NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS IS AN ANNOUNCEMENT UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER, IF MADE, MAY BE MADE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

16 February 2023

Home REIT plc

("Home REIT" or the "Company")

Update and Review of Strategic Options, Including Possible Sale of Company

Following the announcement on 19 January 2023, the Board has been working with its advisers on a number of critical workstreams which are summarised below.

This has been hampered by the unexpected recent resignations of its two brokers, Alvarium Securities and Jefferies International. Immediately following those resignations, the Board undertook a beauty parade for a financial adviser and appointed Smith Square Partners on Monday 13 February 2023.

The Board yesterday received a report (the "Report") from Alvarium Home REIT Advisors Limited (the "Investment Adviser") on rent collection and the operational performance of the Company's portfolio following a detailed review undertaken by Simpact Group ("Simpact"), a specialist social housing property manager engaged by the Investment Adviser. Simpact has completed its first period of engagement with the Company's tenants during January and February 2023. This has highlighted a serious deterioration in rent collections for the quarter to November 2022 and identified serious challenges in rent collection for December 2022 and January 2023. For the quarter ending November 2022, only 23% of rent has been collected, meaning that out of a £14,827,147 quarterly rent roll, only £3,401,615 has been paid. In addition, the rent forecast to be collected for the coming months is highly uncertain as the Investment Adviser deals with a combination of issues surrounding the tenants' ability, or willingness, to pay. It is not possible to quantify the future amounts of rent to be collected with certainty as the issues are not straightforward.

The Board understands that statutory demands have been served on seven of the defaulting tenants. The Company retains its right to forfeit leases of defaulting tenants, and should the Company choose to do so, it would not prejudice its ability to pursue arrears. The Board has asked the Investment Adviser, assisted by Simpact, to assess the impact of its report in terms of rental and capital values going forward.

The Report has indicated that, based on information provided by tenants for approximately 67% of the portfolio (by beds), approximately 25% (by beds) of this sample requires at least some level of refurbishment. The cost of refurbishing these properties  is estimated to be between £15 million - £20 million. The Investment Adviser, alongside Simpact, is undertaking further reviews to verify these estimates that have been provided by tenants.

Vendors are contractually responsible for the refurbishment of properties, and so it is therefore hard to quantify the net exposure to the Company, however the Investment Adviser is working with Simpact to further investigate the full level of refurbishments required across the entire portfolio. The Investment Adviser notes that there is approximately £10 million of retentions held by solicitors which may become available to the Company if the required refurbishment works are not undertaken by certain vendors.

In light of this information from the Report, the Board is considering all strategic options including the possible sale of the Company with Smith Square Partners and its other advisers whilst at the same time not losing sight of the paramount importance of preserving shareholder value. In this regard, as required pursuant to Rule 2.4(a) of the Code, the Company announces that it has received an unsolicited approach from Bluestar Group Limited ("Bluestar") regarding a possible offer for the entire issued share capital of the Company. Any offer by Bluestar would likely be in cash.

Shareholders should note that there can be no certainty that an offer will ultimately be made for the Company, nor as to the terms on which any firm offer might be made. A further statement will be made as and when appropriate.

In accordance with Rule 2.6(a) of the Code, Bluestar is required, by not later than 5.00 p.m. (London time) on 16 March 2023, to do one of the following: (i) announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code; or (ii) announce that it does not intend to make an offer for the Company, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code and the requirement to make an announcement in accordance with Rule 2.6(a) will cease to apply in the circumstances set out in Rule 2.6(b) of the Code (if a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code is announced by another offeror prior to the deadline).

The Board has also noted media speculation of allegations of wrongdoing. The Board confirms that it instructed Alvarez & Marsal, independent forensic accounting experts, to investigate these allegations in early January 2023. This investigation is ongoing and it is not possible to confirm its outcome at this stage.

The Board continues with its advisers to engage with BDO for the purposes of finalising the enhanced audit of its accounts for the year ended 31 August 2022.  The Company is also engaging with its lender, Scottish Widows.

Save for the payment of any distributions which may be required for the Company to maintain compliance with its obligations as a UK REIT, the Board has suspended the payment of quarterly dividend payments for the foreseeable future.

Whilst the Board will endeavour to be as open as possible at the forthcoming AGM, there will be a limit to what it can say due to ongoing investigations.

Lynne Fennah, Chair of the Board, said: "We recognise the serious issues facing the Company and are examining all options to preserve shareholder value, and the interests of all stakeholders."

The person responsible for arranging the release of this announcement on behalf of the Company is FTI Consulting.

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is: 213800A53AOVH3FCGG44.

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

Inside Information

The information contained within this announcement is deemed by Home REIT to constitute inside information as stipulated under the Market Abuse Regulation (EU) no. 596/2014 (as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018). On the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Disclaimer

Smith Square Partners LLP ("Smith Square"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for Home REIT and no one else in connection with the matters set out in this Announcement. In connection with such matters, Smith Square will not regard any other person as its client and will not be responsible to any persons other than Home REIT for providing the protections afforded to clients of Smith Square, or for providing advice in relation to the contents of this announcement or any other matter referred to herein. Smith Square does not owe or accept any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Smith Square in connection with this announcement, in any statement contained herein or otherwise.

Important information

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdictions.

Publication of this announcement

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on Home REIT's website at https://www.homereituk.com/ no later than 12 noon on 17 February 2023.

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.          

Rule 2.9 disclosure

In accordance with Rule 2.9 of the Code, Home REIT confirms that as at the close of business on 15 February 2023 its issued share capital consisted of 790,570,465 ordinary shares of £0.01 each (excluding shares held in treasury). The International Securities Identification Number for Home REIT's ordinary shares is GB00BJP5HK17.