Business
Surrender of leases and transfer of sub-leases
Surrender of leases and transfer of sub-leases.
About this update from Home Reit Plc
[{"type":"text","content":"\n\nFOR IMMEDIATE RELEASE\n \n22 September 2023\nHome REIT plc\n \n(\"Home REIT\" or the \"Company\")\n \nSurrender of leases and transfer of sub-leases\nFurther to its announcement on 2 August 2023 regarding Redemption Project CIC (\"Redemption\") entering into creditors voluntary liquidation, the Company now announces that Redemption has agreed to surrender its leases on 146 properties (the \"Properties\") equating to c.6% of the Company's portfolio by number of properties. Redemption has not paid rent to the Company for 2023.\n \nMears Limited, guaranteed by Mears Group PLC, the housing and social care provider, has been occupying 77 of the Properties on sub-leases from Redemption. These sub-leases will now transfer to Home REIT, with Mears Limited becoming a direct tenant for the remaining lease term of 8 years with an initial contracted rental income of £732,720 per annum. The annual contracted rent due from Redemption for these 77 properties was £1,139,151 as at 31 August 2023.\n \nThe 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 in relation to the Properties. Following the transaction, the Company's direct exposure to Mears Limited increases to 177 properties and £1,623,875 million per annum of contracted rent.\n \nFor the remaining 69 properties, the Company has agreed flexible leases with the Community Accommodation Group, a Charitable Incorporated Organisation and a provider of social housing and care, for a term for 5 years and appointed Myshon Limited, a specialist intensive housing manager with a specific focus on specialist supported housing, supported housing and affordable housing, to manage the properties, also on a flexible agreement. Myshon Limited was previously providing management services in relation to the properties and thus retaining continuity of service will limit any disruption to existing occupants and support services.\n \nThis transaction completely removes the Company's exposure to Redemption, which accounted for 11% of the Company's annual contracted rent as at 31 August 2023.\n \nThe transaction is in line with AEW's strategy as Investment Manager to stabilise the Company's portfolio and allows...