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16 May 2022

Home REIT plc

("Home REIT" or the "Company")

Placing to raise target gross proceeds of £150 million for further investment into accommodation for homeless people in the UK

Home REIT funds the acquisition and creation of high quality properties across the UK that are dedicated to providing suitable accommodation for homeless people.

Homelessness continues to be an endemic challenge within the UK, a situation which is deteriorating further given rising inflation (particularly the impact on domestic energy costs), feeding through to what has been identified as a cost of living crisis. Since the start of the COVID-19 pandemic a total of 222,360 households have been tipped into homelessness - equivalent to the population of the city of Liverpool. According to Government figures, 397 households became homeless every day between July and September 2021. There is an ongoing critical need for suitable accommodation to meet this increasing need and a lack of available and affordable, high-quality, fit-for-purpose homes to address this societal issue in a sustainable way.

Against this backdrop, the Company today announces the launch of a Subsequent Placing of new Ordinary Shares targeting a raise of approximately £150 million at a price of 115 pence per Ordinary Share (the "Placing Price") pursuant to the terms of its existing Placing Programme, details of which are set out in the prospectus published by the Company on 2 September 2021, as supplemented by the supplementary prospectus published by the Company on 9 February 2022  (the "Prospectus").

Highlights

·    Diversified portfolio valued at £713.4 million (as at 28 February 2022) providing 8,556 beds to homeless people across the UK, with 28 tenants across England and working closely with 118 local authorities, delivering a 17 per cent. EPRA Net Tangible Assets / NAV total return since launch (to 28 February 2022)

·     The Placing Price of 115 pence per Ordinary Share represents a discount of 5.7 per cent. to the closing price of 122 pence per Ordinary Share on 13 May 2022 (being the last business day prior to this announcement) and a 4.7 per cent. premium to the 28 February 2022 NAV of 111.2 pence per Ordinary Share, adjusted downwards for the interim dividend of 1.37 pence per Ordinary Share announced on 5 May 2022

·    Net proceeds will be used to acquire further homes in line with the Company's strict investment criteria and as successfully demonstrated over the past 18 months

·    Advanced legal negotiations are underway on a c. £300 million pipeline of such investment opportunities, with an average net acquisition yield of 5.84 per cent.  

Lynne Fennah, Chair of Home REIT, commented:

"This Placing will significantly enhance our capacity to invest in the provision of high-quality accommodation for homeless people across the UK at a time of grave necessity. The proceeds will enable us to continue expanding our existing portfolio which is generating inflation-protected income, utilising our strong pipeline of off-market opportunities, and work with our local partners to provide essential long-term support to some of the UK's most vulnerable people."

Background to and rationale for the Subsequent Placing

In October 2020, the Company raised gross proceeds of £240 million from an initial public offering and was admitted to the premium segment of the Official List of the Financial Conduct Authority and to trading on the premium segment of the Main Market of the London Stock Exchange.

In September 2021, the Company raised gross proceeds of £350 million through a significantly oversubscribed Open Offer, Initial Placing, Offer for Subscription, and Intermediaries Offer. The net proceeds of this issue were fully and efficiently deployed by January 2022.

Alongside investment of the equity raised in October 2020 and September 2021, the Company has also been focused on deploying its two debt facilities totalling £250 million with Scottish Widows. As at 6 May 2022, the Company had drawn down £152 million in aggregate from these facilities.

As a result, the Company has created a portfolio with a total value of £713.4 million (as at 28 February 2022) and delivered an EPRA NTA / NAV total return since launch of 17 per cent. (to 28 February 2022).

The net proceeds of the Subsequent Placing will be used to fund future investments, in accordance with the Company's investment objective and policy, which may also be financed through further borrowing facilities that may be put in place at a future date.

The Investment Adviser is in advanced legal negotiations on a c. £300 million pipeline of investment opportunities which meet the Company's strict investment criteria. All these properties have been identified off-market through the Investment Adviser's extensive contacts and relationships and are under exclusivity at an average net acquisition yield of 5.84 per cent.

All potential acquisitions remain subject to the Investment Adviser's stringent due diligence process to ensure that the Company only acquires high-quality assets that will provide robust, sustainable returns for investors and are fit for the purpose of addressing the UK's homeless problem, providing a genuine social impact. Although there can be no assurance that any of these properties will be purchased by the Company, the Investment Adviser is confident that, with all things equal, the Company would be able to invest or commit substantially all the net proceeds of the Subsequent Placing within 3-6 months following Subsequent Admission.

