Home REIT plc

Annual Report — For the year ended 31 August 2022

Home REIT plc Annual Report — For the year ended 31 August 2022

Home REIT plc (“the Company”) and its subsidiaries

(together the “Group”)

The board of non-executive directors of Home REIT plc (ticker: HOME)

(the “Board” or the “Directors”) reports its annual results for the year

ended 31 August 2022 (“FY22”).

The Group had the investment objective in the period to seek to

contribute responsibly to the alleviation of homelessness in the

UK, deliver tangible social impact. This was to be achieved through

targeting inflation-protected income and capital returns, by funding

the acquisition and creation of a diversified portfolio of high-quality,

well-located accommodation across the UK. On 21 August 2023, the

Amended Investment Policy (defined as the investment policy approved

by shareholders on 21 August 2023) was approved by shareholder

resolution, which is summarised on page 12. On 16 September 2024,

shareholders approved the New Investment Policy for the Managed

Wind-Down of the Group.

The Group, a real estate investment trust (“REIT”), is listed on the

Official List of the Financial Conduct Authority and was admitted to

trading on the premium segment of the main market of the London

Stock Exchange on 12 October 2020. As the Group did not publish its

annual financial report within four months of the end of its financial year

(as required by the Financial Conduct Authority’s Disclosure Guidance

and Transparency Rule 4.1.3) the listing of the Company’s ordinary

shares (each a “Share” and together, the “Shares”) was suspended on

3January 2023.

As non-executive directors, the Board relies upon information

reported to it by the investment adviser, alternative investment fund

manager (“AIFM”) and other external parties including information

regarding the quality of the Group’s assets and tenants. Subsequent

to the period end, material information has come to light which is in

contradiction to the reporting provided to the Board during the period.

The Directors have provided as much detail as they are able to within

this Annual Report in order to provide a true and fair view of the financial

statements, however in preparing the financial statements a number

of judgements/assumptions have had to be made by the Directors,

the details of which are included in Note 3 to the Group’s consolidated

financial statements (the “Consolidated Financial Statements”).

The Company intends to bring legal proceedings against those parties

it considers are responsible for wrongdoing. The Company has issued

a pre-action letter of claim to Alvarium Home REIT Advisors Limited

(“AHRA”) (in liquidation), its former Investment Adviser. Shortly before

issuance of the pre-action letter of claim, the Company was made aware

that AHRA had appointed joint liquidators for the purpose of winding up

the company. Notwithstanding this event, it remains important that all

means of potential financial recovery are fully considered and that any

wrongdoing is thoroughly investigated. The Company has also issued

pre-action letters of claim to Alvarium Fund Managers (UK) Limited (its

former AIFM) (“Alvarium FM”) and AlTi RE Limited (“AlTi RE”), AHRA’s

former principal by virtue of an Authorised Representative Agreement.

The Board cannot comment any further at this stage, as to do so may

prejudice the Company’s position in any potential proceedings. Any

relevant announcements in this regard will be made to the market at

theappropriate time.

Contents

Overview

1 Introduction and highlights

2 Financial overview

3 Portfolio and operating overview

Strategic report

7 Chair’s statement

15 Management report

25 ESG report

28 Key performance indicators

29 Strategic overview

34 Principal risks and uncertainties

42 Going concern and viability statement

Governance

45 The Board

47 Directors’ report

51 Corporate governance statement

56 Report of the Audit Committee

67 Report of the Management

Engagement Committee

69 Report of the Nomination Committee

72 Directors’ remuneration report

76 Statement of Directors’ responsibilities

77 Independent Auditor’s report

Financial statements

97 Consolidated Statement of

Comprehensive Income

98 Consolidated Statement of Financial Position

99 Consolidated Statement of Changes

in Shareholders’ Equity

100 Consolidated Statement of Cash Flow

101 Notes to the Consolidated Financial Statements

134 Company Statement of Financial Position

135 Company Statement of Changes

in Shareholders’ Equity

136 Notes to the Company Financial Statements

Additional information

146 Appendix 1 – Key Regulatory News

Services Announcements 1 September

2021 to 10 October 2024

152 Appendix 2 – Governance and Internal Control

155 Glossary

160 Company information

Overview

 HomeREITplc | AnnualReport | Fortheyearended31August2022 1

ThisAnnualReportcoverstheresultsfortheyearended31August2022

(“FY22”)andthebackgroundthatisrelevantforshareholderstoreview

sincetheendofFY22.TheGroupisduetopublishitsresultsfortheyear

ended31August2023(“FY23”)duringthefourthquarter2024.

TheFY22auditedaccountshadinitiallybeendelayed,followingthe

publicationofareportandallegationsfromthirdparties,toallowthe

Group’sauditor,BDOLLP(“BDO”),toundertakeanenhancedsetofaudit

proceduresinrespectofFY22,andfortheBoardtoinstructAlvarez&

MarsalDisputesandInvestigationsLLP(“A&M”)toconductaninvestigation

intoallegationsofwrongdoing.Withoutwaiveroflegalprivilege,thekey

findingsofthisreport,includingthearrangementsforrefurbishmentof

properties,settlementofrentarrearsandarrangementswithtenants

whichhadnotbeenbroughttotheBoard’sattentionbyAHRA,(inaddition

tochallengesraisedbyBDO)causedtheBoardtoreviewtheaccounting

treatmentforacquisitionsandrevenuerecognitionanddeterminethat

revisedaccountingpolicieswererequiredtoappropriatelyaccountforthe

substanceofhistoricalacquisitionsandleasecontracts(refertoNotes2,3

and4totheConsolidatedFinancialStatements).

TheBoarddetermineditwasnecessarytoapplytherevisedaccounting

policiesbacktoinception,reviewallhistoricalacquisitionandlease

documentation;instructthirdpartiestoundertakeaninternalinspection

programmetodeterminetheconditionoftheproperties;andappoint

JonesLangLaSalleLimited(“JLL”)toundertakevaluationsoftheGroup’s

entirepropertyportfolio,onthebasisoffairvalueasat31August2022.

Theapplicationofrevisedaccountingpoliciesbacktoinceptionhasresulted

intherestatementofthe2021comparatives(fortheperiod19August2020

to31August2021)“FY21”intheseaccounts.Furtherdetailsareprovidedin

Note4totheConsolidatedFinancialStatements.

