Home REIT (HOME) has published its long-overdue annual results for the year ended 31 August 2022, which have also included a restatement of the 2021 results. The period saw a substantial loss and decrease in NAV for the period, the reasons for which came to light after the period end and which the board says were in contradiction to the reporting given to it during the period. Frustratingly, there’s limited information in the RNS announcement and the report on HOME’s website has been restricted in such a way that makes it impossible for us, and other analysts and journalists to copy the detail, and report it to you here. However, for the sake of speed, you can read the report here and you will find details of the principal causes for the losses from page 3 onwards. There’s also a lot more detail on the financial overview in the report as well. However, HOME’s board says that it intends to bring legal proceedings against those parties it considers are responsible for wrongdoing. It lists the following actions taken so far:
- A pre-action letter of claim has been issued to Alvarium Home REIT Advisers Limited (its former investment advisor, which is in liquidation – HOME says it received notification of the appointment of liquidators shortly before issuing its letter of claim)
- A pre-action letter of claim has been issued to Alvarium Fund Managers (UK) Limited – its former AIFM
- A pre-action letter of claim has been issued to AITi RE Limited – its former advisor’s former principal by virtue of a Authorised representative Agreement).
NAV impact
Net asset value (NAV) increased from £247.9m (restated as at 3 August 2021) to £345.9m as at 31 August 2022. However, once the net proceeds from the share issuance during the period of £601.2m are considered, NAV decreased by £503.2m from the restated August 2021 NAV. NAV per share reduced by 57.5% to 43.76 pence (2021 restated: 103.03 pence). This resulted in a loss before tax of £474.8m (restated period to 31 August 2021: £16.1m profit before tax).
HOME’s chair, Michael O’Donnell, had the following to say:
“Whilst the Board is pleased to finally be in a position to publish the Report and Accounts we share shareholders’ frustrations about the progress of the Company.
“Despite substantial efforts to stabilise the business, the Company continues to face extensive financial and operational challenges. Against this backdrop and reflecting the expected reduced size of the Company’s portfolio, the Board concluded that the best course of action to optimise remaining shareholder value is the Managed Wind-Down.
“Our priority now is to optimise the value of the portfolio and maximise returns to shareholders, while keeping any disruption to residents to an absolute minimum. Despite the challenges faced by the Company, the work undertaken over the past 12 months by AEW, including asset management initiatives to enhance value, regaining control of most properties and rolling out a re-tenanting programme, has created a portfolio that, while subscale to continue as a standalone quoted entity, represents an attractive investment opportunity for investors seeking to enter the supported living and private rented sectors.
“It should be noted however that the fees incurred in defending the Company against threatened litigation from a group of current and past shareholders will directly reduce the amount of capital ultimately returned to all shareholders and may impact the timing of any distribution to shareholders.
“I also would again like to thank shareholders for their ongoing patience and support as we strive to address, and seek redress for, the issues facing the Company.”
