30 November 2022

Home REIT plc

("Home REIT" or the "Company")

FULL RESPONSE TO SHORT SELLING REPORT

Further to the Company's announcement released on 23 November 2022, Home REIT today provides a response to the short selling report (the "Report") published by Viceroy Research LLC ("Viceroy").

This announcement has been prepared to the standard required under the UK Disclosure and Transparency Rules and UK Listing Rules, including Listing Rule 1.3.3 "Misleading information not to be published", with the content of this announcement verified under the supervision of the Company's lawyers, Stephenson Harwood LLP. The Company notes with disappointment that these obligations do not appear to apply to Viceroy's Report.

The Company has provided detailed information below to address the issues raised by Viceroy. The Company would invite them to consider our responses, engage with the Company and discontinue their campaign in the media. Home REIT is completely confident in the integrity of the business it is operating, its financial soundness and the beneficial impact the Company is having in reducing homelessness in the UK.

The Company invites investors to join one of the webcasts it is hosting to discuss this announcement and the Report. The webcasts are at 11:30 on 30 November 2022 and 15:00 on 1 December 2022. Please contact HomeREIT@fticonsulting.com to register your interest in attending.

Lynne Fennah, Chair of Home REIT, commented:

"This is a business whose sole focus is on providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value. It is with deep frustration that the Board is having to spend time and resources responding to these baseless and misleading allegations."

Summary Rebuttal

·    ALLEGATION 1 - The Company's Tenants "do not appear to be paying rent", "Substantial quantities of Home REIT's rent will never be collected," and therefore "[this] is likely…to [result in] substantial downwards revaluations of its investment properties"

RESPONSE - Home REIT's rent is ultimately supported by central government funding and Local Authorities' statutory duty to house homeless people. There are no overdue arrears in relation to amounts billed to 31 August 2022, supporting the independent valuations of the Company's portfolio carried out by Knight Frank LLP ("Knight Frank").

·    ALLEGATION 2 - Viceroy queries the Company's financials and questions the use of straight-line rent revenue.

RESPONSE - The Company is obliged under IFRS accounting standards to straight-line its rental income. The half year report presents an adjusted cash earnings figure to provide complete transparency over the impact of the straight-lining adjustment. As a result, the suggestions that the Company has poor cash conversion are incorrect.

·    ALLEGATION 3 - The "financial data of Home REIT's tenants show that many cannot afford rent, have not been paying rent, are in administration, are run by bad actors, or simply do not provide social housing services."

RESPONSE - All of the Company's Tenants provide social housing services. The Company has addressed each of Viceroy's accusations on a Tenant-by-Tenant basis. The Company reiterates that there are no overdue arrears in relation to amounts billed to 31 August 2022. The Investment Adviser's due diligence exercises are adapted to each Tenant but include confirming the Tenant's legal qualification to receive exempt housing benefit, in addition to reviewing financial statements, operational capabilities (e.g. staffing levels) and their business plan/forecasts, such that the Tenants can meet their rent payment obligations as they fall due. The Company takes any accusation against the conduct of directors/trustees of its Tenants seriously and would investigate any suspected wrongdoing, if required.

·    ALLEGATION 4 - Alvarium Home REIT Advisors Limited's (the "Investment Adviser") fee structure is poorly aligned with shareholder interests and perfectly aligned to commit fraud.

RESPONSE - External management is a common feature of the UK listed investment trust and REIT market. Home REIT has one of the lowest external management fees in the UK REIT space with an effective rate of 0.79% on NAV as at 31 August 2022 and no performance fee, which has incentivised the on-target delivery of all its KPIs. Home REIT's NAV is calculated by the Company's administrator, Apex Fund and Corporate Services (UK) Limited ("Apex"), using the latest available independent valuations provided by Knight Frank. Each of Apex, Knight Frank and BDO LLP ("BDO") are independent of the Investment Adviser. There is therefore no "alignment" whatsoever for fraud in the Investment Adviser's fee structure; on the contrary - it is designed to prevent fraud.

·    ALLEGATION 5 - "Alvarium have systematically inflated the prices of properties on the balance sheet."

RESPONSE - The total revaluation gain for properties purchased by the Company between IPO and 28 February 2022 is £43.2 million, which equates to an average of 6.4% per property. This revaluation gain was established by the external valuation process undertaken by Knight Frank as per the RICS Valuation. As the Company explains in detail below, the statements made by Viceroy misunderstand the process by which the Company acquires its assets, misinterprets figures derived from underlying SPVs and relies on misleading HM Land Registry data.

Home REIT: A Summary

In this section, the Company provides a re-cap of essential information on its structure and processes that informs its responses to allegations raised in the Report.

The Company targets inflation-protected income and capital returns by investing in a diversified portfolio of homeless accommodation assets, let or pre-let to registered charities, community interest companies and other regulated organisations (the "Tenants") that receive housing benefit or comparable funding from local or central government, on very long-term and index-linked leases. Pursuant to the Homelessness Reduction Act 2017, Local Authorities have a statutory duty to house people who are unintentionally homeless and in priority need.

The funding structure for Home REIT is illustrated in a diagram that can be accessed at the following location: https://www.homereituk.com/wp-content/uploads/2022/11/Funding-Diagram.pdf

What the Company looks for in its properties

The Company's properties:

·    provide high-quality accommodation to homeless and vulnerable individuals in need of housing;

·    benefit from residual value and alternative use characteristics;

·    are let on very long unexpired lease terms (typically 20 to 30 years to expiry or first break);

·    have triple net, full repairing and insuring leases; and

·    have rent reviews that are inflation-linked (typically capped at 4% and collared at 1%) or contain fixed uplifts.

The Company's properties are in areas of the UK with the greatest need for homeless accommodation, spread across 135 Local Authorities in England and Wales. Home REIT believes that each Tenant is best placed to assess the specific requirements of homeless people in their area (e.g. domestic violence survivors, prison leavers, ex-servicepeople) and sources properties based on these criteria.

Home REIT's properties provide new social housing capacity to help alleviate homelessness, at a much more competitive cost versus more expensive, unsuitable alternatives e.g. B&Bs, which Home REIT does not provide. On average, Home REIT's properties provide Local Authorities with a rental saving of approximately 70% versus the alternatives.

How the Company acquires its properties

The Company generally acquires properties in off-market bulk purchases from developers ("Vendors"), which means that properties can be refurbished and upgraded prior to occupation by the Tenant's residents. Vendors typically provide the Company's Tenants with additional funding, usually representing twelve months of rent, to assist Tenants at any stage of the lease where the residential property may not have full occupancy, including in the important ramp up stage of a lease where properties may not be fully occupied. Properties are generally purchased in corporate portfolios, which often provide additional costs savings for the Company e.g. in Stamp Duty and due diligence efficiencies.

Wider market backdrop

The Board believes that the investment case for Home REIT is underpinned by the following fundamental macro and micro property investment drivers:

1.    The supply/demand imbalance between the unmet demand for low-cost affordable housing in the UK and the limited supply of quality, cost-effective housing stock.

2.    A material and growing spread between the high cost of private rentals and the level of Universal Credit funding for housing benefit.

3.    The statutory obligations imposed on Local Authorities under the Homelessness Reduction Act 2017 to house homeless people.

