Home REIT debt refinancing talks collapse

Talks to renegotiate Home REIT’s £130m debt pile have collapsed, meaning the struggling social housing fund will have to sell more properties to pay back lenders.

The housing firm, which has been beset by a string of scandals, on Monday said refinancing talks with lender Scottish Widows had failed to produce on terms it could recommend to shareholders, despite "extensive and advanced discussions with a potential lender".

“Whilst the stabilisation strategy adopted in August 2023 has progressed from an operational perspective, re-financing of the debt was a key component of its continued advancement,” said Home REIT non-executive chairman Michael O’Donnell.

“As a re-financing has not been possible, the board is considering a number of options both to repay the outstanding debt and provide an optimised resolution for shareholders, which may include a more extensive realisation strategy.”

He added that the company would focus on further property sales as part of a strategy to repay the outstanding borrowings "in a timely manner" and "anticipates ongoing support of Scottish Widows".

At the end of May Home REIT had total borrowings of £131.8m which will be further reduced by £27m via proceeds recent property sales, which have exchanged but are yet to complete.

The company's property portfolio comprises of 1,765 properties with a value of £314.1m with assumed direct control of 1,193 properties.

In February, Britain's financial watchdog started a probe into the company overing the period between September 22, 2020 to January 3 last year.

The company has been selling off properties after a scathing report from short seller Viceroy Research which questioned the robustness of Home REIT's tenant base and rental income in October 2022.

Trading in Home REIT’s shares has been suspended since January 2023 after it missed the deadline to publish its annual report.

Reporting by Frank Prenesti for Sharecast.com