Home Reit Regulatory News (HOME)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EC NO. 596/2014) AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED) (THE "UK MARKET ABUSE REGULATION").

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN ANY MEMBER STATE OF THE EEA WHERE THE COMPANY'S SECURITIES MAY BE LEGALLY MARKETED), OR ANY OTHER JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL, OR TO ANY NATIONAL, RESIDENT OR CITIZEN OF THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA.

This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority ("FCA") and does not constitute a prospectus. Investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the prospectus expected to be published shortly by Home REIT plc (the "Prospectus") in its final form and not in reliance on this announcement. The Prospectus will, when published, be available, subject to certain access restrictions, on the Company's website (www.homereituk.com), at the Company's registered office at 6th Floor, Bastion House, 140 London Wall, London, EC2Y 5DN, and at the National Storage Mechanism via https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Approval of the Prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the Prospectus. Potential investors are recommended to read the Prospectus before making an investment decision in order to fully understand the potential risks and rewards associated with a decision to invest in the Company's securities. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation or recommendation to purchase, sell or subscribe for any securities or investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

31 August 2021

Home REIT plc

("Home REIT" or the "Company")

Open Offer, Initial Placing, Intermediaries Offer and Offer for Subscription and Placing Programme to raise gross proceeds of approximately £262 million for further investment into accommodation for homeless people in the UK

Home REIT plc funds the acquisition and creation of high quality properties across the UK that are dedicated to providing suitable accommodation for homeless people. There is an ongoing critical need for such accommodation in the UK due to an increasing homeless population and a lack of available and affordable, high-quality, fit-for-purpose homes to address this societal issue. The Company aims to be part of the solution.

Having fully deployed the net proceeds of its £240 million IPO and over 70 per cent. of its £120 million 12-year debt facility, within 10 months the Company has successfully established a £328 million portfolio providing over 3,800 beds for homeless people across England, as detailed in today's trading update.

With an attractive c. £400 million pipeline of further potential acquisitions now identified, the Company is well positioned to continue to be able to meet this growing demand while also providing local authorities with a more appropriate and affordable option to house vulnerable homeless people.

The Company therefore announces that shortly it will publish a prospectus in connection with the launch of an Open Offer, Initial Placing, Intermediaries Offer and Offer for Subscription of new ordinary shares in the capital of the Company (the "New Ordinary Shares"), targeting gross issue proceeds of approximately £262 million at a price of 109 pence per New Ordinary Share (the "Initial Issue Price") (the "Initial Issue"), together with the implementation of a new 12 month placing programme of New Ordinary Shares (the "Placing Programme"). The Company will also publish at the same time a shareholder circular to convene a general meeting in connection with the proposals (the "General Meeting").

Highlights:

· Diversified portfolio successfully built within 10 months, providing over 3,800 beds to homeless people across the UK, with 21 tenants across England and working closely with 81 local authorities, delivering a 8.5 per cent. EPRA Net Tangible Assets ("NTA") / NAV total return since launch

· Open Offer, Initial Placing, Offer for Subscription and Intermediaries Offer targeting the issue of approximately £262 million in New Ordinary Shares at an Initial Issue Price of 109 pence per New Ordinary Share, reflecting:

o a discount of 4.4 per cent. to the closing mid-market Ordinary Share price of 114 pence as at 27 August 2021; and

o a premium of 4.2 per cent. to the Unaudited NAV per Share as at 31 July 2021

· Net Issue Proceeds will be used to acquire further homes in line with the Company's strict investment criteria

· Advanced legal negotiations are underway on a c. £400 million pipeline of such investment opportunities, with an average acquisition yield of 5.95 per cent.

· Placing Programme will enable additional capital to be raised from 28 September 2021 to 1 September 2022, once the proceeds of the Initial Issue have been fully committed or invested

Lynne Fennah, Chairman of Home REIT plc, commented:

"Having successfully established a strong and diversified portfolio since last October, Home REIT is well on track to meet the aims set out at IPO, in terms of the intended ethos, social impact and investor objectives. This Initial Issue and the acquisition of additional homes that it will enable will further advance the Company's mission as we continue to grow and work even more effectively towards alleviating homelessness across the UK in an affordable and, importantly, sustainable way."