4.    Home REIT's ability to charge a low rent in line with Local Housing Allowance ("LHA") rates (current average of only £96 per person per week) but still deliver a sustainable net initial yield on cost of 5.9% per annum for investors and quality, fully refurbished accommodation for residents.

5.    The long-term supply demand imbalance for all forms of residential accommodation in the UK, which has historically supported consistent capital appreciation for UK housing stock.

6.    The non-specialist and fully refurbished nature of the Company's property portfolio, coupled with the low current rent and attractive yield on cost, provides multiple avenues for downside protection, including (1) re-letting to general needs social housing tenants, students, or other private renters and (2) sale to owner-occupiers or buy to let portfolio owners.

Detailed Rebuttal

The Report raises five key issues, which the Company entirely rebuts, highlighting the inaccuracies and misinterpretations:

Allegation 1 - Tenants

·    The Company is disappointed by the public disclosure of the addresses of certain of the Company's properties. The Company has always committed to increasing its disclosures to investors but has taken the utmost care to protect the privacy and safety of the residents, who are among the most vulnerable in society.

·    The Company's top Tenants are shown below, alongside key operating and financial metrics:

Note: All figures as at 1 November 2022, reflecting FY periods to 31 August 2022.

Note 1: Following the reassignment of Circle's leases to One CIC as outlined below, rents paid by One CIC represented c. 10.9% of the Company's total.

Note 2: Invoiced rent does not include adjustments for straight-lining of rent, accrued and deferred income

Note 3: All rent free figures reflect the six-month period from 1 March to 31 August 2022

Note 4: The Company has disregarded aggregate arrears of less than £10,000 across all Tenants (being less than 0.027% of the Company's invoiced rent in the year to 31 August 2022) over the financial period for the purposes of this announcement

Focus: 1= General Homeless, 2= Vulnerable Women, 3= Prison Leavers, 4= Domestic Abuse, 5= Ex-Service-people.

·    All of the Company's Tenants were set up at different times and each manages accommodation for homeless people, overseen by industry experts with established track records in the social sector. Home REIT undertakes financial and operational due diligence on its Tenants at the outset of any relationship, including a review of current operational capabilities and forecast business plan. The Company is committed to strengthening its ongoing due diligence of Tenants and is in the process of creating quarterly reporting obligations for its Tenants covering underlying occupancy, status of exempt housing benefit applications, progress of refurbishments, the presence of any assured shorthold tenancies ("AST") already in the property, changes to composition of the board of trustees, and provision of management accounts. Home REIT has a constructive relationship with all its Tenants and is not the subject of current, nor has ever been the subject of historical, legal action with any counterparty (as Viceroy has alleged on social media) nor have any Tenants raised issues on the "financial viability of Home REIT's portfolio, and also about the appropriateness of this venture" with the Company. Home REIT is not concerned that some Tenants do not have an online presence given the comprehensive financial and operational due diligence undertaken. There are no overdue arrears in relation to amounts billed to 31 August 2022.

·    The Company's Tenants receive exempt housing benefit directly from the Local Authority, which is directly funded by central government, to pay rent and associated expenses for their residents. Local Authorities have a statutory duty to house people who are unintentionally homeless and in priority need, pursuant to the Homelessness Reduction Act 2017. All the Company's Tenants are regulated either by the Charity Commission, the Office of the Regulator of Community Interest Companies or the Regulator of Social Housing, and there is strong oversight to ensure that exempt housing benefit is distributed fairly and high standards are maintained at the Tenant level. As stated to investors, the Company is committed to increasing its detailed ongoing assessment of the service levels of Tenants to their residents at the Company's properties.

·    Prior to entering into a lease with the Company, Tenants typically engage informally with the relevant Local Authority to understand the demand for homelessness accommodation, the number of referrals on their books and the type of property the Local Authority is lacking for this provision of accommodation. Once the lease has been signed, the Tenant starts the process of exempt housing benefit application to the Local Authority either on a per bed basis or on a block basis (such as Wellesley House referenced later in this section). Evidence for each line of a claim must be provided e.g. a lease in reference to the rent claim, the costs of management and maintenance such as property insurance, gas safety certificates, allowance for out of hours repairs and management calls, and eligible service charge costs such as fuel/energy costs on communal areas, provision of furniture and white goods. Claims can be made for a share of management and administration costs and an allowance on service charge costs for void periods as well. The Local Authority will review the claim and the evidence provided and, assuming the application is approved, will backdate the payment to the date of occupation by the resident or date of block contract (as applicable). The Local Authority will also undertake regular reviews that the levels of service previously stated are provided (e.g. through logs of visits by housing officers) and that the property is in the correct condition. Home REIT charges a low rent in line with LHA rates and delivers appropriate accommodation for residents.

·    The following points are made in direct response to allegations raised in the Report:

o  Big Help Project: Regarding Peter Mitchell and the allegations previously raised, Home REIT understands that he rejects all allegations and remains a serving councillor on Liverpool City Council. Mr Mitchell has extensive social housing experience, having been chairman of the registered provider Cobalt Homes for 10 years and on the board of Symphony Homes. Colette Goulding has extensive social housing experience and was a finalist for the Merseyside Women of the Year Awards 2022. Home REIT has discussed Big Help Project's draft management accounts to FY 2022 with senior Big Help management and expects these to show a relative decrease in debtors and an increase in rental income, along with a decrease in the level of donations (as this may contain the rent cover provided by the Vendor to the Tenant).  Further information on shared trustees for this and other Tenants is provided later in this section. Full due diligence was undertaken on the Tenant on a financial and operational basis, including a review of the allegations made against Peter Mitchell. Home REIT has been paid all rent due in full (£3.9 million for FY 2022).

o  CG Community Council: The Report cites financial statements for the year ended 31 March 2021. However, Home REIT entered into its first lease with this Tenant in June 2021 and therefore any expenditure in the prior financial year does not impact on the Company's investment. For FY 2022, the Company received £2.4 million in rent from CG Community Council for the provision of accommodation to homeless residents. Please see the Big Help Project (above) for comments around trustees. The Company has also requested that the Tenant updates its 'Charity Overview' section on the Charity Commission website to reflect the services it provides through the properties leased from the Company. The Company has discussed the draft financial statements for the year ended 31 March 2022 and expects these to demonstrate a significantly improved balance sheet and income statement. These are due to be published on the Charity Commission's website in January 2023.

o  Dovecot and Princess Drive Community Association: The Report variously claims that this Tenant was established in May 1974 or in 1997: the Tenant was established on 9 July 1997. The Report also cites financial statements for the year ended 30 September 2020 (prior to Home REIT's launch had formally closed) and 31 March 2022, showing low or no rental expense. Home REIT has been paid all rent due in full (c. £2.0 million for FY 2022) for the provision of accommodation to homeless residents and has been advised that the Tenant's accounts have been administered incorrectly, which will be rectified at the next public filing. Please see the Big Help Project (above) for comments around trustees. The Company understands that the Tenant does not publicly promote its provision of accommodation for homeless people, as it relies predominantly on relationships with Local Authorities who provide homeless referrals that are used to occupy the accommodation that the Tenants leases. The Company has also requested that the Tenant updates its "Charity Overview" section on the Charity Commission website to reflect the services it provides through the properties leased from the Company.

o  Redemption Project: The Investment Adviser has reviewed draft management accounts to 30 September 2022 and expects Redemption Project to deliver both an operating profit and balance sheet improvement at its next set of publicly available accounts. The fact that the Tenant's registered office was previously used by other businesses is irrelevant: Home REIT has been paid all rent due in full (£2.7 million for FY 2022).

