Home REIT hires AEW as investment manager

Beleaguered trust also revealed rent collection had fallen to 13.1%

Home REIT has appointed AEW UK Investment Management as its investment manager and property adviser, as it revealed rent collection had plummeted to 13.1%.

In a stock exchange announcement, the trust said AEW’s immediate priorities will be to carry out a “thorough review” of Home REIT’s portfolio and to prepare the potential sale of a number of properties to stabilise the rest of its assets.

Part of the £74.5bn assets under management AEW Group, AEW is also investment manager of AEW UK REIT, while it represents Natixis Investment Managers’ real estate asset management platform.

The appointment, which lender Scottish Widows has given consent to, comes after a “competitive” process in which the trust’s board received seven proposals to take on the role, including RM Funds.

Home REIT’s property valuer Knight Frank has terminated its contract, offering six months’ notice which will expire on 3 November.

Alongside the announcement, Home REIT revealed it has agreed terms with ‘turnaround’ CFO Bill Starn as a consultant. Following AEW’s appointment as investment manager, he is expected to transfer as a consultant to the AEW team.

See also: Home REIT saga raises doubt over the viability of investing in social housing

Rent Collection problems persist

AEW will also seek to improve rent collection efficiency, as the trust revealed it fell to 13.1% in the five months to the end of April, with £3.4m being paid from the £25.9m demanded.

Home REIT announced in February that rent collection had dropped to 23% in the quarter to the end of November 2022.

AEW takes on the property adviser role immediately, while it will assume the role of investment manager and alternative investment fund manager subject to the completion of Alvarium’s contracts and regulatory approval.

Lynne Fennah, chair of Home REIT, said: “The appointment of a new investment manager is an important step. 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.

“The board has run a thorough process to enable it to make this change in investment manager. AEW has undertaken detailed diligence before taking on the mandate and is well placed to hit the ground running. I am delighted with the appointment and look forward to working together.”

Nick Winsley, head of AEW UK, added: “We are committed to working with Lynne and the board to protect the interests of all of Home Reit’s stakeholders, shareholders, the company’s lender and the residents.

“While our immediate priority will be to address a number of short-term requirements, we will also undertake a thorough review of the company’s assets that will allow us to formulate a longer-term strategy for the entire portfolio, which we will propose to the board in due course.”

Jennifer Morrissey, partner at Harcus Parker, commented: “This announcement shows the scale of the issues facing the company and how it has been managed.  Home REIT’s admittance that rent collection has been at 13% – despite last year’s claims that 100% of the rent was being collected – is disturbing. It means that the company is now having to sell off properties that were intended for vulnerable people, and may have vulnerable people living in them.”

“There is no mention of any efforts to remedy that. At the same time, shareholders find out that its independent property valuer, Knight Frank, has resigned and there are – unspecified – issues with Home’s properties that may have gone unaddressed before now, but again no explanation is provided as to why the valuer has resigned nor of why the company has taken until now to address the issues with its properties. All decision-making continues to happen behind the scenes.”

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