Home REIT (HOME) H2 2021 earnings summary

Executive summary

• Home REIT focuses on funding and creating high-quality homeless accommodation, delivering over 3,000 beds across 572 properties since IPO in October 2020, with a mission to provide secure, inflation-protected income and capital returns while addressing homelessness.

• Properties are let on long-term, index-linked leases (typically 25 years) to specialist registered charities, with income underpinned by government-backed housing benefit, providing low-risk returns and significant social impact.

• The company targets a 7.5%+ annual total net return and a 5.5%+ annual dividend once fully invested, with a minimum 2.5 pence per share dividend in the first year.

• The fund offers substantial cost savings to local authorities compared to alternative housing options and supports tenant rehabilitation and reintegration.

Financial highlights

• Total NAV return of 4.9% over the six months from IPO; EPRA NTA per share increased by 5% to 102.8p as of 28 February 2021.

• Portfolio value rose 4.3% from acquisition to £243m; average acquisition net initial yield (NIY) was 5.83%.

• Rental income for the half-year was £3.06m, with operating profit before valuation changes at £1.62m and profit for the period at £11.43m.

• Declared dividend per share was 0.83p, in line with the FY21 2.5p target.

• EPS was 0.57p (EPRA EPS excluding fair value uplift); loan-to-value (LTV) stood at 32.8%, in line with the target.

Outlook and guidance

• Full deployment of £235m IPO net proceeds and £120m of debt capital; portfolio is 100% let with strong residual value and alternative use potential.

• Long-term lease structure (25 years WAULT), 100% of rent index-linked, and low cost, long-term debt underpin sustainable returns.

• On track to achieve minimum 2.5p dividend in year one, targeting 5.5%+ annual dividend and 7.5%+ total net return thereafter.

• Ambition to grow the portfolio to £1 billion over the next three years, with ongoing assessment of market timing for further capital raises.

• Strong pipeline of assets supports continued disciplined yield and off-market acquisition strategy.