o  Lotus Sanctuary: Home REIT encourages all counterparties to provide the highest calibre of care to promote positive outcomes for its residents, who remain anonymous to the Company. Regarding the statement around a property in an "unsafe area", Lotus Sanctuary formally rebutted the claim by Women's Aid, explaining that the property comprised 28 self-contained refurbished flats that had been approved by the Local Authority for exempt accommodation. Regarding the resident complaint around the standard of care provided in a property run by Lotus Sanctuary, Home REIT was in dialogue with the Tenant, who determined that the issues pertained to a limited number of residents where underlying factors such as eligibility for housing, non-declaration of income, and anti-social behaviour were contributing factors. No concerns have been raised to Home REIT regarding any other aspect of the properties under this Tenant's control regarding staff, property conditions, or otherwise. Indeed, the Tenant invited Women's Aid to visit the relevant property; the invitation was not responded to. Home REIT has been paid all rent due in full (£3.7 million for FY 2022).

o  Supportive Homes CIC: The Tenant has the benefit of significant operational experience in the social housing space, with Morag Williams having over eight years of industry experience, and the Tenant having access to a total of 22 staff. The Company believes that this expertise supplements other directors who are newer to the social housing sector. As the Tenant legal entity was established in March 2021, it has yet to file any formal accounts with Companies House. Home REIT has been paid all rent due in full (£3.0 million for FY 2022).

o  One (Housing and Support) CIC: The Report comments that current debts were rising quickly in the Tenant's FY 2022 accounts. It is correct that creditors had risen to £2.31 million compared to £1.92 million in FY 2021, but this fails to consider the increase in debtors from c. £88,000 to c. £320,000 and increase in stock. This typically reflects delays with some Local Authorities in their processing of exempt housing benefit claims, which are subsequently backdated to the date of the claim upon payment.  Home REIT has been paid all rent due in full (c. £3.0 million for FY 2022).

o  Bloom Social Housing: The Report comments on Wellesley House, which is an example of the proper functioning of the exempt accommodation sector. It is currently under a block contract due to the high levels of demand for homeless accommodation in the Local Authority area. These contracts, covering a block of 20 self-contained studios, are typically for twelve months, but given the elevated need for homeless accommodation in the area, the Tenant fully expects to have the contract extended in due course. Should the block contract not be extended, Bloom Social Housing is able to fill the properties on an individual basis. The Penta House Veterans project referenced by Viceroy is currently being used for general needs housing. Penta House was not granted exempt accommodation status as originally sought by the Tenant due to the number of people to be housed in the building. Whilst the Tenant was disappointed with the decision, they have acted swiftly to ensure the property is income producing and providing a much-needed social impact.  The Tenant was founded in April 2020, prior to the IPO of the Company in October 2020. The Tenant directors have significant expertise, with Sarah Furber in particular having worked in the housing and social housing sectors for over 30 years. Home REIT has been paid all rent due in full (c. £2.0 million for FY 2022).

o  Circle Housing and Support ("Circle"): Circle is currently in solvent administration. The circumstances surrounding Circle's solvent administration were driven by a change of strategic direction by Circle's management. Circle's properties are largely sub-let to Mears Group Ltd ("Mears") on ten-year sub-leases. Mears manages over 17,000 homes for local and central government. The Vendor provided a contribution to Circle referred to in the Report to cover the difference over the course of the lease between the cost of the head lease to Home REIT and  the cost of the sub-lease to Mears.  The Company announced the solvent administration on 1 November 2022, further noting that rent due continues to be paid on time and in full, with no impact to residents. Circle's existing leases were reassigned on the same rental terms and the remaining Vendor's contribution referenced above was transferred to One CIC on 25 November 2022, demonstrating the resilience of Home REIT's business model and its ability to continue to provide critical housing to its vulnerable occupants due to the protective statutory framework that the Homelessness Reduction Act 2017 created.

o  Gen Liv UK CIC ("Gen Liv"): The Investment Adviser has previously reviewed draft financial statements to December 2021 which provide appropriate comfort that Gen Liv can afford its lease obligations. Home REIT has been paid all rent due in full (£3.0 million for FY 2022). Gen Liv has a staff of seven with requisite experience to provide homeless accommodation services. Gen Liv has noted the photographical error on its website and intends to update this in due course.

o  Dawson Housing: The Report summarises a clerical error regarding the inadvertent deregistration by the regulator of Dawson Housing in April 2021. Dawson Housing was reinstated by the regulator in November 2021 following an appeal. Dawson Housing has a staff of 14 with requisite experience to provide homeless accommodation services. Home REIT has been paid all rent due in full (c. £1.8 million for FY 2022). CEO Alex Bass's background has been predominantly in real estate and his experience is supplemented by an additional five directors, the majority of whom have specialist experience in social housing, including Amanda Trent who has over ten years in the sector and is a Chartered Member of the Chartered Institute of Housing.

o  Noble Tree: The Report notes sub-leases from Noble Tree to Mears. Home REIT is aware of and is comfortable with this situation; having sub-lease holders provides further protections around the ongoing collection of rent, especially when such sub-lease holders are large publicly listed entities. This has enabled Noble Tree to expand its portfolio at a sustainable rate. The Tenant has used the COVID-19 extension to extend the reporting as the Tenant is implementing updated management systems. The Company expects the Tenant to show a healthy balance sheet for the year ending December 2021 when filed and again in the year to 2022 when these are filed. Jakob Kinde has stated that the allegations raised are historical and unfounded. Home REIT has been paid all rent due in full (£1.6 million for FY 2022).

·    Tenants typically seek to run a minor surplus on their financial accounts. As previously disclosed, the rent paid to Home REIT represents on average c. 45% of the exempt housing benefit that they can claim, with the remainder of the funds allocated to maintenance costs, the provision of additional support services and a share of central costs.

·    Viceroy notes that many of the Tenants are administered by the same parties. There is nothing unusual in these arrangements. The Company believes that charitable focus on homelessness is an undersupplied and underfunded area in the UK. For smaller charities, it is common practice to share senior level expertise, administrative support functions and office space, which drives a reduction in operating costs, allowing them to focus resources on the vulnerable people they support. Indeed, Home REIT believes that this organisational approach is currently conducive to helping the greatest number of vulnerable people.

(1) Lotus Sanctuary CIC and Redemption Project and (2) The Big Help Project, CG Community Council and Dovecot and Princess Drive Community Association share senior expertise. As outlined above, this is common practice and the Company refutes strongly that it represents a manipulation of its investment restrictions around Tenant concentration. This is an example of Tenants sharing best practice ideas and resources with industry experts to apply their experience across multiple charitable projects, delivering a superior outcome for residents.

o  In connection with the above, Viceroy notes that Home REIT's Tenant exposure restriction (being <= 15% of GAV) "seems to only be valid on a technicality". The fact that the Tenants are different legal entities is not a "technicality". The investment restriction that the Company has no Tenant exposure in excess of 15% of its GAV is designed to protect the Company from the risk of having a large exposure to a single Tenant in a default/ insolvency. As each of these Tenants is a distinct legal entity, the Company's exposure to the default/insolvency risk is against each Tenant entity individually, not collectively, thereby mitigating the risk and complying with the investment restriction as intended.