AsummaryofkeyeventsfromRegulatoryNewsServices(“RNS”)

announcementsisincludedinAppendix1.ThereisaGlossaryofDefined

Termsonpages155to159.

Sincetheyearend,therehasbeenachangetotheinvestment

managementoftheGroup:

• DuringtheFY21andFY22period,AHRAwastheappointedInvestment

AdviserandAlvariumFMwastheappointedAIFM.

• AEWUKInvestmentManagementLLP(“AEW”orthe“Investment

Manager”)wassubsequentlyappointedInvestmentManagerand

AIFMon21August2023andassuchwasnotresponsibleformanaging

theperformanceoftheGroupinlinewiththeinvestmentpolicyin

placefromIPOuntil21August2023(the“OriginalInvestmentPolicy”)

duringFY22.

Overview

Introduction and Highlights

2 HomeREITplc | AnnualReport | Fortheyearended31August2022

• TheGroupacquired1,528investmentproperties

for£597.4million(includingpurchasecosts)during

theyear(2021:711for£312.8million),increasingthe

Group’sportfolioto2,239propertiesintotal.

• Theportfoliowasindependentlyvaluedat£414.3

millionasat31August2022(2021:£327.9million).

Thepropertieshavebeenvaluedonanindividual

basis.Noportfoliopremiumhasbeenapplied.

• Decreaseinfairvalueofpropertiesof£452.9million,

representing49.8%ofthehistoricalacquisition

costsof£910.2million(includingpurchasecosts)

(2021:increaseof£14.0million,4.5%ofthehistorical

acquisitioncostsof£312.8million).

• 39.1%oftheportfolio(bynumberofproperties,

46.3%byvalue)wasvaluedonavacantpossession

basis(“MV-VP”).JLLvaluedpropertiesonaMV-VP

basiswhenthepropertyconditionwasjudgedtobe

verypoororworseorwhenatenantwasjudgedto

beinpoorfinancialconditionorworse.

• TheGroupraisedgrossproceedsof£350million

inanoversubscribedfollow-onequityissuein

September2021,followedbyfurthergrossproceeds

of£263millioninanoversubscribedfollow-onequity

issueinMay2022.

• InadditiontotheGroup’slongterm12-yeardebt

facilityof£120million,afurther15-yeardebtfacility

of£130millionwassecuredwithScottishWidows

Limited(“ScottishWidows”orthe“Lender”)atan

all-infixedrateof2.53%perannumforthetermin

December2021.

• TheLoan-to-Valueratio(“LTV”)at31August2022

was60.3%(excludingcashheldinescrowpending

deliveryofsecurityacceptabletotheLender)

comparedtotheGroup’sborrowingpolicycapof

35%andloancovenantsof50%.

• TheGroupheldunrestrictedcashbalancestotalling

£74.5millionattheyearend(2021:£6.2million).

• Lossbeforetaxfortheyearof£474.8million(forthe

periodended31August2021:profitbeforetaxof

£16.1million).

• Dividendspaidinrespectoftheyeartotalling

5.50penceperShare(2021:2.5penceperShare).

• 57.5%decreaseinnetassetvalue(“NAV”)perShare

to43.76penceasat31August2022(2021:103.03

pence),primarilyresultingfromthedecreaseinthe

fairvalueofinvestmentpropertyreflectingthe

conditionoftheassetsandthere-assessmentof

tenantcovenantstrength.

• TheNAVtotalreturnfortheyearof-52.7%since

31August2021(2021:4.7%).

Overview

Financial overview

 HomeREITplc | AnnualReport | Fortheyearended31August2022 3

• 2,239propertiesasat31August2022

(31August2021:711properties).

• Theconditionofthepropertiesheldasat

31August2022havebeenassessedbyJLLorby

otherpartiesengagedbytheGroupsuchasVibrant

EnergyMattersLtd(“Vibrant”)whosereportswere

madeavailabletoJLL.Ofthe2,239properties

82.3%wereinternallyinspected(fromAugust2023

toMay2024)andthesehavebeenassessedas0.1%

verygood,9.0%good,64.0%fair,20.0%poorand

6.9%verypoor.Ofthosepropertiesnotinspected,

68%havebeensoldsubsequentto31August2022.

• 7.7%ofpropertiesweredeemedunhabitableasat

31August2022(31August2021:7.3%)whichincludes

thepropertiesdeemedasverypoorbythirdparty

inspectionsaswellasinformationprovidedby

tenantsandAEW’sassetmanagementteam.

• TheGroup’sportfoliowasletto29different

registeredcharities,communityinterest

companiesandotherregulatedorganisations.

Asat31August2022,theDirectorsconsider

that17ofthesetenantsareconsideredtobe

ofweakcovenantstrength,withonetenantin

administration.

• 100%oftheincomewasindex-linkedandsubjectto

anannualcollarandcapof1%and4%,respectively.

• Themajorityofthetradedebtorsoutstandingat

31August2022weresubsequentlysettled,some

inanon-traditionalmannerwhichisdescribed

morefullyinNotes3,5and11oftheConsolidated

FinancialStatements.Theremaining£1.9million

wasfullyprovidedasat31August2022.

Post year end events

InvestmentAdviserandAIFM

On4January2023,theCompanyannouncedthat

AlvariumRELimited(nowcalledAlTiRELimited)had

solditswholly-ownedsubsidiary,AHRA,toAHRA’s

managementinexchangeforapromissorynotewhich

waseffectiveon30December2022.

On15March2023,theCompanyagreedwithAHRA

toterminatetheInvestmentAdvisoryAgreement

dated22September2020(the“IAA”)(whichgoverned

therelationshipbetweentheCompanyandAHRA)

witheffectfrom30June2023.On22May2023,the

CompanyappointedAEWtoprovidepropertyadvisory

servicesandannounceditsintenttoengageAEWas

InvestmentManagerandAIFMafterreceiptofFinancial

ConductAuthority(“FCA”)andshareholderapproval

foranamendedinvestmentpolicy.