Background to and rationale for the Initial Issue and Placing Programme

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

The net proceeds of the Company's IPO were deployed within five months and the Company has now also fully deployed or committed the £120 million of debt drawn down under the Company's 12-year debt facility with Scottish Widows. As at 31 July 2021, the Company held £35 million in cash.

As a result, the Company has delivered an EPRA NTA / NAV total return since launch of 8.5 per cent.

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

The Investment Adviser is in advanced legal negotiations on a c. £400 million pipeline of investment opportunities which meet the Company's strict investment criteria. All of these properties have been identified off-market through the Investment Adviser's extensive contacts and relationships and are under exclusivity at an average net acquisition yield of 5.95 per cent.

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

Investment highlights

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

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

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

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

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

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

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

Net Asset Value

As announced today, the estimated NAV per Ordinary Share (unaudited) at 31 July 2021 was 104.6 pence.

In line with its stated dividend policy, the Company is targeting an interim dividend of 0.84 pence per Ordinary Share in respect of the period from 1 May 2021 to 31 August 2021 (the "Q4 Dividend"). The Q4 Dividend (if declared) will have a record date prior to the issue of the New Ordinary Shares pursuant to the Initial Issue and, accordingly, holders of New Ordinary Shares issued pursuant to the Initial Issue (or the Placing Programme) will not be entitled to receive the Q4 Dividend in respect of those shares. The target Q4 Dividend is a target only and, for the avoidance of doubt, is not a profit forecast.

The Initial Issue

Under the Initial Issue the Company is targeting the issue of 240,570,465 New Ordinary Shares at an issue price of 109 pence per New Ordinary Share. This number of New Ordinary Shares is being reserved for Qualifying Shareholders under the Open Offer and any shares not taken up under the Open Offer will be allocated to the Initial Placing, the Offer for Subscription, and the Intermediaries Offer at the absolute discretion of the Company, in consultation with Alvarium Securities Limited ("Alvarium Securities") and Alvarium Home REIT Advisors Limited (the "Investment Adviser").

The Directors have reserved the right, in consultation with Alvarium Securities and the Investment Adviser, to increase the aggregate size of the Initial Issue up to 321,100,917 New Ordinary Shares if demand exceeds 240,570,465 New Ordinary Shares. The Initial Issue is being conducted in accordance with the terms and conditions as set out in the Prospectus, which is expected to be published on 2 September 2021.

The Open Offer

Qualifying Shareholders are being offered the opportunity, under the Open Offer, to apply for up to:

1 New Ordinary Share for every 1 Existing Ordinary Share

held and registered in their name at the Record Date (being the close of business on 27 August 2021).

New Ordinary Shares issued to Qualifying Shareholders under the Open Offer are not subject to scaling back to satisfy valid applications under the Initial Placing, the Offer for Subscription or the Intermediaries Offer.

Any New Ordinary Shares not taken up pursuant to the Open Offer will be made available under the Initial Placing, the Offer for Subscription and the Intermediaries Offer. There will be no priority given to applications under the Initial Placing, the Offer for Subscription or the Intermediaries Offer pursuant to the Initial Issue.

The latest time and date for acceptance and payment in full in respect of the Open Offer will be 11.00 a.m. on 22 September 2021.

The Initial Placing

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

The Initial Placing will close at 5.00 p.m. on 22 September 2021 (or such later date as the Company, Alvarium Securities and the Sponsor may agree, not being later than 31 December 2021). If the Initial Placing is extended, the revised timetable will be notified through a Regulatory Information Service.

The Offer for Subscription

The Offer for Subscription is being made in the United Kingdom, the Channel Islands and the Isle of Man. The Offer for Subscription will open on 2 September 2021 and the latest time and date for receipt of completed Offer for Subscription Application Forms under the Offer for Subscription is 11.00 a.m. on 22 September 2021.

The Intermediaries Offer

Investors may also subscribe for New Ordinary Shares pursuant to the Intermediaries Offer. Only the Intermediaries' retail investor clients in the United Kingdom are eligible to participate in the Intermediaries Offer. Investors may apply to any one of the Intermediaries to be accepted as their client.