·    Many of Viceroy's complaints centre on the financial health of the Tenants and an accompanying lack of public profile being demonstrated by them. The Investment Adviser undertakes extensive due diligence exercises ahead of contracting with any counterparty, including the Company's Tenants. These exercises are adapted to each Tenant but generally include confirming the Tenant's legal qualification to receive exempt housing benefit, in addition to reviewing financial statements, operational capabilities (e.g. staffing levels) and their business plan/forecasts, such that the Tenants can meet their rent payment obligations as they fall due. The Tenants are private entities and are subject to different timelines regarding the preparation and publication of their financial statements compared to publicly listed entities.

·    Viceroy states that several Tenant directors/trustees (e.g. at Big Help Project and CG Community Council) also own property development companies. As described in Allegation 5 below, Home REIT has rigorous controls and processes in place to ensure that the assets it acquires represent fair value for all stakeholders. A core foundation of the Company's existence is that there is a role for private capital to help alleviate homelessness in the UK; by making an appropriate return on their investment in residential property, Vendors can deliver additional high-quality accommodation for homeless people at an attractive cost to taxpayers. Without the Company's participation in providing such accommodation, Local Authorities would be forced to use unsuitable, more expensive options (e.g. overnight shelters, B&Bs, hostels) that are on average approximately 70% more expensive than the accommodation that Home REIT provides. It should also be noted that the Company does not acquire "B&B accommodation assets" as alleged in the Report; it acquires newly refurbished residential property.

·    Home REIT's Tenants are charities, community interest companies and other regulated organisations. Certain of these Tenants may have trustees that also act on the boards of for-profit companies; however, these are separate entities and each trustee owes a fiduciary duty to the relevant charity, community interest company, or other regulated organisation as a trustee. 100% of the support services provided by the Tenants that are contained within a gross exemption housing benefit claim are agreed with the Local Authority, which undertakes full checks on compliance at the beginning and on an ongoing basis.

·    The Company has prioritised providing high quality housing in the two years of its life since IPO. As the Company continues to grow, it is committed to increasing its public disclosure. Enhanced future disclosures around Tenants will include:

o  Improving the evaluation process of the Company's Tenants and standardising the methods of tracking performance; and

o  Helping Tenants to formalise the routine monitoring that enables the Company to evaluate the services delivered to residents.

Allegation 2 - Financial Analysis

Viceroy's report suggests the Company has poor cash conversion due to its receivables being overdue and also criticises the Company's rental revenue recognition approach. This is a misrepresentation of the Company's financial position based on incorrect conclusions from the HY 2022 financial results. The Company highlights the following points:

·    There are no overdue arrears in relation to amounts billed to 31 August 2022.

·    The Company structures its leases such that the first twelve weeks of rent are invoiced in a single invoice after three months. This (1) enables the Tenant to focus on its core charitable aim to house homeless people, in the most efficient way possible and (2) accounts for any delays in the Tenant receiving the first payment of exempt housing benefit from the Local Authority. This structure can have the appearance (when viewed out of context or in isolation) of a relatively high rental debtor balance at a point in time (e.g. at the Company's half year end). This timing issue has never materialised into non-recovery of debts. The Company is aware that this method impacts its accounts receivable days, particularly when acquisition activity has been elevated, but feels that any crude calculation of receivable days based on a point in time debtor position that doesn't adjust for this is likely to be unreliable. The Company has been highly acquisitive since IPO and, therefore, this structure has materially impacted the Company's accounts receivable days; the Company expects this situation to normalise as it matures.

Revenue recognition of rent

·    The Company reports its financial statements under International Financial Reporting Standards ("IFRS"), as is required for the consolidated financial statements of UK listed companies.

·    IFRS 16 requires lessors, where the relevant lease has a minimum uplift, to straight line such an increase in the rent arising over the expected term of the lease. The straight lining of rents recorded in the Company's financial statements reflects that the leases have a minimum uplift of 1% per annum and hence the Company is required to smooth this minimum uplift over the 25-year term of a typical lease.

·    This is an explicit IFRS requirement and not a choice of accounting policy. The Board notes that this treatment must be adopted by every other UK publicly listed company that has minimum uplifts in the terms of their leases. To state otherwise is factually incorrect.

·    The Company has consistently disclosed the effect of rental smoothing in its independently audited financial accounts, allowing shareholders and other stakeholders to adjust for the rental smoothing effect required under IFRS.

·    The Company's independent valuer is Knight Frank, which is appropriately qualified and objective.

·    From an accounting perspective, any additional rent that is credited to revenue by straight lining rent is offset against the change in fair value in the profit and loss account, meaning that no asset is held at an amount above its independent valuation at the reporting date.

·    Revenue recognition is a concept purely reserved for accounting treatment and has no place in a rental agreement. Therefore, it is unsurprising that Viceroy cannot find a reference to it in the agreements they have found.

·    The Report refers to "rapidly increasing administrative expenses" when comparing operating expenses for the twelve months to August 2021 and the six-month period to February 2022.  The comparison fails to consider the growth of the Company during the period, notably the £358 million of acquisitions completed during the latter six-month period. Operating expenses as a percentage of rental income fell from 47% (in the period to February 2021) to 19% (in the period to February 2022). The Company is transparent in the breakdown of administrative expenses in the notes to its financial statements, which are fully compliant with the disclosure requirements of International Financial Reporting Standards.

Allegation 3 - Valuation and Alleged Conflict

·    The Report alleges that Home REIT values its own properties. This is incorrect: the Company's valuation advisers are Knight Frank, who are retained by the Company to value the properties on a bi-annual basis for financial reporting under IFRS, as well as to provide ad hoc valuations as required. Knight Frank provides independent valuation services and confirms in its reports that, other than the valuation services it provides, it has no material involvement with the Company's portfolio nor any potential conflict of interest.

·    As with all UK listed REITs, Knight Frank values the Company's assets per the RICS Valuation - Global Standards, which incorporate the International Valuation Standards, and the RICS UK National Supplement (the "Red Book"). The portfolio has been valued based on "Fair Value" as defined in VPS4 of the Red Book. As stated in Knight Frank's report, the adoption of the required Fair Value basis does not result in any material difference in the value reported from that derived under the definition of Market Value which is set out in VPS4 (1.2) of the Red Book and is defined as: "The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."

·    It is correct that the valuer's opinion of Fair Value is primarily derived using recent comparable market transactions on arm's length terms and appropriate valuation techniques (in this case, the Investment Method). Knight Frank has provided Home REIT with details of comparable market transactions when presenting its valuations. Knight Frank also considers the long-term sustainable rental levels and asset cash flows, current and predicted operational performance for the assets and the strength of the financial covenants of the Tenants in determining the net initial yield ("NIY") applied to the current rental income of the properties. Given the robust position regarding rental income, no valuation impairments are expected due to non-payment of rent.

·    Knight Frank inspects the properties externally for the valuation following the purchase of those properties by Home REIT. It is not standard market practice for a residential property portfolio of this scale for every property to be inspected internally at each bi-annual valuation especially where access to the building can be difficult and the Valuer can obtain sufficient information about the internal layout and state of repair of the residential property from other sources. However, to provide further assurance in this area, Knight Frank intends to start internal inspections on a random sample basis going forward.