On21August2023,theCompanyterminatedthe

InvestmentManagementAgreement(the“IMA”)(which

governedtherelationshipbetweentheCompany

andAlvariumFM)andAlvariumFMceasedtoactas

AIFMfollowingshareholderapprovaloftheAmended

InvestmentPolicy.ThesamedaytheCompanyformally

appointedAEWasInvestmentManagerandAIFM.

DirectorChanges

On18January2024,theCompanyannouncedthe

appointmentofMichaelO’Donnellasanindependent

non-executivedirectorsucceedingLynne

Fennahasindependentnon-executivechairwith

immediateeffect.

On2April2024,theCompanyannouncedthe

appointmentofPeterWilliamsasseniorindependent

non-executivedirectorwithimmediateeffectand

ManagementEngagementCommitteeChairelect.

On7June2024,theCompanyannouncedthe

appointmentofRodDayasanindependentnon-

executivedirectorwithimmediateeffectandAudit

CommitteeChairelect.

Dividends

On12December2022,theCompanydeclaredan

interimdividendof1.38pencepershareinrespectof

theperiodfrom1June2022to31August2022,which

waspaidon20January2023toshareholdersonthe

asapropertyincomedistribution(“PID”).

On16February2023,theBoardannouncedthatexcept

foranydistributionsthatwouldberequiredtomaintain

REITstatus,thatithasceasedpayinganyfurther

dividendsuntilfurthernotice.

Acquisitionsanddisposals

From1September2022to30November2022,the

Groupacquired232newassetstotalling£104.1million

(includingpurchasecosts)ofwhich£5.9millionrelated

tocertainworksduetobecompletedbythevendor

(“Seller’sWorks”).

From4August2023to10October2024,theGroup

exchangedonthesaleof1,491propertiesforgross

salesproceedsof£216.5million,ofwhich1,228

propertieshadcompletedwithgrosssalesproceeds

of£169.7million.Investmentpropertieswhich

werevaluedat£220.1millioninthe31August2022

ConsolidatedStatementofFinancialPositionwere

exchangedfor£195.2million.Oftheproceedsreceived

oncompletions,£120.1millionwasappliedagainstthe

outstandingloanbalances.Asof10October2024,263

propertieshaveexchangedbutnotcompletedwitha

totalgrosssalesvalueof£46.8million.

PropertyValuation

Theinvestmentpropertiesheldat31August2023have

beenvaluedasat31August2023byJLLwithafairvalue

of£412.7million.

Overview

Portfolio and operating overview

4 HomeREITplc | AnnualReport | Fortheyearended31August2022

Restrictedcash

Ofthecashheldinlockboxaccountsasat

31August2022,£34.2millionofcashwasreleasedto

theGroupafterHomeHoldings2Limited(asubsidiary

oftheCompany)providedapprovedsecurityto

theLender.Thebalanceof£38.9millionwasnever

released(appropriatecollateralwasneverprovided)

with£30.0millionappliedagainsttheoutstanding

borrowingsinApril2023andtheremainingbalanceof

£8.9millionappliedagainstoutstandingborrowingsin

December2023.

Cashheldbysolicitorsasat31August2022of

£18.3millionwasusedtofundaportionofthepurchase

priceoftheassetsacquiredasdiscussedabove.

Oftheretentionsheldbysolicitors,£5.2millionhas

beenreleasedtotheCompanysince31August2022.

ViceroyResearchReportandSubsequent

AppointmentofA&M

On23November2022,theCompanyacknowledged

thatViceroyResearchLLP(“ViceroyResearch”)had

issuedashort-sellerreportdated23November2022

(the“ViceroyResearchReport”).On30November2022,

theCompanypublishedadetailedrebuttal,whichwas

supportedbyafullverificationprocessconducted

byStephensonHarwoodLLP,theCompany’s

primarylegaladvisersatthetime,basedonformal

representationsfromAHRAandAlvariumFM.Alsoon

30November2022,ViceroyResearchissuedaresponse

totherebuttal.

InlateDecember2022,theBoardreceivedinformation

whichresultedintheBoardconsideringitappropriate

toinstructA&Mtoconductaninvestigationinto

allegationsofwrongdoing,includingmattersraisedin

theViceroyResearchReportandtheresponsethereto

issuedbytheCompany.On5May2023,A&Mdelivered

totheCompanyadetailedreport.Withoutwaiverof

privilege,thekeyfindingsofthereportwere:

• arrangementswiththeGroup’scorporatetenants

andvendorsrelatingtothecostofrefurbishment

ofpropertieswerenotbroughttotheattentionof

theBoardbyAHRA,sothattheBoardwasunableto

considerwhetherareleaseofavendor’sliabilities

forrefurbishmentofpropertieswasappropriate.

Thesearrangementsincludedarepresentative

ofAHRA,withouttheknowledgeorauthorityof

theBoard,enteringintoasettlementagreement

on8December2022betweentheGroupand

variouspropertyvendors(the“Aggregators”)

wherebytheCompanywouldpay£0.7millionand

purportedlywaiveanyrefurbishmentclaimsagainst

theAggregatorsinrelationto488propertiesheld

bytheGroup.

• theBoardhadnotapprovedorbeenprovidedwith

informationregardingalternativearrangements

tosettleoutstandingrentarrears(asdiscussed

inNotes3,5and11totheConsolidatedFinancial

Statements).

• therewaslimitedevidenceofdetailedongoing

monitoringoftenantsbeingundertakenbyAHRA;

• AHRAprovidedinaccurateinformationabout

occupancyratestoTheGoodEconomyPartnership

Limited(“TheGoodEconomy”),whohadbeen

commissionedbytheCompanytoproducean

independentreportontheGroup’sperformance

andsocialimpactonanannualbasis;

• certainconnectionsbetweentenantsexistedthat

werenotdisclosedtotheBoard;and

• thereexistedcertainundisclosedpotentialoutside

businessinterestsandundeclaredpotential

conflictsofinterestbetweencertainpersons

associatedwithAHRAandthirdparties.

Tenantmattersandleaseamendments

On29September2022,AHRAenteredintodeedsof

variationonbehalfoftheGroupwithN-TrustHomes

CICandSelectSocialHousingCIC(withoutBoard

knowledge)suchthatallleaseswithbothtenants

receivedarent-freeperiodwithretroactiveeffect

from1March2022andextendingeighteenmonths

to31August2023inexchangeforchangingthelease

extensionagreementfromfiveyearstotenyears.