Scaling back

The Directors have reserved the right, with the consent of Alvarium Securities and the Sponsor, to increase the size of the Initial Issue if overall demand exceeds 240,570,465 New Ordinary Shares by reallocating New Ordinary Shares that would otherwise be available under the Placing Programme to increase the size of the Initial Placing, the Offer for Subscription and/or the Intermediaries Offer, with any such increase being notified by an RIS announcement. The maximum number of New Ordinary Shares to be issued pursuant to the Initial Issue is 321,100,917.

In the event that commitments under the Initial Issue exceed the maximum number of New Ordinary Shares available (notwithstanding any such reallocation), applications under the Initial Issue (other than applications up to Qualifying Shareholders' full entitlement under the Open Offer) will be scaled back at the discretion of Alvarium Securities in consultation with the Company and the Sponsor.

Application for admission

Application will be made to the Financial Conduct Authority and London Stock Exchange plc for the New Ordinary Shares to be issued pursuant to the Initial Issue to be admitted to the premium segment of the Official List and to trading on the Main Market. It is expected that Initial Admission will become effective, and dealings will commence in respect of the New Ordinary Shares, at 8.00 a.m. on or around 27 September 2021.

The Placing Programme

Following completion of the Initial Issue (and conditional on passing of the Issue Resolutions at the General Meeting), the Directors will be authorised to issue further New Ordinary Shares pursuant to the Placing Programme without having to first offer those New Ordinary Shares to existing Shareholders.

The Placing Programme is being implemented to satisfy market demand and to enable the Company to raise additional capital in the period from 28 September 2021 to 1 September 2022 should the Board determine that market conditions are appropriate. The Placing Programme is intended to be flexible and may have a number of closing dates in order to provide the Company with the ability to issue and allot Ordinary Shares over a period of time.

The maximum number of New Ordinary Shares that may be issued pursuant to the Initial Issue and the Placing Programme is 550,000,000. Assuming 240,570,465 New Ordinary Shares are issued pursuant to the Initial Issue (being the target number of New Ordinary Shares to be issued thereunder), the Directors will be authorised to issue a further 309,429,535 New Ordinary Shares pursuant to the Placing Programme.

Publication of Prospectus

The Prospectus is expected to be published on or around 2 September 2021 and will be available shortly thereafter for viewing on the Company's website at http://www.homereituk.com and on the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Capitalised terms shall have the meanings attributed to them in the Prospectus unless otherwise defined in this announcement.

General Meeting

Shareholder approval is required to authorise the Directors to allot New Ordinary Shares pursuant to the Initial Issue and the Placing Programme. In addition, approval of Shareholders is also required to allot New Ordinary Shares on a non-pre-emptive basis pursuant to both the Initial Issue and the Placing Programme.

Accordingly, the Directors propose to convene a General Meeting to be held at the offices of Stephenson Harwood LLP at 11.00 a.m. on 20 September 2021. The formal notice convening the General Meeting will be set out in a circular to Shareholders published on the same day as the Prospectus. The Initial Issue and the Placing Programme are conditional on the passing of the Issue Resolutions at the General Meeting.

Expected Timetable

 Notes:

1. The Company and Alvarium Securities may agree to extend such date and thereby extend any of the Initial Placing, the Intermediaries Offer and/or the Offer for Subscription periods. If any such periods are extended, the Company will notify investors of such change by publishing an RNS announcement.

2. In respect of the Initial Issue, there will be no dealings on a conditional basis prior to the commencement of unconditional dealings.

3. Underlying Applicants who apply under the Intermediaries Offer for Ordinary Shares will not receive share certificates

4. All references are to London time

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is: 213800A53AOVH3FCGG44.

Disclaimer

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus expected to be published by the Company shortly and not in reliance on this announcement. Copies of the Prospectus may, subject to any applicable law, be obtained from the registered office of the Company and at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website, www.homereituk.com. Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of an RIS announcement, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company. Approval of the prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the prospectus. Potential investors are recommended to read the prospectus before making an investment decision in order to fully understand the potential risks and rewards associated with a decision to invest in the Company's securities.

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

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

In addition the Company has not been and will not be registered under the US Investment Company Act of 1940, as amended.

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

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

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

This announcement contains forward looking statements, including, without limitation, statements including the words "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Such forward looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. The Company, the Investment Adviser, the AIFM, Alvarium Securities and the Sponsor expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Regulation Rules of the Financial Conduct Authority, the UK Market Abuse Regulation or other applicable laws, regulations or rules.

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

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

Information to Distributors

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

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

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