Home Reit’s board has said it is “extremely disappointed” after an audit reduced the estimated value of its portfolio by £564.1m, compared to the price paid at acquisition.
In a regulatory update today (20 December), the trust said external inspections by Jones Lang LaSalle (JLL) appraised its 2,473 property portfolio at £412.9m, a 57.7% drop from the unaudited historical acquisition costs of £977m.
The board said the “very material reduction” in valuation was a result of a reassessment of the quality of the trust’s assets through its ongoing inspection programme, and of the “covenant strength of the tenants, several of which have gone into liquidation in 2023”.
Lynne Fennah, chair of Home Reit, said: “The board is extremely disappointed by the significant value reduction announced today which reflects the information that has come to light regarding the quality of the company’s assets and tenants.
“This information is in contradiction to reporting provided to the board during these periods. The company reserves all of its rights in respect of the matters referred to in today’s announcement and is still considering the conclusions and implications of the revaluation exercise with its advisers, and what consequential actions it may take.
“The publication of the company’s portfolio valuation marks an important step in the stabilisation strategy and ongoing work being done to publish the company’s annual results for the periods ending 31 August 2022 and 31 August 2023.”
Home Reit noted that JLL had considered the rental value for existing uses of the properties and Local Housing Allowance rates.
The inspection programme has also led to a “significant re-assessment” of the quality of the property assets, the trust said. JLL found that many properties were in need of extensive renovation before they can be occupied.
Finally, the board added that valuations have also been impacted by a deterioration in the wider housing market and an increase in property yields following a rise in interest rates.
In a separate announcement, the firm also disclosed it has sold another 80 properties for £16.2m at public auction.