·    Before acquisition, the Company commissions professional surveyors to conduct building surveys. The Company uses high quality and reputable law firms to advise on the purchase of its properties, including a full title review of each asset before acquisition with formal reliance reports provided, and is therefore confident that it has appropriate and proper title on all the assets it has acquired. Given the procedures in place over inspections of leases, title and physical property, the Company does not believe that Knight Frank's procedures should be seen as a "major red flag" and notes that Knight Frank are following their standard procedures. Reviewing three recent public valuation reports published in prospectuses by UK REITs over the last two years and conducted by three different valuation firms (CBRE, Cushman & Wakefield and Colliers) illustrates this point well - none included a review over lease documents or title deeds.

·    Lease information provided to Knight Frank by Home REIT is subject to a comprehensive reconciliation process between Home REIT, Apex, and Knight Frank to ensure the robustness of the lease data used in the valuation.  As part of the statutory audit of the 2021 annual report, BDO concluded, as disclosed in its audit report, that based on its work it did not note any material instance which may have indicated that the assumptions adopted by the directors in the valuation of investment property were not reasonable or that the methodology applied was inappropriate.

·    The Company has £250 million of long-term fixed rate debt. This debt requires in-depth lender engagement, which includes reviewing property titles, building surveys, valuations, rental credit quality and other technical due diligence. At no point have the Company's lenders raised any material issues with either their own valuations or due diligence or the Company's valuations in any discussion with the Company.

·    Home REIT's valuation approach relies upon a tried and tested international methodology and set of valuation standards that have consistently worked well. In trying to claim that Home REIT's valuation methodology is fundamentally different and flawed, the Company believes that Viceroy demonstrates a lack of understanding of the UK real estate market as a whole.

Allegation 4 - Outsourcing

·    Home REIT is a premium listed investment company that, under the FCA's Listing Rules, is required to have a non-executive board of directors that is independent of its management company. Accordingly, none of the board has any connection with the Investment Adviser's group or its affiliates.

·    Along with hundreds of other REITs, investment trusts and other investment companies that are established by asset managers and listed on the premium segment of the London Stock Exchange's Main Market, Home REIT has an external management structure whereby the wholly independent, non-executive board delegates parts of its day-to-day responsibilities for running the Company to an external alternative investment fund manager ("AIFM"). The AIFM, in turn, is advised by an investment adviser, a situation which is compliant with the Alternative Investment Fund Managers Directive ("UK AIFMD").

·    As payment for their respective services, the AIFM receives a small management fee and the Investment Adviser receives an annual investment advisory fee, paid monthly, based on a percentage of the Company's NAV. There is no performance fee charged, as incorrectly stated by Viceroy.

·    The Company has appointed Alvarium Securities Limited ("Alvarium Securities") and Jefferies International ("Jefferies") to provide corporate broking services to the Company. Alvarium Securities and Jefferies are each paid an identical annual retainer fee and may receive additional fees, at market rates, from time to time in relation to other services, including with respect to equity issuances conducted by the Company.  As has been consistently disclosed in the Company's prospectuses and in its annual and half year reports, Alvarium Securities is a subsidiary of Alvarium Investments Limited ("Alvarium Investments"), the ultimate parent company of the AIFM and the Investment Adviser. Engagements between the Company, Alvarium Securities, the AIFM, and the Investment Adviser (among others), including any sponsor and placing agreements, have always been entered into between the relevant parties on standard market terms and on an arm's- length basis between the related parties. In the interests of transparency, the Company discloses all fees paid to entities within the Alvarium Investments group in its annual report. As required by the FCA's Listing Rules, the Board monitors and manages the performance of its key service providers, including Alvarium Securities, on an ongoing basis and at least annually. The Board is satisfied with the performance of Alvarium Securities to date and is further satisfied that Alvarium Securities, which is authorised and regulated by the FCA, operates independently from the AIFM and the Investment Adviser such that any potential conflicts between them are managed.

·    The Company's NAV is calculated by the Company's administrator, Apex, at each year end reporting date and is independently audited by BDO as part of its statutory audit of the Company's annual report and accounts. The valuation of the property portfolio, a key constituent of the NAV, is conducted by the Company's independent valuer, Knight Frank.

·    The NAV is a key metric of performance for a UK REIT ensuring a strong alignment between the Investment Adviser and the Company's shareholders.

·    The Investment Adviser does not earn performance fees, acquisition fees or other fees from its investment advisory services contract. The Investment Adviser is not generally incentivised to take on additional leverage, as its fee is paid on NAV (set out below), but the Company accepts that the effects of purchasing a property with leverage will accrete the Company's NAV per share; the Company is limited to taking on leverage up to 35% of its gross asset value.

·    This simple fee structure is a key differentiator for Home REIT whilst the quantum of fees (effective 0.79% of NAV, based on the following tiers: 0.85% of NAV <£500 million, 0.75% of NAV £500-750 million, 0.65% of NAV > £750 million) represents one of the lowest in the externally managed UK Real Estate sector.

·    The Board oversees and regularly reviews the performance of the Investment Adviser, Apex, BDO and Knight Frank. Additionally, The Good Economy produces an independent verification of the Company's strategy and the social impact it has on the homeless people who are accommodated in the Company's properties.

·    As set out in the Company's annual report for the year to 31 August 2021, several Key Performance Indicators ("KPIs") are used to track the Company's financial and social performance, including performance of its asset base. Given the delegation of the Company's day-to-day running to the Investment Adviser, these KPIs effectively act as a scorecard of the Investment Adviser's performance. The Company's KPIs are listed below, all of which have been consistently met or exceeded since the Company's launch:

·    Total NAV return

·    Dividend per share

·    EPRA earnings per share

·    Total expense ratio

·    EPRA net total assets

·    Pro forma net LTV / EPRA LTV

·    Weighted average unexpired lease term

·    Percentage of contracted rents index-linked or fixed

·    Homelessness beds created

·    The Management Engagement Committee of the Company reviews the performance of the Investment Adviser on at least an annual basis to ensure that their continuing engagement is in the best interest of the Company and its shareholders. Following the latest review process the Board agreed that the performance and fees of the Investment Adviser were satisfactory and that it was in the Company's best interest that the engagement of the Investment Adviser continues.

·    The Report states that the Company has had three CFOs in 2022, which is false. As is standard for an externally managed listed investment company, the Company itself has no CFO and indeed no employees. The CFO function is outsourced to the Investment Adviser and Gareth Jones acted in this role from launch until the Company announced on 1 November 2022 that he was taking a period of leave for health reasons. Prior to Gareth's leave, James Snape had been hired to take on the role as CFO of the Investment Adviser, such that Gareth could focus on his fund management duties. Gareth remains an employee of the Investment Adviser and the Company wishes him a speedy recovery. The audit committee of the Board retains oversight of the Company's finances.

·    As the Company's arrangements with its Investment Adviser are market standard, regularly reviewed, and embed low fees based on independent valuations performed by third party experts under their own professional codes of conduct, the Company strongly refutes the baseless allegation that this structure creates a heightened risk of fraud. On the contrary, the management fee structure is designed such that the risk of fraud is reduced by the separation of responsibilities amongst different parties and the independent valuation, audit and oversight structure outlined in this section.

