Home REIT has posted a 7.2% increase in NAV in its maiden annual results.
The NAV and EPRA net tangible asset (NTA) per share increased to 105.0p at 31 August 2021, an increase of 7.2% from the 98.0p (after share issue expenses) at the time of the company’s IPO in October 2020, reflecting the discount achieved on off market acquisitions, early mover advantage in this sector, and yield compression in the wider long‐lease sector.
The group’s portfolio of 711 properties were independently valued on 31 August 2021 at £328m, representing an increase of 4.5% above the aggregate acquisition price.
In the period, the company paid or declared dividends totalling 2.5p per share. Taken together with the increase in NAV, the company has delivered a NAV total return of 8.9% since IPO. From 1 September 2021, the company will target a minimum annual dividend of 5.5p per share.
Portfolio overview
At August 2021, the group had 3,846 beds across 711 properties acquired at an average net initial property yield of 5.85% (including acquisition costs). Average weekly rents of £90 per bed vs £225 average estimated weekly B&B rate per bed in England, providing an average 60% estimated saving to local authorities. The typical building size in the portfolio comprises 3 to 4 bed houses or small 7 bed apartment blocks.
Assets are broadly diversified geographically across 81 different local authorities in the UK as well as across different sub sectors within homeless accommodation, ranging from drug and alcohol abuse, domestic abuse, prison leavers, general needs poverty and those with mental health issues.
Portfolio is let to 21 different registered charities, housing associations, community interest companies and other regulated organisations.
The portfolio is 100% is let and income producing with a long weighted average unexpired lease term (WAULT) of 24.3 years. 100% of the income is index‐linked.
Post period highlights
In September 2021, the company raised gross proceeds of £350m through a significantly oversubscribed issue of new ordinary shares. Since 31 August 2021, it has acquired 539 new assets totalling £229m, providing over 2,679 further beds.
Chairman comment:
Lynne Fennah, said: “In just over a year since listing, Home REIT has produced an admirable performance, meeting, and in some areas exceeding, the objectives set out at IPO. In this short time the Company has helped many charity and operating partners provide much needed, effective support to homeless people across the UK; offered local authorities a stable, cost effective and fit-for-purpose solution to their statutory obligation to provide homes for those in need; and has also delivered on behalf of its shareholders, whose support was gratefully received in September’s oversubscribed equity raise.
“Unfortunately, as the UK emerges from the pandemic, the requirement for good quality accommodation for homeless people is only set to grow. However, the Investment Manager has proven its ability to effectively and responsibly source and deliver properties in line with the investment strategy and with a pipeline of potential further acquisitions identified, we believe the Company is well positioned to continue to deliver meaningful social impact.”
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