Investment highlights

Within this context, the Directors believe the Company offers the following attractive investment characteristics:

·    Seeks to deliver inflation-protected income and capital growth over the medium term through the acquisition and creation of high-quality homeless accommodation across the UK let on long-term, index-linked leases

·     Dedicated to tackling homelessness in the UK, targeting a wide range of vulnerable groups including, but not limited to, victims of domestic abuse, people leaving prison, individuals suffering from mental health or drug and alcohol issues and foster care leavers

·    Strong ESG framework with clear and independently assessed social impact, as detailed in the Company's Good  Economy Report of July 2021, with all properties let on green leases

·    Exposure to a diversified portfolio of homeless accommodation, let to registered charities, housing associations, community interest companies and other regulated organisations, which have a proven operating track record in providing low-cost accommodation to homeless people and a focus on care, support, training and rehabilitation to provide vulnerable homeless people with the skills and confidence to enable them to reintegrate into society

·    Homes let or pre-let to robust tenants on long leases (typically 20 to 30 years to expiry or first break), with index-linked or fixed rental uplifts, in order to provide security of income and low cost of debt. The Company only invests in assets with leases containing regular upward-only rental reviews and all the rent payable by the Company's tenants is funded by support from local and central government

·   Minimum targeted¹ annual dividend of 5.5 pence per Ordinary Share from the financial period commencing 1 September 2021, with the potential to grow in absolute terms through upward-only inflation-protected long-term lease agreements.  Targeted¹ NAV total return of a minimum of 7.5 per cent. per annum over the medium term

Net Asset Value and Dividend

As announced in the Company's interim results on 5 May 2022, the NAV per Ordinary Share (unaudited) at 28 February 2022 was 111.2 pence.

The New Ordinary Shares issued pursuant to the Subsequent Placing will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid by reference to a record date after the date of issue. For the avoidance of doubt, holders of New Ordinary Shares issued pursuant to the Subsequent Placing will not be entitled to receive the interim quarterly dividend for the quarter ended 28 February 2022 of 1.37 pence per Ordinary Share in respect of those shares.

Subsequent Placing

Under the Subsequent Placing the Company is targeting the issue of 130,434,782 New Ordinary Shares at an issue price of 115 pence per New Ordinary Share.

Alvarium Securities has agreed to use its reasonable endeavours to procure subscribers pursuant to the Subsequent Placing for the New Ordinary Shares on the terms and subject to the conditions set out in the Placing and Offer Agreement. 

The Subsequent Placing will close at 1.00 p.m. on 26 May 2022 (or such later date as the Company, Alvarium Securities and the Sponsor may agree). If the Subsequent Placing is extended, the revised timetable will be notified through a Regulatory Information Service.

The Directors have reserved the right, in consultation with Alvarium Securities and the Investment Adviser, to increase the aggregate size of the Subsequent Placing by utilising the Company's authorities pursuant to the Placing Programme. In the event that commitments under the Subsequent Placing exceed the target number of New Ordinary Shares available applications will be scaled back at the discretion of Alvarium Securities in consultation with the Company and the Sponsor.

The Subsequent Placing is being conducted in accordance with the terms and conditions as set out in the Prospectus.

Application for admission

Applications will be made to the Financial Conduct Authority and the London Stock Exchange for the New Ordinary Shares to be issued pursuant to the Subsequent Placing to be admitted to the premium segment of the Official List and to trading on the Main Market.  It is expected that Subsequent Admission will become effective, and dealings will commence in respect of the New Ordinary Shares, at 8.00 a.m. on or around 31 May 2022.

Expected Timetable

The times and dates set out in the expected timetable above refer to London time and may be adjusted by the Company. In such circumstances details of the new dates will be notified to the Financial Conduct Authority and the London Stock Exchange and an announcement will be made through a Regulatory Information Service. 

Terms used and not defined in this announcement bear the meaning given to them in the Prospectus.

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is: 213800A53AOVH3FCGG44.