Allegation 5 - Alleged NAV Inflation

As noted above, property valuations from which the NAV is derived have been produced independently by an independent valuer, Knight Frank.  The year-end valuations have been subject to audit procedures carried out by the Company's independent auditor, BDO, as part of their audit of the annual report as well as challenge and review from the Company's independent Board of Directors as well as other advisers.  In addition, the assets secured to the Company's lender (constituting the majority of the portfolio) have been subject to an independent valuation carried out by leading valuers appointed by the lender, that support the valuation levels given by Knight Frank.

As part of any property acquisition, the following criteria must be met for the deal to progress:

·    Rental level to be at or around LHA rates on a per bed basis (LHA + 10%). This enables the Tenant to have certainty around its exempt housing benefit claim, as the Local Authority cannot refuse the rental cost aspect if it is in-line with LHA rates (per The Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006). This structure has underpinned the Company's pricing level discipline, deploying over £1 billion at an average NIY of 5.8% (as at 25 November 2022), ahead of target.

·    Detailed planning due diligence is undertaken to ensure that the rental level is based upon the number of bedrooms that meet the relevant legislation requirements (such as minimum bedroom size under Houses of Multiple Occupation ("HMO") legislation and that the property has full planning permission for the number of bedrooms proposed).

·    A building survey is carried out on every acquisition as well as a full structural survey, where required. Should a property have material structural issues (e.g. subsidence), the property will not be acquired.

·    A full refurbishment is carried out, which is paid for by the Vendor. The Vendor provides representations and warranties that such refurbishment works will complete within twelve months of the Company purchasing a property. For higher value refurbishments, the Company is further protected by a retention fund provided by the Vendor.

·    A full legal review of title documents is undertaken by the Company's acquisition solicitors.

·    The acquisition yield agreed on the property considers the property type and location, Tenant covenant strength and length of the lease term. Each acquisition is also accompanied by a valuation by Knight Frank to ensure the Company is not paying above the market level for the property (on average, valuations to date have been c. 6% above the total acquisition costs incurred by the Company).

·    Each property is inspected internally by the Company's specialist fire and health and safety advisers following completion of the refurbishment works and prior to occupation.

The Company "[purchases] property at vastly inflated prices"

This assertion is based on a misunderstanding of the process by which the Company acquires its assets and how these are registered at HM Land Registry (the "Land Registry").

As described in the summary, the Company typically acquires portfolios of properties from Vendors. When the Company purchases a portfolio of properties not held in a corporate wrapper, in advance of the sale the Vendor will often first transfer the properties into a special purpose vehicle ("SPV") so they are held in a corporate wrapper (e.g. if the Vendor wishes to sell a portion of its own portfolio of properties). This corporate SPV and the properties held within it are then acquired all together as a portfolio by the Company, hence there are often two transfers of each property recorded with the Land Registry.

Land Registry process

When a transaction involving the transfer of a portfolio of properties is registered with the Land Registry, the Land Registry records the transfer of ownership on the title for each individual property, but it does not record a "price paid entry" for each individual property where there are no apportioned prices set out in the portfolio transfer.

Further information on the Land Registry's processes can be found in its "Practice Guide 7: Entry of Price Paid or Value Stated Date in the Register", updated 17 January 2022 (https://www.gov.uk/government/publications/price-paid-or-value-information-registration-procedures/practice-guide-7-entry-of-price-paid-or-value-stated-data-in-the-register). It should be noted in particular that this guidance document states, in Section 3, that the sum entered for a transfer on the title register will be the actual amount of money a buyer has paid to a seller and that this may not be the same as the market value of the property. It further notes, in section 10, that "price paid entries" on the title register may not be made for transfers of multiple properties (five or more) or of shares. Further, Land Registry guidance states that the transfer of more than one property as part of a portfolio is excluded from the Price Paid Dataset (see https://landregistry.data.gov.uk/app/root/doc/ppd) which is a separate record of price paid data available via the Land Registry's price paid service (see https://www.gov.uk/search-house-prices).

In some instances (including two transactions flagged by Viceroy), the Land Registry has recorded in the Price Paid Dataset the entire purchase price of a portfolio against a single property in the portfolio e.g. if the Company has purchased an SPV containing ten properties each valued at £100,000, the Price Paid Dataset shows the total £1 million consideration against a single property in the portfolio. In addition, no new "price paid entries" have been recorded in the title registers for the properties included in the portfolio transfer. The two transactions where this has occurred are the "Stoke-on-Trent Portfolio" and the "Plymouth Portfolio", each of which is discussed in more detail below. The Company acknowledges that the Price Paid Dataset can create a misleading picture from the perspective of a third party reviewing publicly available information about values of properties within the Company's portfolio, especially where multiple transactions have taken place on the same dates (as was the case for both Stoke-on-Trent and Plymouth). The Company will ask the Land Registry to advise what their practice is with respect to recording the Price Paid Dataset and price paid entries on the title registers for portfolio transfers. The Company is also querying whether there is any action that can be taken in the future by the Company to avoid a recurrence of this issue.

Notwithstanding any response from the Land Registry, it should be noted that the Price Paid Dataset and any "price paid entries" on the title registers are not necessarily the market values of the properties (as stated in the Land Registry guidance) and are not the property values used by the Company and its advisers to calculate the Company's NAV (values provided by Knight Frank are used for this purpose only).

Home REIT and the Investment Adviser are both incentivised to pay as low a net purchase price as possible for the Company's properties, hence the Company acquires portfolios of properties off-market from Vendors. A lower purchase price enhances the potential return provided by the asset, thereby supporting the Company's return targets, NAV and dividend. Purchasing properties at inflated prices, on the other hand, would not make commercial sense. Additionally, noting that properties are independently valued, from the Investment Adviser's perspective, overpaying for properties which are then re-valued downwards would result in poor performance for the Company, which would not reflect well on the Investment Adviser.

The Company engages in "excessive revaluation of purchased property"

For clarity, the total revaluation gain for properties purchased by the Company between IPO and 28 February 2022 is £43.2 million, which equates to an average of 6.4% per property. This revaluation gain was established by the external valuation process undertaken by Knight Frank as per the RICS Valuation - Global Standards, which incorporate the International Valuation Standards, and the RICS UK National Supplement. The gain reflects a yield compression movement from an average acquisition yield of 5.9% (as at 28 February 2022) and the average valuation yield of 5.6%. The assertion that the Company has benefited from "unrealistic appreciation over a short period of time" is incorrect and has been drawn from misinterpreted figures derived from underlying SPVs. The change in fair value of investment property at SPV level cited in the Report is not comparable to a revaluation gain for the Company.

As described above under the heading "The Land Registry process", the price of a property recorded on the title register for a transfer is the total value paid by the buyer to the seller. "Property values" recorded on the title register do not necessarily reflect the market value of the property. By way of example, the title register entries also do not reflect the net economics to the Vendor nor show the cost of renovations and refurbishments that may have happened or been committed to at the property. For every property purchase Home REIT has completed, the Vendor:

·    Reimburses to Home REIT the Stamp Duty Land Tax ("SDLT") payable upon purchase;

·    Pay all property refurbishment costs and Energy Performance Certificate ("EPC") upgrades;

·    Has an agreement with the Tenant to provide an initial minimum rent cover, which is typically at least twelve months; and

·    Has an agreement with the Tenant to contribute to the property's sinking fund.

In addition, the Company has no visibility on when a Vendor purchased its assets, the background under the top-Vendor's sale motivations (e.g. a distressed sale), or the Vendor's financing arrangements. For example, the Vendor could have purchased properties sold to Home REIT several years ago in a distressed sale with an onerous financing package. It is therefore challenging for any third party to calculate an accurate return for a Vendor in a sale to Home REIT.

