Home REIT Appoints AEW As Crisis-Hit Investor Looks To Claw Back Unpaid Rent
Social housing investor Home REIT appointed property giant AEW UK Investment Management as its new investment manager.
The former housing investor had established a three-company shortlist for a new investment adviser after sacking previous adviser Alvarium in March following a collapse in its rental income and the disintegration of some of its tenant base.
Effective immediately, AEW's priorities will be to review the company's assets to "help inform a longer-term strategy for the portfolio", as well as short-term requirements, including the potential sale of a limited number of properties and engaging with tenants over property issues "that may have been previously unaddressed", while improving rent collection efficiency, the company said in a statement.
“As announced on 15 March 2023, the board will write to shareholders as soon as practicable setting out the proposed changes to the company's investment policy, which will include enabling the company to enter into shorter-term leases with tenants,” Home REIT said.
AEW’s UK arm manages around £1.6B across a range of property vehicles in the UK, including its own London-listed REIT, and AEW UK Head Nick Winsley had overseen the bid to take over the management of Home REIT’s portfolio and tenant base.
The company has lurched from crisis to crisis since a damning assessment from Viceroy Research in November. Home REIT’s share value collapsed before being suspended in January after Viceroy raised concerns over its business model and shaky tenant base.
On 16 February 2023, the company announced that, for the quarter ended 30 November 2022, only 23% of rent had been collected, meaning that out of a £14.8M quarterly rent roll, just £3.4M had been paid.
During the five months ended 30 April 2023, it collected around £3.4M, including sums in relation to rent arrears, while rent demanded during the same period was £25.9M.
Home REIT said it had developed a number of initiatives to improve rent collection, which AEW will now take forward under a revised investment policy. At 19 May 2023, the company had a cash balance of £18.9M.
The board also intends to proceed with the sale of a number of properties, as it works to stabilise its property portfolio, provide additional liquidity and reduce its borrowings.
The company is also looking for a new valuer after Knight Frank gave it six months' notice that its contract to provide valuation services will terminate from 3 November 2023.
“AEW brings deep fund management and property expertise that will be critical in enabling the company to stabilise its property portfolio, maintain its mission of providing accommodation to vulnerable people and maximise value for shareholders,” Home REIT Chair Lynne Fennah said.
Home REIT had recently explored a takeover bid from Bluestar Advisors but the appointment of the new investment manager means any sale appears to be off the table.