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(Alliance News) - Home REIT PLC on Friday said that Redemption Project CIC has agreed to surrender its leases on 146 properties, equating to around 6% of Home REIT's portfolio by number of properties.
London-based real estate firm Home REIT, which invests in housing for homeless people, said Redemption's decision follows entering into creditors voluntary liquidation at the start of August, alongside another Home REIT tenant Serenity Support CIC.
Redemption has not paid rent to Home REIT in 2023, Home REIT noted
Home REIT said two transactions have "completely" removed its exposure to Redemption, which accounted for 11% of annual contracted rent at August 31.
Firstly, Mears Ltd, guaranteed by housing and social care provider, Mears Group PLC, has been occupying 77 of the properties on sub-leases from Redemption.
These sub-leases will now transfer to Home REIT, the company said, with Mears Ltd becoming a direct tenant for the remaining lease term of eight years with an initial contracted annual rental income of GBP732,720.
Home REIT said the annual contracted rent due from Redemption for these 77 properties was GBP1.11 million as at August 31.
Home REIT said the surrender agreement allows the company to receive "a sustainable income stream from a strong tenant covenant" and is expected to generate higher rent collection than has previously been received from Redemption for the properties.
Following the transaction, Home REIT said its direct exposure to Mears Ltd increases to 177 properties and GBP1.6 million of annual contracted rent.
For the remaining 69 property leases being surrendered, Home REIT said it has agreed flexible leases with charitable incorporated organisation and social housing and care provider Community Accommodation Group for a term for five years.
Home REIT has also appointed specialist intensive housing manager Myshon Ltd to manage the properties on a flexible agreement.
Myshon, which focuses on specialist supported housing, supported housing and affordable housing, was previously providing management services for the properties. As a result, Home REIT said "retaining continuity of service will limit any disruption to existing occupants and support services".
Earlier this month, Home REIT said that Supportive Homes CIC, a tenant of 209 properties in the company's portfolio, also entered into voluntary liquidation.
Supportive Homes represented around 11% of rent demanded in August, Home REIT said, explaining that the tenant was non-performing and therefore the creditor's voluntary liquidation gave it the ability to re-tenant properties or carry out other asset management initiatives as soon as possible.
At the time, Home REIT said discussions with other prospective tenants to take on new leases on the properties had already commenced.
Three days earlier, Home REIT said its new investment manager was continuing to review all tenants and that property valuations and inspections, required to publish outstanding accounts and restore its shares, were still underway.
Home REIT shares were suspended in early January after it failed to published its annual report for the financial year that ended August 31, 2022.
Home REIT said in early September that it did not expect to be in a position to publish outstanding accounts until late 2023 at the earliest.
By Greg Rosenvinge, Alliance News reporter
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