For example, on 15 November 2022 the Company purchased a property portfolio for a gross purchase price of £283,973 and a net purchase price of £273,937, taking into account Land Registry costs of £10,036. From the £273,937, the Vendor:

·    Allocated £44,000 in Vendor's refurbishment costs undertaken pre-Home REIT purchase;

·    Provided the Tenant with additional funding of £16,754 (representing twelve months of rent);

·    Provided £1,500 to the property's sinking fund

·    Provided £15,351 in legal, agent and survey fees on their original acquisition price of £151,500; and

·    Paid £3,351 of SDLT on the Tenant's lease.

This is a typical property portfolio transaction for Home REIT and reduced the Vendor's headline gross "profit" of £132,473 to a net profit of £41,832, representing a 18.0% net profit on cost for the Vendor compared to the headline 87.4% gross profit. A reconciliation is provided below:

Source: Investment Adviser.

As shown, this structure significantly reduces the net amount received by the Vendor from a sale of property to Home REIT, while ensuring that the Company receives a high-quality, newly refurbished asset, typically on a 25-year lease, backed by an acquisition valuation from an independent valuer at or above the price paid by Home REIT.

With respect to:

·    Home Holdings 1

Stoke-on-Trent Portfolio

o  As stated above, the conclusions Viceroy draws with respect to the Stoke-on-Trent portfolio are incorrect and the Company believes are based on a misunderstanding of the registration approach of the Land Registry.

o  Home REIT acquired a portfolio of 34 assets for a combined consideration of £7.3 million, as part of an SPV purchase in December 2020. SDLT on the transaction was paid by the Vendor.

o  The Vendor had originally aggregated the portfolio together for a combined purchase of £3.2 million (excluding purchase costs).

o  The Vendor then transferred the portfolio from their original SPV (Vendor SPV 1) to a specific SPV for the purpose of the sale to Home REIT (Vendor SPV 2). An internal transfer price arranged by the Vendor was made for £5.9 million between Vendor SPV 1 and 2. This entire £5.9 million transfer price was then listed by the Price Paid Dataset against a single property, 144 Birches Head Road. If the Form TR5 is reviewed (provided here https://www.homereituk.com/wp-content/uploads/2022/11/TR5-Pathway-Homes-Group.pdf), it is clear that this £5.9 million transfer price relates to the entire portfolio, not just 144 Birches Head Road. For a person unfamiliar with the Land Registry's practices (described above), this gives the misleading impression that the price of that single property had increased from £0.2 million to £5.9 million. The actual market value of this specific property, which is the value used in the Company's NAV calculations and has most recently been determined by Knight Frank, is £0.39 million (as at 31 August 2022).

o  In terms of the Vendor net profit on cost, a reconciliation is provided below. Overall, the Company estimates a 42% net profit on cost, compared to the 127% gross profit on cost implied by Viceroy. The Company notes that the net profit on cost is an estimate and the actual figure may vary depending, in particular, on final refurbishment costs and the considerations around the Vendor's original purchase of the properties as outlined earlier in this section.

Source: Investment Adviser.

Notes:

* Estimated initial acquisition costs of 6%, and 2% costs on sale to Company.

**The Company was not provided with an explicit refurbishment cost estimate. Considering the average recommended refurbishment costs per bed (excluding prelims and contractor profit) across available data on the Company's entire portfolio at £7,633 per bed, this equates to approximately £0.95 million (across 125 beds).

o  The Report also states that £9.1 million was spent on these properties by Home REIT. This is incorrect as the Report aggregates the latest Price Paid Dataset for each individual property in the portfolio to reach this value. This is erroneous because the entire portfolio purchase price (£5.9 million) has been recorded in the Price Paid Dataset solely against 144 Birches Head Road, creating the misconception that this property was acquired by SPV 2 for £5.9 million. The Price Paid Dataset for the remaining 33 properties showing as having been paid on 2 December 2020 plus the £0.2 million acquisition price for 144 Birches Head Road recorded on 14 October 2020 relate to the Vendor SPV1's £3.2 million acquisition and not the Company's acquisition of the portfolio on 2 December 2020. By not understanding this and aggregating all the latest individual entries of the properties in the portfolio, the Report is effectively double counting them.

Plymouth Portfolio

o  Home REIT acquired a portfolio of 28 properties for a combined consideration of £12.7 million.

o  The Vendor originally aggregated the portfolio for a combined purchase of £6.5 million (excluding purchase costs).

o  The Vendor transferred the portfolio from their original SPV (Vendor SPV 1) to a specific SPV for the purpose of the sale to Home REIT (Vendor SPV 2). An internal transfer price arranged by the Vendor was made for £11.7 million between Vendor SPV 1 and 2. This entire £11.7 million transfer price was then then listed by the Price Paid Dataset against a single property, 27 Neswick Street. As with the Stoke-on-Trent Portfolio, after an inspection of the Form TR5 (provided here https://www.homereituk.com/wp-content/uploads/2022/11/TR5-Plymouth-25-02-2021-signed-by-transferor.pdf ), it is clear that this £11.7 million transfer price relates to the entire portfolio, not just 27 Neswick Street. This gives the misleading impression that the price of the property had increased from £0.2 million to £11.7 million. The actual market value of this specific property, which is the value used in the Company's NAV calculations and has been most recently determined by Knight Frank, is £0.39 million (as at 31 August 2022).

o  Following the acquisition from Home REIT of Vendor SPV 2 for £12.7 million, the portfolio was subsequently hived up (whereby the assets of a subsidiary are transferred upwards to the parent company) into Home Holdings 1 Limited for £13.0 million whilst Vendor SPV 2 was closed. £13.0 million represented the book cost of the asset at the time of transfer following an independent valuation.

o  In terms of the Vendor net profit on cost, a reconciliation is provided below. Overall the Company estimates a 37% net profit on cost. The Company notes that the net profit on cost is an estimate and the actual figure may vary depending, in particular, on final refurbishment costs and the considerations around the Vendor's original purchase of the properties as outlined earlier in this section.

Source: Investment Adviser.

Notes:

* Estimated initial acquisition costs of 6%, and 2% costs on sale to Company.

**The Company was not provided with an explicit refurbishment cost estimate but was provided with building surveys with recommended refurbishment works. The final refurbishment total may have been in excess in this figure.

*** 'Gross' purchase price already net of SDLT.

o  The Report also states that £19.2 million was spent on these properties by Home REIT. As is the case with the Stoke-on-Trent Portfolio, this number is calculated by aggregating the latest Price Paid Dataset entries against each individual property in the portfolio, thereby double counting them as the price of all the properties in the portfolio has been recorded against 27 Neswick Street.

·    Home Holdings 2

Peterlee Portfolio

o  Home REIT acquired a portfolio of 10 properties for a combined consideration of £0.85 million.

o  The Vendor had originally aggregated the portfolio together for a combined purchase of £0.36 million (excluding purchase costs).

o  In terms of the Vendor net profit on cost, a reconciliation is provided below. Overall the Company estimates a 33% net profit on cost, compared to the 137% gross profit on cost implied by Viceroy (the Report incorrectly aggregates the total initial purchase prices and then calculates its gross profit from this amount. The Company notes that the net profit on cost is an estimate and the actual figure may vary depending, in particular, on final refurbishment costs and the considerations around the Vendor's original purchase of the properties as outlined earlier in this section.