On4October2022,AHRAenteredintoadeedof

variationonbehalfoftheGroupwithICDEHomes

CIC(withoutBoardknowledge)suchthatallleases

withICDEHomesCICreceivedarent-freeperiodwith

retroactiveeffectfrom1March2022andextending

eighteenmonthsto31August2023inexchangefor

changingtheleaseextensionagreementfromfive

yearstotenyears.

Since31August2022,anumberoftenantshave

surrenderedleasesorgoneintocreditorsvoluntary

liquidation.Ofleasesassociatedwiththetenantsin

placeonthe2,239propertiesownedbytheGroupon

31August2022,asatthedateoftheseaccounts,369

arestillininplace,452propertieshavebeenturned

overtoapropertymanagerresultingintheGroup

havingdirectleaseswiththeoccupants,349arere-

tenanted,and1,069havebeensold.

OtherAdviserUpdates

On29October2022,theCompanyappointedJefferies

InternationalLimitedasjointbroker.Theagreement

withJefferiesInternationalLimitedwasterminated

on1February2023.AsdescribedmorefullyinNote19

Overview

Portfolio and operating overview—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 5

totheConsolidatedFinancialStatements,Alvarium

Securitiesresignedon8February2023.

On5July2023,theCompanyappointedLiberum

CapitalLimited(“Liberum”)(nowPanmureLiberum

CapitalLimited)asCapitalMarketsAdviserduringthe

periodinwhichtheCompany’ssharesaresuspended

fromtradingandwillactastheCorporateBroker

totheCompanycommencingonthedateatwhich

theCompany’sSharesarere-admittedtolisting

onthepremiumlistingsegmentoftheOfficialList

andtotradingonthemainmarketoftheLondon

StockExchange.

On13February2023,theCompanyappointedSmith

SquarePartnersLLP(“SSP”)asfinancialadviserand

therelationshipwasterminatedon24August2023

witheffectfrom24November2023.

On18January2023,theCompanyannouncedthat

AHRAhadengagedsectorspecialist,SimpactGroup,

toperformadetailedreviewoftheGroup’sportfolio

andtomonitorandassistwithmanagingtheGroup’s

tenants,includingrentcollectionandrecoveryof

arrears.Thecontractwassubsequentlyassignedtothe

Companyfrom1July2023andtheengagementwas

terminatedwitheffectfrom31October2023.

LenderDiscussions

Asaresultofthepropertysalesdiscussedabove

andapplicationoflockboxamountsagainst

theloanbalance,asofthelatestpaymenton

25September2024,theoutstandingloanbalances

totalled£72.0million.

On19June2023ScottishWidowsimposedaDeferred

Feeof0.5%oftheaggregateamountsoutstanding

onthetwoloansateachof31August2023and

30November2023,payableonthefullandfinal

repaymentoftheloan.On4December2023Scottish

WidowsimposedafurtherDeferredFeeeffectivefrom

30November2023beingtheequivalentof5.0%per

annumontheaggregateamountsoutstandingonthe

twoloansascomputedonadailybasis,payableatthe

earlierof28June2024orthefullandfinalrepayment

oftheloans.On2July2024,theDeferredFeewas

increasedfrom5%to7%witheffectfrom1July2024

untilthefullrepaymentoftheloan.TheLender

expectsthetwoloansandallcontractualinterestand

DeferredFees(whichareestimatedtobe£9.1million

inDecember2024)tobefullyrepaidnolaterthan

31December2024.

PotentialLitigation/FCAInvestigation

Apre-actionletterofclaimhasbeensenttothe

CompanybyHarcusParkerLimited(“HarcusParker”)

onbehalfofcertainshareholdersoftheCompany.

On5March2024,theCompanyannouncedthatit

intendstobringlegalproceedingsagainstthose

partiesitconsidersareresponsibleforwrongdoing.

On12April2024,theCompanyissuedpre-action

lettersofclaimtoAlvariumFMandAlTiRE.On

29May2024,theCompanyissuedapre-actionletter

ofclaimtoAHRA.

On13February2024,theCompanyannouncedthatit

hadbeennotifiedbytheFCAofitscommencementof

aninvestigationintotheCompanycoveringtheperiod

from22September2020to3January2023.

Alternative performance measures

TheGrouppresentedvariousEuropeanPublic

RealEstateAssociation(“EPRA”)Performance

MeasuresandotherKeyPerformanceIndicators

intheManagementReportfortheperiodended

31August2021.Giventhesignificantnumberand

quantumofnon-recurringadjustmentsrecorded

inthese2022financialstatements,theBoarddoes

notconsiderthatsuchperformancemeasurements

willbenefittheuserofthesefinancialstatements

andaccordingly,wearenotpresentinganyEPRA

PerformanceMeasuresintheseReportandAccounts.

TheBoardwill,however,continuetokeepthe

presentationofEPRAmeasurementsunderreview.

Overview

Portfolio and operating overview—continued

6 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

7 Chair’sstatement

15 Managementreport

25 ESGreport

28 Keyperformanceindicators

29 Strategicoverview

34 Principalrisksanduncertainties

42 Goingconcernandviabilitystatement

 HomeREITplc | AnnualReport | Fortheyearended31August2022 7

Dearshareholder,

Aspreviouslyannounced,theGrouphasfacedunprecedented

challengesincluding:

• investigationsintoallegationsofwrongdoing;

• substantialtenantarrears;

• tenantliquidations;

• theterminationofAHRAastheInvestmentAdviserandAlvariumFM

astheAIFM;

• suspensionofitsshares;

• apotentialgroupactionagainsttheCompanyandthedirectorsatthe

timethatthesharesweresuspended;

• appointmentofanewvaluer;

• acomprehensiveinspectionprogramme;

• thecommencementofanFCAinvestigationintotheCompany;

• ademandbytheGroup’sLender,ScottishWidows,fortherepayment

ofitsloans;and

• substantialdelaystothepublicationoftheGroup’sAnnualReport.