Notes

1 These dividend and return targets stated are targets only and not a profit forecast and there can be no assurance that they will be met. These targets have been developed based upon assumptions with respect to future business decisions and conditions that are subject to change, including the Company's execution of its investment objective and strategies, as well as growth in the sector and markets in which the Company operates. As a result, the Company's actual results may vary from the targets set out above and those variations may be material. Accordingly, potential investors should not place any reliance on these targets in deciding whether or not to invest in the Company and should decide for themselves whether or not the target dividend yield and target total NAV return are reasonable or achievable.

Important Information

This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority ("FCA") and does not constitute a prospectus. Investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the prospectus published by the Company on 2 September 2021, as supplemented by the supplementary prospectus published by the Company on 9 February 2022, (the "Prospectus") and not in reliance on this announcement.

The Prospectus is available, subject to certain access restrictions, on the Company's website (www.homereituk.com), at the Company's registered office at 6th Floor, Bastion House, 140 London Wall, London, EC2Y 5DN, and at the National Storage Mechanism via https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of an RIS announcement, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company. Approval of the Prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the Prospectus. Potential investors are recommended to read the Prospectus before making an investment decision in order to fully understand the potential risks and rewards associated with a decision to invest in the Company's securities.

This is a financial promotion and is not intended to be investment advice. The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by Alvarium Fund Managers (UK) Limited (the "AIFM"), which is authorised and regulated by the Financial Conduct Authority, solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia, collectively, the "United States"). This announcement is not an offer of securities for sale in or into the United States. The New Ordinary Shares have not been, and will not be, registered under the US Securities Act 1933, as amended (the "US Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold into or within the United States, absent registration under, or except pursuant to an exemption from the registration requirements of, the US Securities Act, and in compliance with any applicable securities laws of any state or other jurisdiction in the United States. No public offering of securities is being made in the United States. In addition the Company has not been and will not be registered under the US Investment Company Act of 1940, as amended.

Further, this announcement is not for release, publication or distribution into Australia, New Zealand, Canada, Singapore, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA where the Company's securities may be lawfully marketed) or any other jurisdiction where such distribution is unlawful.

The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Each of Alvarium Securities Limited ("Alvarium Securities") and Dickson Minto W.S. (the "Sponsor"), both of which are authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and for no-one else and will not regard any other person (whether or not a recipient of this announcement or the Prospectus) as its client in relation to the Subsequent Placing, the Placing Programme and the other arrangements referred to in the Prospectus and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in connection with the Subsequent Placing, the Placing Programme, any Admission and the other arrangements referred to in this announcement and in the Prospectus.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance is not a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement contains forward looking statements, including, without limitation, statements including the words "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Such forward looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. The Company, the Investment Adviser, the AIFM, Alvarium Securities and the Sponsor expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Regulation Rules of the Financial Conduct Authority, the UK Market Abuse Regulation or other applicable laws, regulations or rules.

The information in this announcement is for background purposes only and does not purport to be full or complete. Neither Alvarium Securities nor the Sponsor, nor any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. Alvarium Securities and the Sponsor, together with their affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this announcement or its contents or otherwise arising in connection therewith.

In connection with the Subsequent Placing, Alvarium Securities and any of its affiliates may take up a portion of the New Ordinary Shares as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such New Ordinary Shares and other securities of the Company or related investments in connection with the Subsequent Placing or otherwise.  Accordingly, references in the Prospectus to the New Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, Alvarium Securities and any of its affiliates acting in such capacity.  In addition, Alvarium Securities and any of its affiliates may enter into financing arrangements (including swaps or contracts for differences) with investors in connection with which Alvarium Securities and any of its affiliates may from time to time acquire, hold or dispose of Ordinary Shares. Alvarium Securities does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) the UK's implementation of EU Directive 2014/65/EU on markets in financial instruments, as amended ("UK MiFID II") and (b) the UK's implementation of Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing UK MiFID II, and in particular Chapter 3 of the Product Intervention and Product Governance Sourcebook of the FCA (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in UK MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by UK MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the MiFID II Product Governance Requirements) should note that: the market price of the New Ordinary Shares may decline and investors could lose all or part of their investment; the New Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the New Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Subsequent Placing and/or the Placing Programme.  Furthermore, it is noted that, notwithstanding the Target Market Assessment, Alvarium Securities will only procure investors (pursuant to the Subsequent Placing and the Placing Programme) who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of UK MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Ordinary Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.