Source: Investment Adviser

Notes:

* Estimated initial acquisition costs of 3% (lower for small lot size).

**The Company was not provided with an explicit refurbishment cost estimate. Considering the average recommended refurbishment costs per bed (excluding prelims and contractor profit) across available data on the Company's entire portfolio at £7,633 per bed, this equates to approximately  £0.19 million (across 25 beds).

*** 'Gross' purchase price already net of SDLT.

·    Home Holdings 3

o  Home REIT acquired a portfolio of 6 properties for a combined consideration of £2.7 million. The transaction was structured as a purchase of an existing Vendor SPV (Allerton SPV17 Limited)

o  The Vendor acquired the original portfolio for £1.2 million

o  In terms of the Vendor net profit on cost, the Vendor has provided a full P&L statement of the actual costs as outlined below. Combined this equates to a 20% net profit on cost, compared to a c. 125% gross profit on cost implied by Viceroy.

Source: Investment Adviser.

Notes: Actual final costs provided for this portfolio by the Vendor.

o  The fair value at £2.78 million as at 31 August 2021 represents the independent valuation undertaken by Knight Frank, not the purchase price.

·    Home Holdings 4

o  Home REIT acquired a portfolio of nine properties for a combined consideration of £5.1 million. The transaction was structured as a purchase of an existing Vendor SPV (Grolar Developments SPV 4 Limited).

o  The Vendor acquired the original portfolio for £3.1 million.

o  The Vendor has provided a full cost estimate breakdown as at the acquisition date as below. This produces an estimated net profit on cost of 27%, compared to gross profit on cost implied by Viceroy of 65%.

Source: Investment Adviser.

Notes: *Vendor's estimate at time of acquisition.

o  The fair value at £5.37 million as at 31 August 2021 represents the independent valuation undertaken by Knight Frank, not the purchase price.

·    These examples highlight that the Company has not benefited from the excessive revaluation of purchased properties. The price paid for acquired assets typically includes SDLT, the combined refurbishment and sinking fund contribution, additional funding for the Tenant and the Vendor's profit. The revaluation gain experienced by the Company, determined by independent valuer Knight Frank, was £42.3 million or 6.4% on average for properties purchased between IPO and 28 February 2022. For the interim report as at 28 February 2022, BDO conducted a review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). The valuations for the respective period were also subject to extensive challenge and review from the Company's independent board of directors as well as other advisers. 

·    Whilst these selected transactions have shown good levels of profitability for some Vendors, Home REIT notes the risks assumed by the Vendors in providing this service, including in areas such as potential inflation of construction/refurbishment costs, overall pricing in the residential market, as well as the time and capital they commit to their projects. Home REIT has also been provided with aggregated data from two Vendors that shows example aggregate net profit on costs of 12% over £47 million of sales, and 8% over £43 million of sales respectively, demonstrating the long run expected profitability for the Vendors. Home REIT has rigorous controls and processes in place to ensure that the assets it acquires represent fair value for all stakeholders. As noted above, a core foundation of the Company's existence is that there is a role for private capital to help alleviate homelessness in the UK; by making an appropriate return on their investment in residential property, Vendors can deliver additional high-quality accommodation for homeless people at an attractive cost to taxpayers.

·    The Company has prioritised providing high quality housing in the two years of its life since IPO. As the Company continues to grow, it is committed to increasing its public disclosure. Enhanced future disclosures around property transactions will include:

o  Reporting total refurb costs experienced annually

o  Reporting percentage of the portfolio currently being refurbished

o  Reporting Vendor profit margin over a larger sample of the portfolio

Background on Viceroy

Viceroy, registered in Delaware, produces articles about listed companies that are designed to cause their share prices to fall.

As evidenced in a decision of the South African Financial Services Tribunal dated 15 November 2022, Viceroy is linked to Oasis, a Cayman Islands-based hedge fund that takes positions to profit when share prices fall, through the production of short-selling reports for companies of Oasis' choice. The decision goes on to state that Viceroy would be remunerated with 12.5% of the net profit Oasis made on the relevant short-selling transaction based on Viceroy's report, plus a retainer. Per the latest disclosure of net short positions to the FCA, Oasis Investments II Master Fund Ltd. and a partner of Viceroy held short positions of 2.22% and 0.82% of the Company's shares in issue respectively.

Conclusion

Viceroy's disclaimer states that its Report represents its "opinions", however, the Board believes that such "opinions" are either not reasonably held or they represent a misinterpretation of matters. The Board regrets the material losses that its investors have suffered as a direct result of the Report's publication.

The Company must ensure all information it publishes into the public domain is true, accurate, and not misleading. The Company and its advisors have worked assiduously since the Report's publication to provide a response that fulfils these market standards of completeness and transparency. This announcement and the statements made by the Company in it have been verified under the supervision of the Company's legal advisers, Stephenson Harwood LLP.

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, 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).

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is: 213800A53AOVH3FCGG44.

For more information, please visit the Company's website: www.homereituk.com

About Home REIT plc

The Company is now providing 11,861 beds, across 2,473 properties spread throughout 135 Local Authorities, to homeless people in the UK, where the demand for long-term high quality and affordable homeless accommodation continues to far outweigh the supply. With over 270,000 people sleeping rough, in homeless shelters or other temporary housing in Great Britain and in England a household became homeless every four minutes (only exacerbated by the cost of living crisis) this is a huge, growing problem in the UK, which Home REIT is proud to help alleviate. There is also a focus on training and rehabilitation at the properties by the Tenants to provide individuals with the skills and confidence to reintegrate back into society. With the obligation for Local Authorities to secure accommodation for homeless people from 2018 cross-party legislation, Home REIT's properties offer significant savings to local authorities of approximately 70 per cent. via lower rents and better-quality accommodation versus expensive alternatives e.g. bed & breakfast.

Home REIT plc seeks to contribute to the alleviation of homelessness in the UK, whilst targeting inflation-protected income and capital returns, by funding the acquisition and creation of a diversified portfolio of high-quality accommodation assets across the UK which are dedicated to providing accommodation to homeless people. The accommodation assets are let or pre-let on very long (typically 20 to 30 years) leases, containing inflation-linked or fixed uplift rent review provisions, 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 which receive exempt housing benefit or comparable support from local or central government to fund the provision of such accommodation to homeless people.

There is a critical need for further accommodation for homeless people in the UK, due to an increasing homeless population and a lack of available and affordable high-quality, fit-for-purpose stock to address the problem. Local housing authorities are under a statutory duty to secure accommodation for individuals who are unintentionally homeless and in priority need but current accommodation for homeless people is limited in quantum and often sub-standard and uneconomical.

The Company focuses on investing in and creating well-located properties that provide a sustainable level of rent for the Tenant. Within the homeless accommodation assets, there is a focus on care, support, training and rehabilitation to provide vulnerable homeless people with the skills and confidence to find long-term accommodation and enable them to reintegrate back into society. Savings are expected to be made to local authorities and other providers of accommodation to homeless people via lower rents versus more expensive alternative accommodation.

The Company is listed on the premium segment of the Official List of the UK Financial Conduct Authority and its Ordinary Shares were admitted to trading on the main market of the London Stock Exchange, premium segment, on 12 October 2020.