TherehasbeenasubstantiallossanddecreaseinNAVfortheperiod,the

principalcausesofwhichareoutlinedinthepostbalancesheetactivities

andfindingsimpactingreportingperiodresultssectionbelow.Ihave

setoutbelowstatementsoffact,withoutwaiveroflegalprivilege,and

althoughthisprovidesatrueandfairviewofthestateoftheCompany

andGroup,Iamunabletoelaboratewithfurtherdetailsastodosomay

prejudicetheCompany’spositioninanypotentialproceedings.

Legalprivilegeincludesconfidentialdocumentsandcommunications

betweenlawyers,clients,and/orthirdparties,whichcomeintoexistence

forthedominantpurposeofbeingusedinconnectionwithactualor

pendinglitigationorforthedominantpurposeofseekinglegaladvice.

Legalprivilegecreatesanabsoluterighttoprotectandwithholdinspection

ofsuchdocumentsandcommunications.

Corporate Governance

TheCompanyisanexternallymanagedREITandhasnoemployeesand

onlynon-executivedirectors.Thenon-executiveBoardisresponsible

forleadingandcontrollingtheGroupandhasoverallauthorityfor

themanagementandconductoftheGroup’sbusiness,strategyand

development.Inordertofulfiltheseobligations,theBoardappointed

AlvariumFMandAHRAtoprovide(amongstotherthings)investment

managementandadvisoryservices.

TheBoardhassubstantialrealestate,financialandcommercialexperience

andhasestablishedappropriatecommittees(includingAuditCommittee

andManagementEngagementCommittee),whichmeetonaregularbasis.

FurtherdetailontheGroup’sgovernanceisprovidedintheCorporate

GovernanceStatementonpage51andinAppendix2.

The AIFM and the Investment Adviser

AlvariumFMwastheappointedAIFMduringtheperiod,bywayofthe

IMA.AlvariumFMwasresponsible,interalia,formanagingtheassets

oftheGroupinaccordancewiththeOriginalInvestmentPolicyandfor

Strategic report

Chair’s statement

8 HomeREITplc | AnnualReport | Fortheyearended31August2022

ensuringthattheCompanycompliedwithitsOriginal

InvestmentPolicy.TheCompanyandAlvariumFM

appointedtheInvestmentAdviser,AHRA,bywayof

theIAAtoprovidecertainservicesinrelationtothe

Group,includingsourcingandadvisingoninvestments

foracquisition,duediligenceinrelationtoproposed

investmentsandon-goingtenantandproperty

monitoring.

InJanuary2023,theBoardinstructedA&Mtoconduct

aninvestigationintoallegationsofwrongdoing,

includingmattersraisedintheViceroyResearch

Report.On5May2023,A&MdeliveredtotheCompany

adetailedreport.Withoutwaiverofprivilege,thekey

findingsofthisreportwere:

• arrangementswiththeGroup’scorporatetenants

andvendorsrelatingtothecostofrefurbishment

ofpropertieswerenotbroughttotheattentionof

theBoardbyAHRA,sothattheBoardwasunableto

considerwhetherareleaseofavendor’sliabilities

forrefurbishmentofpropertieswasappropriate.

ThisincludedarepresentativeofAHRA,without

theknowledgeorauthorityoftheBoard,entering

intoasettlementagreementon8December2022

betweentheGroupandtheAggregatorswhereby

theGroupwouldpay£0.7millionandpurportedly

waiveanyrefurbishmentclaimsagainstthe

Aggregatorsinrelationto488properties.

• theBoardhadnotapproved,orbeenprovidedwith

informationregardingalternativearrangementsto

settleoutstandingrentarrears;

• therewaslimitedevidenceofdetailedongoing

monitoringoftenantsbeingundertakenbyAHRA;

• AHRAprovidedinaccurateinformationabout

occupancyratestoTheGoodEconomy;

• certainconnectionsbetweentenantsexistedthat

werenotdisclosedtotheBoard;and

• undisclosedpotentialoutsidebusinessinterests,

andundeclaredpotentialconflictsofinterestas

betweencertainpersonsassociatedwithAHRAand

thirdparties.

Duetoinformationthatcametolightwhichwasin

contradictiontoreportingpreviouslyprovidedtothe

BoardbyAHRAandAlvariumFMduringtheperiod,

togetherwithlowrentcollectionandfurtherevidence

ofmaterialinformationbeingwithheldfromtheBoard,

on15March2023,theBoardagreedwithAHRAbyway

ofletterofagreementthattheCompanywasentitled

toterminatetheIAAonorbefore30June2023.On

30June2023,theIAAwasterminated.On25May2023,

theCompanyandAlvariumFMagreedbywayof

variationagreement,asfurthervariedon18July2023,

thattheIMAwouldbevariedtoallowfortermination

immediatelyupontheCompanygivingnoticeinwriting

toAlvariumFM,providedsuchnoticewasgivenby

notlaterthan31August2023,oruponeitherparty

givingnotlessthansixmonths’noticeinwriting.On

21August2023,theCompanyterminatedtheIMA.

ContrarytoAHRA’sreportingtotheBoard,post

periodendinvestigationsbyAEWhavedetermined

thefollowing:

• mostofthepropertiesacquiredwerenothigh-

qualityaccommodationandmostwereacquired

subjecttoSeller’sWorksobligations.Postperiod

end,JLL,basedonitsowninspectionsandthework

ofVibrantandothers,hasassessedthecondition

of90.9%ofpropertiesasfairorworse(ofthose

propertieswhichwereinternallyinspected);

• noreliabledataexistedformonitoringunderlying

occupancy.AsatthedateofinspectionbyVibrant

(fromAugust2023onwards),ofthe2,239properties

ownedat31August2022,50.6%wereconsidered

occupied,13.3%wereconsideredunoccupied,

36.1%wereinspectedbyafirmotherthanVibrant

(whomadenocommentonoccupation)and17.7%

remainuninspected(ofwhich68.2%havebeensold

subsequenttoyear-end).

• nodataexistedfordeterminingthemonitoringof

accommodationbackedbyexemptrentfromlocal

authorities;and

• themajorityoftenantswerepoorlycapitalised

andlackedlong-termoperatingtrackrecords,

orthebenefitoflocalauthoritysupport.Insome

instances,forexample,singlefamilyhomes,the

rentburdenundertheoriginalleasewasconsidered

unsustainablebasedonthelocation,lay-out,use

andconditionoftheproperty.

