Home REIT, which invests in a portfolio of accommodation for the homeless, is looking to raise £262m from a placing.
The group has fully deployed the net proceeds of its £240m IPO in October 2020 and over 70% of its £120m debt facility, establishing a £328m portfolio providing more than 3,800 beds for homeless people across England. It has an investment pipeline worth £400m that it can acquire through the equity raise.
The open offer, initial placing, offer for subscription and intermediaries offer will be at a price of 109 pence per share, which reflects a discount of 4.4% to the closing price on 27 August 2021; and a premium of 4.2% to the unaudited NAV per share as at 31 July 2021.
The group also intends to put into place a placing programme that will enable additional capital to be raised from 28 September 2021 to 1 September 2022.
Lynne Fennah, chairman of Home REIT, said: “Having successfully established a strong and diversified portfolio since last October, Home REIT is well on track to meet the aims set out at IPO, in terms of the intended ethos, social impact and investor objectives. This Initial Issue and the acquisition of additional homes that it will enable will further advance the Company’s mission as we continue to grow and work even more effectively towards alleviating homelessness across the UK in an affordable and, importantly, sustainable way.”
The company is targeting the issue of 240,570,465 new shares at an issue price of 109 pence per share. The directors have reserved the right to increase the aggregate size of the initial issue up to 321,100,917 shares if demand warrants it. The initial issue is being conducted in accordance with the terms and conditions as set out in the prospectus, which is expected to be published on 2 September 2021.
Home REIT investment strategy
- Seeks to deliver inflation-protected income and capital growth over the medium term through the acquisition and creation of high-quality homeless accommodation across the UK let on long-term, index-linked leases
- Dedicated to tackling homelessness in the UK, targeting a wide range of vulnerable groups including, but not limited to, victims of domestic abuse, people leaving prison, individuals suffering from mental health or drug and alcohol issues and foster care leavers
- Strong ESG framework with clear and independently assessed social impact, as detailed in the Company’s Impact Report of July 2021, with all properties let on green leases
- Exposure to a diversified portfolio of homeless accommodation, let to registered charities, housing associations, community interest companies and other regulated organisations, which have a proven operating track record in providing low-cost accommodation to homeless people and a focus on care, support, training and rehabilitation to provide vulnerable homeless people with the skills and confidence to enable them to reintegrate into society
- Homes let or pre-let to robust tenants on long leases (typically 20 to 30 years to expiry or first break), with index-linked or fixed rental uplifts, in order to provide security of income and low cost of debt. The Company only invests in assets with leases containing regular upward-only rental reviews and all the rent payable by the Company’s tenants is funded by support from local and central government
- Minimum targeted annual dividend of 5.5 pence per Ordinary Share from the financial period commencing 1 September 2021, with the potential to grow in absolute terms through upward-only inflation-protected long-term lease agreements. Targeted NAV total return of a minimum of 7.5% per annum over the medium term.
HOME : Home REIT eyes £262m fund raise