Home REIT (HOME) H2 2023 earnings summary

Executive summary

• The period was marked by severe operational and financial challenges, including tenant arrears, tenant liquidations, investigations into alleged wrongdoing, and the suspension of share trading due to delayed financial reporting.

• Major management changes occurred: the termination of AHRA and Alvarium FM, and the appointment of AEW as Investment Manager and AIFM in August 2023.

• A comprehensive inspection and revaluation of the property portfolio revealed significant asset quality issues and weak tenant covenants, leading to a substantial reduction in property values and NAV.

• The company adopted a Managed Wind-Down strategy in September 2024, aiming to sell all assets and return capital to shareholders after debt repayment.

Financial highlights

• Portfolio independently valued at £412.7m as of 31 August 2023, down from £414.3m in 2022 and representing only 40.7% of historical acquisition costs.

• Loss before tax for FY23 was £118.2m, compared to £474.8m in FY22.

• Net asset value (NAV) per share fell 37.3% to 27.43p (2022: 43.76p).

• No dividends declared for FY23; last dividend was 1.38p per share paid in January 2023 for the prior period.

• Loan-to-value (LTV) ratio at year-end was 53.3%, above the policy cap of 35% and loan covenants of 50%.

• Unrestricted cash at year-end was £0.8m (2022: £74.5m).

Outlook and guidance

• The Managed Wind-Down strategy, approved in September 2024, focuses on orderly asset sales to repay debt and return capital to shareholders.

• Asset disposals are expected to be structured to maximise value and minimise disruption to vulnerable occupiers.

• The ability to make distributions is constrained by ongoing litigation and an FCA investigation.

• Interim and annual results for 2023 and 2024 are expected in Q1 2025, after which the company will seek restoration of its stock market listing.