TheCompanyhasnowissuedapre-actionletterof

claimtoitsformerInvestmentAdviser,AHRA.Shortly

beforeissuanceofthepre-actionletterofclaim,the

CompanywasmadeawarethatAHRAhadappointed

jointliquidatorsforthepurposeofwindingupthe

company.Notwithstandingthisevent,itremains

importantthatallmeansofpotentialfinancialrecovery

arefullyconsideredandthatanywrongdoingis

thoroughlyinvestigated.TheCompanyhasalsoissued

pre-actionlettersofclaimtoAlvariumFM(itsformer

AIFM)andAlTiRE.TheBoardcannotcommentany

furtheratthisstage,astodosomayprejudicethe

Company’spositioninanypotentialproceedings.

Strategic report

Chair’s statement—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 9

Post Balance Sheet Activities and Findings Impacting

Reporting Period Results

Thefollowingisahigh-levelsummaryofsignificant

mattersimpactingfinancialresultswithfurtherdetail

providedintheManagementReport.

Accountingtreatmentandprioryearadjustments

Asaconsequenceofinformationthatcametolight

postyearend,theBoardhasreviseditsaccounting

treatmentinrespectofthetreatmentofacquisition

ofinvestmentproperties,rentalpropertyincome

andleaseinducements.Therevisedaccounting

treatmentisasaresultofareviewofallhistorical

acquisitionagreements(eachan“SPA”),assessmentof

acquisitionsurveyorreports,verificationagainstthe

currentpropertyinspectionprogrammeandreview

oftherelationshipsbetweenvendorandtenants.The

revisionstotheaccountingpoliciesaredetailedinNote

2totheConsolidatedFinancialStatementswithNote

3totheConsolidatedFinancialStatementsproviding

furtherdetailonthesignificantaccountingjudgements

basedoninformationavailabletotheGroup.

Therevisionsofaccountingpolicieshaveresulted

inpriorperiodadjustmentstotalling£4.8millionin

additionallossesandreductioninNAVasdetailed

inNote4totheConsolidatedFinancialStatements

withfurtherinformationprovidedintheManagement

Reportbeginningonpage15.

Qualityofassets

AlthoughtheBoardwasnotrequired,andindeed

wasnotasked,toapprovetheproposedacquisitions,

prospectivepropertyacquisitionswerepresented

totheBoard(andtovaluersandinsurers)asbeing

high-qualitypropertiessuitableforhomeless

accommodationinlinewiththeOriginalInvestment

Policy.AfterdetailedreviewsoftheSPAsbyAEW,the

Boardnowunderstandsthatmostpropertieswere

acquiredsubjecttoavendorobligationtocomplete

Seller’sWorks.Acquiringpropertiesrequiring

significantimprovements/redevelopmentrequired

BoardapprovalasavariationfromtheOriginal

InvestmentPolicy,whichwasneverrequestedand

thereforenevergranted.UnderthestandardSPA,the

vendorhadacontractualrequirementtomakethe

necessaryimprovementswithinaspecifiedperiod

oftime.Thecontracts,however,generallyprovided

limitedrecourseifthevendordidnotcompletethe

necessaryimprovementspost-acquisition.Many

vendorsdidnotcompletetheworkswhichresulted

intheCompanyoverpayingforpropertiesdueto

theircondition.

JLLhasassessedtheconditionoftheportfoliopost

periodend,basedonitsexternalinspectionsandthe

findingsofthecomprehensiveinspectionprogramme

carriedoutbetweenAugust2023andMay2024.The

conditionofpropertieswereclassifiedaseithervery

good,good,fair,poororverypoor(seeNote3tothe

ConsolidatedFinancialStatements).Ofthe2,239

propertiesownedat31August2022,82.3%havebeen

internallyinspectedwith90.9%ofthesehavingbeen

assessedasfairorworse.Thisre-assessmentofthe

qualityoftheassetshascontributedtothereductionin

valuationofthepropertiesasat31August2022.

Qualityoftenants

InlinewiththeOriginalInvestmentPolicy,theGroup

hadintendedtoacquireassetsletorpre-letto

tenantswithrobustfinancialsandaprovenlong-term

operatingtrackrecordoperatingacrossadiverse

rangeofhomelesssubsectorsandlocations.Following

furtherinvestigationbytheBoardandAEW,ithasbeen

determinedthatthemajorityoftenantslackedlong-

termoperatingtrackrecordsandwerenotfinancially

robust.Theywereoperatingassets,manyofwhich

wereofaconditionwhichmeanttheycouldnotachieve

approvaltoobtainexemptrents,andthismadepaying

rentverydifficultwithoutsupport.TheCompanyand

theDirectorswerenotaware,andindeedhadnot

beeninformed,ofthisattherelevanttime.TheBoard

understoodatthetimethatAHRAhadcloselinkstothe

localauthoritiesandithassincebecomeapparentthat

thiswasnotthecase.

Asat31August2022,onetenantrepresentinglessthan

3%oftheannualrentoftheGroupwasinvoluntary

administration,andtheleasesweresubsequently

assignedtoanothertenantpostyearend.Whilst

allbut£1.9millionofthe£7.8millionarrearsat

31August2022wererecoveredpostyearend(seeNote

11totheConsolidatedFinancialStatements),17of

the29tenantsareconsideredtobeofweakcovenant

strengthrepresenting68.3%ofpropertiesand66.6%

ofannualcontractedrentasat31August2022.One

tenanthadenteredadministrationasat31August2022

andafurther11tenantsenteredintovoluntary

administrationpostperiodend,representing53.9%

ofpropertiesand62.1%ofannualcontractedrent

asat31August2022.Thepoorfinancialcondition

ofcertaintenantsalsocontributedtothereduction

inthevalueofthepropertyvaluation(seefurther

commentarybelow).

