Embattled Home REIT is considering the possible sale of the company after receiving an unsolicited approach from Bluestar Group Limited regarding a possible offer for the entire issued share capital of the company.
The company said that any offer by Bluestar would likely be in cash but added “that there can be no certainty that an offer will ultimately be made”.
The board said it was considering all strategic options for the company including the possible sale after its rent collection rate tanked at the end of 2022.
Bluestar, founded by Ben Gotlieb, is a special situations investment company set up to acquire and lend capital to pan European real estate-backed businesses and development schemes. Ben Gotlieb is formerly of Alvarium Investments, Home REIT’s former manager.
Rent collection
The company has seen a serious deterioration in rent collections for the quarter to November 2022 and identified serious challenges in rent collection for December 2022 and January 2023. For the quarter ending November 2022, only 23% of rent has been collected, meaning that out of a £14,827,147 quarterly rent roll, only £3,401,615 has been paid.
In addition, the company said “rent forecast to be collected for the coming months is highly uncertain as the investment adviser deals with a combination of issues surrounding the tenants’ ability, or willingness, to pay. It is not possible to quantify the future amounts of rent to be collected with certainty as the issues are not straightforward.”
Statutory demands have been served on seven of the defaulting tenants. The company is assessing the impact of its report in terms of rental and capital values going forward.
A review of its portfolio by Simpact has indicated that, based on information provided by tenants for arond 67% of the portfolio, 25% requires at least some level of refurbishment, which it estimates will cost between £15m and £20m.
Brokers resign
Two of the company’s brokers, Alvarium Securities and Jefferies International, have resigned in recent days. Following those resignations, the board has appointed Smith Square Partners on 13 February 2023.
Investigation into wrongdoing
It was reported earlier this month that the company was being investigated for bribery by the National Crime Agency. The board confirmed that it instructed Alvarez & Marsal, independent forensic accounting experts, to investigate these allegations in early January 2023. It added that the investigation is ongoing and it is not possible to confirm its outcome at this stage.
Possible sale timeline
The board said it would work with Smith Square Partners and its other advisers on the possible deal and will look to preserve shareholder value in the process. A further statement will be made as and when appropriate.
Bluestar is required, by 16 March 2023, to announce one way or the other whether it intends to make an offer for the company.
AGM
The company is holding its AGM on Monday, 20 February 2023. It said it would “endeavour to be as open as possible at the forthcoming AGM, but there will be a limit to what it can say due to ongoing investigations”.
Chairman comment
Lynne Fennah, chair of the board, said: “We recognise the serious issues facing the company and are examining all options to preserve shareholder value, and the interests of all stakeholders.”
Here is a timeline of the events that have unfolded at Home REIT:
- Short seller report published
- Rebuffal of allegations
- Board faces calls to resign
- A class action lawsuit is launched on behalf of shareholders
- Trading in shares are suspended
- Hires property manager to conduct review of portfolio
- Allegations of wrongdoing, including bribery, surface
HOME : Home REIT considers sale after approach