result:

Further to the announcement of 31 August 2021, the Board of Home REIT, which funds the acquisition and creation of high quality properties across the UK that are dedicated to providing suitable accommodation for homeless people, is pleased to announce that it has raised gross proceeds of £350 million through a significantly oversubscribed Initial Issue of 321,100,917 New Ordinary Shares at an issue price of 109 pence per New Ordinary Share.

[bluntnib] 20/9/2021 09:47

jonwig

"Driving down costs" results in the kind of conditions exposed recently in the media. I don't disagree though that the private sector is generally more efficient. I am lamenting the fact that as a country we cannot organise ourselves better. There is something grotesque about social security payments being diverted in this way. I am not proposing an increase in council tax. Would it not be better for local authorities to collaborate directly with pension and investment managers to secure long term funding of purpose built housing? Or is that naive?

[jonwig] 20/9/2021 09:40

You seem to be proposing a council tax rise so that LAs can buy properties. The main difference would then be inefficiency. The private sector is rather better at driving down costs and increasing efficiency whilst staying in a regulated environment. The divi is a fair reward.

[bluntnib] 20/9/2021 09:15

jonwig - thanks for your thoughts.

Re point 2 - are these funds not already "exploiting" a situation whereby taxpayer funds are being siphoned off via DSS payments, supposedly for the needy, to provide 5% to 7% dividends for the greedy, ie you and me? It's a classic inefficiency that is ripe for Government reform.

[jonwig] 20/9/2021 09:02

Bluntnib - some valid points thre.

On (1), you always get late entries to a market like this. I think size and first-mover are worthwhile advantages.

On (2), the operator of the accommodation will act as a buffer between the authorities and the landlord. Provided the landlord carries out maintenance to standard, the rent will be capped, and I doubt the landlord will have much freedom to 'exploit' the situation. (Though smaller landlords could well try it on.)

On (3), I don't know. Possibly that's a danger. But gov't policies have certainly got rough sleepers off the streets (my experience) and vulnerable women appear to be finding help.

[bluntnib] 20/9/2021 08:45

A lot of fund managers are chasing the same idea -ie buy up 'cheap' housing stock and lease it out to desperate councils for guaranteed index-linked returns paid by DSS.

My concerns are:


1) Given the increased competition, will these companies operpay and thus fail to meet yield targets? Could some even fail to deploy all the capital raised in recent months?
2) Will they lose their ESG sustainability halo when everyone realises they are cashing in on the misery of the homeless and the inefficiency of local authorities at the expense of the taxpayer?
3) Will regulators and Government intervene to ensure stricter, and thus more expensive, standards in the wake of increasing media scrutiny of the sector (see recent ITV and Sunday Times investigations)?

[jonwig] 31/8/2021 12:40

It's the standard model for an expanding rent-gathering property company. Loads do it, and so do renewable energy and infrastructure funds. You're aware of that, aren't you?

Really all HOME is doing is collecting rent. If it borrows money it can do that below the running yield on the assets. Of course the assets need maintenance, and I guess there's alternative use (flats at open market).

If you don't like the model, leave it alone. But lots of us do.

[trcml] 31/8/2021 09:58

So, whenever Home wants to buy a property it taps shareholders for the money. As 'we' don't know whether the property has any potential beyond what's on offer, really all HOME is doing, apart from its overt purpose, is what?

[jonwig] 31/8/2021 07:25

Trading update:



Looks pretty much in line with their promises at IPO. NAV 104.6.

Also fundraising at 109p (not unexpected):



Open to PIs.

[williamcooper104] 27/7/2021 08:53

Wasn't sure if it was a problem or an opportunity for HOME

[jonwig] 27/7/2021 07:12

Well, at least HOME isn't one of the named culprits!

But it's a potential issue, as HOME "currently has 19 tenants housing over 3,648 people in 643 properties across 81 local authorities." It would be surprising to get 643 clean bills of health!

I wonder if the 19 tenants (charities, housing associations, etc.) would be on the hook, with HOME responsible only for the fabric?

[williamcooper104] 27/7/2021 02:03

https://www.birminghammail.co.uk/news/midlands-news/you-should-nervous-housing-watchdog-21065777

[williamcooper104] 20/7/2021 14:04

Looks like the acquisitions have been on CPI with cap/floor of 4 and 1 - which is not dreadful Liking the 12 year debt faculty at 2.1 percent

[trcml] 20/7/2021 13:34

It does of course borrow the money from shareholders! By the sound of it HOME has exhausted scope for bank loans. Any 'responsible' lender would require a charge over the property/properties to which the first mortgagee might not agree. Shareholders can be tapped for capital because in exchange HOME can offer (not promise) a dividend. Whether the shareholder's capital would be protected depends upon the market price for the share at the time the shareholder wants to sell. This is not a sector of the property investment market i am involved in - in the markets i am in index-linked rent reviews are common - but the impression I have is that HOME buy ready-made investments, as distinct from a vacant property, refurbishing it as necessary and letting it on long-lease to one of their approved tenants. Whether the price HOME pays for a particular property is 'inflated' because it comes with a lease in place depends upon the seller. (Worth considering also whether there are property traders that construct the deal in the first place.) Index-linked to CPI but subject to cap-and-collar is attractive to the tenant knowing for certain that the annual rent would not be less or more than x percent. For shareholders, including myself, the potential for capital appreciation depends upon the purchase price of each property compared to its current market value, either as an investment or for development when the lease expire or can be bought in. Also stock market investor sentiment for the price of the shares. Announcing a possible equity offer is unusual: presumably a portfolio has been offered to HOME which it would like to buy provided it can raise the cash. Its advisers might also be testing shareholder appetite for injecting further cash.

[williamcooper104] 20/7/2021 12:04

Thanks - not surprising as most new long leases are being struck on CPI

[jonwig] 20/7/2021 11:16

William - CPI is the index given in the prospectus.

[williamcooper104] 20/7/2021 10:39

Or cynically; there's less asset management upside but there's also less for management to screw up

[williamcooper104] 20/7/2021 10:38

Agree that VP values really matter, and last thing you want is an over-rented lease to a weak covenant (regulated or not) £90 per week doesn't smell too demanding/intrinsically over-rented There's little asset management upside, but if you buy this it's because of the premium over index linked gilts (which is about 700bp) It looks like they are creating new leases, so likely to be CPI rather than RPI and caped at 3-4 percent (that's a guess though)