PortfolioValuation

JLLhasindependentlyvaluedtheGroup’sportfolio

inaccordancewiththeRICSValuation–Professional

Standards.Asat31August2022,theGroup’sportfolio

hadamarketvalueof£414.3million,representing

45.5%ofthehistoricalacquisitioncostsof£910.2

million(includingpurchasecosts).Thereduction

inthepropertyvaluationisprincipallyaresultofa

re‐assessmentofthequalityoftheassetsandthe

covenantstrengthofthetenants.Theassessment

oftheconditionofthepropertiesandthecovenant

Strategic report

Chair’s statement—continued

10 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Chair’s statement—continued

strengthoftenantsasat31August2022resultedin

39.1%(bynumberofproperties,46.3%byvalue)ofthe

portfoliobeingvaluedonavacantpossessionbasis

forthe31August2022valuation.Whereavaluation

hascontinuedtobepreparedonaninvestmentbasis,

limitationsonthedurationoftheincomestreamshave

beenappliedtoaccountforthecovenantstrengths

ofthetenants,andthehighrentlevelsdemanded

undertheleases,seefurtherdetailinNote9tothe

ConsolidatedFinancialStatements.

The2021valuationpreparedbyKnightFrankLLP

(“KnightFrank”)valuedeachassetontheinvestment

approach.Havingretrospectivelyconsideredthe

substanceofthetransactionsandconsideredthe

levelofworksrequired,theDirectorsnowconsider

thatthesubstanceofsometransactionswasthatofa

forwardfundingarrangement.Asdescribedmorefully

inNote9totheConsolidatedFinancialStatements,

theDirectorshavedeductedtheestimateofprepaid

Seller’sWorksfromthefairvalueoftheKnight

Frankvaluation.Additionally,asdiscussedinNotes

3and4totheConsolidatedFinancialStatements,

theDirectorsalsoconsiderthatthesubstanceof

enteringintosimultaneousacquisitionandleasing

transactionsresultedintheindirectpaymentoflease

inducementsandtheaccountingshouldbecorrected

accordingly.Theseamountshavealsobeendeducted

fromthevalueoftheKnightFrankvaluation,including

adjustmentforassociatedamortisation.TheDirectors

havealsoconsideredwhetherthe31August2021

KnightFrankvaluationrequiredadditionaladjustments

andconcludedthatnofurtheradjustments

wererequired.

Equity Issues

TheGroupcommencedbusinessoperationson

12October2020whentheSharesoftheCompanywere

admittedtotradingonthepremiumsegmentofthe

mainmarketoftheLondonStockExchange,withgross

proceedsof£240millionbeingraisedintheGroup’s

IPO,followedbyequityissuesinSeptember2021raising

grossproceedsof£350million,andinMay2022raising

grossproceedsof£263millionfromabroadrangeof

investors.ThetotalgrossproceedsraisedsinceIPO

were£853million.

Financial Results

Netassetvalue

TheNAVhasincreasedfrom£247.9million

(restatedasat31August2021)to£345.9millionas

at31August2022.Oncethenetproceedsfromthe

shareissuanceduringtheperiodof£601.2millionare

considered,thisisadecreaseinNAVof£503.2million

fromtherestatedAugust2021NAV.Thisdeclineis

principallydueto:

i. decreaseinfairvalueofinvestmentpropertyof

£452.9million(Note9totheConsolidatedFinancial

Statements),reflectingtheconditionoftheassets

andtheassessmentoftenantcovenantstrengthas

detailedabove;

ii. writeoffofSeller’sWorksof£11.9millioninthe

periodended31August2022;

iii. animpairmentchargeonthevalueoflease

inducementsof£28.3million;

TheNAVperSharehasdecreasedto43.76pence

asat31August2022,adecreaseof57.5%fromthe

103.03penceasat31August2021(restated).

Earnings

ThelossbeforetaxoftheGroupfortheperiodto

31August2022was£474.8million(restatedperiodto

31August2021:£16.1millionprofitbeforetax).

Dividends

TheGrouppaiditssixthdividendof1.38pence

perShareon9September2022.Afurtherinterim

dividendof1.38penceperSharewasdeclaredon

12December2022andpaidon20January2023

inrespectofthequarterended31August2022.

Dividendsdeclaredinrelationtothefinancialyearto

31August2022equalled5.50penceperShare,inline

withinitialtargets.

TheBoardapprovedthesedistributionsbasedon

draftfinancialstatementsandforecastsprovidedby

AHRAandtoensureitdistributedPropertyIncome,

asdefined,inordertocomplywithREITregulations.

Inaddition,theBoardconsideredthatithadthe

substantialSpecialDistributableReserve(Note17to

theConsolidatedFinancialStatements)whichcould

coveranyimprecisioninAHRA’sestimates.

TheBoardhassincereviewedthedecisiontodeclare

theinterimdividenddeclaredon12December2022;had

theBoardbeenprovidedwithallmaterialinformation

knownbyAHRAandAlvariumFMatthetimeincluding

thepoorrentcollectionandthedeterioratingfinancial

positionofthetenants,theDirectorswouldnothave

declaredthisdividend.

Financing

On1December2021,theGroupenteredintoa15-year,

interestonly,£130millionloanagreementwithScottish

Widowsatanall-infixedrateof2.53%perannum,

expiringinDecember2036.Theloanwasfullydrawn

downon28February2022,butfullusewassubjectto

meetingconditionsonassigningcollateral.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 11

Strategic report

Chair’s statement—continued

Togetherwiththe12-yearloanagreementwithScottish

WidowsenteredintoinDecember2020for£120million

atanall-inrateof2.07%perannumforthedurationof

theloanterm,dueforrepaymentinDecember2032,

thesefacilityarrangementswereintendedtoprovide

protectionagainsttheprevailingenvironmentof

increasinginterestrates,giventhelong-termfixedrate

ofinterest.

TheGrouphasrepaidpostperiodendatotalof

£178.0millionasatthedateoftheseaccounts

comprising£159.0millionofcashand£19.0million

inNetBreakGains.

Certainfinancialpenaltieshavebeenimposedbythe

Lenderinrespectoftheloanfacilitiestoincentivise

repaymentoftheloansassoonaspossible.After

reportingloancovenantbreachesinJanuary2023,

theLenderextendedtheinitialwaiverletterdated

29January2023andhasissuednewwaiverletters

priortotheexpiryofeachpreviouswaiverperiod.

Thecurrentwaiverletterrelatestomattersincluding

financialcovenants,anadversechangeintheposition

oftheCompanyanditssubsidiaries,afailureto

deliverauditedaccountsandotherinformation,the

suspensionofthesharesoftheCompanyonthe

LondonStockExchangeandthetaxstatusofthe

Company.Thecurrentwaiverletterisscheduledto

expire31October2024.

TheGroupisincurringDeferredFees,whichare

estimatedtototal£9.1millionatrepaymentin

December2024,payableonfullandfinalrepaymentof

theloansof:

• 0.5%oftheaggregateamountsoutstanding

onthetwoloansateachof,31August2023and

30November2023;and

• 5.0%perannumontheaggregateamounts

outstandingonthetwoloansascomputedonadaily

basisfrom30November2023andincreasedto7%

from1July2024untiltheloanisfullyrepaid.

ScottishWidowshasadvisedthatitsobjective

isforrepaymentoftheloanbalancepriorto

31December2024.

Limitations of scope in audit opinion

Theauditorswereunabletoexpressanopinionon

thefinancialstatementsasaresultofthelimitations

inscopearisingfromthechallengesinassessing

conditionofthepropertiesatacquisition,the

treatmentofreceipts,theconditionsbeingmetaround

thereleaseofretentionsandthecompletenessof

relatedpartytransactionsanddisclosures.Detailon

theselimitations,theareasofthefinancialstatements

affectedandhowthesehavebeenconsideredby

theDirectorsisincludedinthereportoftheAudit

Committeebeginningonpage59.

Post-balance sheet matters

ThepostbalancesheeteventsaredetailedinNote

26totheConsolidatedFinancialStatementsand

furtherdetailprovidedintheManagementReport

frompage21.

InvestmentManagerassetmanagementinitiatives

Followingarigorousselectionprocess,theBoard

appointedAEWasPropertyAdviseron22May2023

andasInvestmentManageron21August2023

followingshareholderapprovaloftheAmended

InvestmentPolicy.

AEWastheInvestmentManagercontinuedits

effortstostabilisethefinancialpositionoftheGroup

andrationalisetheportfolio.Keyinitiativesare

outlinedbelow:

• AspartofthestabilisationstrategyAEWcontinues

toundertakeacomprehensivepropertycondition

reviewanddatacollectionexerciseoftheproperty

portfolio.Analysisoftheunderlyingproperty

conditionisparamounttodetermineproperty

suitability,capitalexpenditurerequirementsand

incomeandcapitalreturnprospects;

• AEWhasengagedintenant-by-tenantrestructuring

negotiationstounlockaccessandinformationon

theconditionoftheunderlyingproperties.The

primaryfocushasbeenonobtainingcontrolof

theportfoliowithlegalactionbeingtakenagainst

selectednon-performingtenants.TheCompany

hasprogressednegotiationswithanumberof

tenantstofacilitaterestructuringofleasesand

rationalisationoftheportfolio;

• Theinspectionprogrammehasbeenwounddown

with82.3%oftheportfoliointernallyinspected

asat31May2024onthebasisthattheremaining

propertieshavebeendifficulttoaccess.Those

propertiesmaybeinspectedoncetheyareback

undercontroloftheGroup.Ofthoseproperties

notinspected,68.2%havebeensoldsubsequent

to31August2022;

• ThespeedatwhichAEWcanre-tenantproperties

hadbeenhamperedbythelackofinformationon

theunderlyingpropertiesandleasesinplaceto

non-performingtenants.Astheinspectionprocess

iseffectivelycompleted,AEWexpectsthere-

tenantingprogramcanaccelerate;

12 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Chair’s statement—continued

• AEWcontinuestoengage,wherepossible,

withprovidersofvariousformsofSocialUse

accommodation.SocialUseincludesrealestate

usedtohousevulnerableindividualsincluding

butnotlimitedto:homeless,ex-servicemen

andwomen,individualsfleeingdomesticabuse,

vulnerablewomen,prisonleavers,asylumseekers,

refugees,fostercareleavers,careleavers,anyone

experiencingsubstancemisuse,mentalillness,

ordisability;

• Rentcollectedonoperatingleasesincludingarrears

representsanaverageof11%oftherentinvoiced

fortheperiod1September2023to31August2024.

AEWcontinuestoworkwithselectedtenantson

paymentplans.Itisanticipatedthatrentcollection

willfluctuatemonthonmonthintheneartermas

AEWcontinuestoworkonstabilisingtheportfolio

andpursueslegalactionwherenecessary;

• AEWcontinuesengagementwiththeCompany’s

shareholders,whichincludesquarterlyretail

shareholderwebinarandmonthlyupdates

distributedbyRNS;

• SinceAugust2023to10October2024,theGroup

hascompletedonthesaleof1,219propertiesand

exchangedonafurther273properties.Thegross

proceedsfrompropertiessoldandexchangedtotals

£216.7million,whichinaggregateisinlinewiththe

August2023draftvaluation.

FCAinvestigation/Potentiallitigation

TheCompanyannouncedon13February2024the

commencementofaninvestigationbytheFCAinto

theCompany.TheCompanyandtheDirectorswill

cooperatefullywiththeFCAinitswork.

Apre-actionletterhasbeensenttotheCompany

byHarcusParkeronbehalfofcertainshareholders

oftheCompany.Nolegalproceedingshavebeen

issuedatthisstage.Theletterallegedthatthe

Company,alongwithcertainotherparties,provided

informationtoinvestorswhichwasfalse,untrueand/or

misleading.TheCompanyhasissuedacomprehensive

responsetoHarcusParkerandcorrespondence

iscontinuingbetweentheparties.TheCompany

intendstovigorouslydefenditselfinrespectofthe

threatenedlitigationandhasdeniedtheallegations

madeagainstit.

TheCompanyintendstobringlegalproceedings

againstthosepartiesitconsidersareresponsiblefor

wrongdoing.Tothatend,theCompanyhasitselfissued

pre-actionlettersofclaimtoAlvariumFM,AlTiRE

andAHRA.TheCompanycannotcommentfurtherat

thisstage,astodosomayprejudicetheCompany’s

positioninanypotentialproceedings.

AmendedInvestmentPolicyandStabilisationPeriod

ShareholdersapprovedtheAmendedInvestment

Policyon21August2023.TheAmendedInvestment

PolicychangesaimedtoensuretheGroupwasable

tocontinuetooperateinthesectorandpreserveits

longer-termsocialobjectiveofhelpingtoalleviate

homelessnessintheUK.Theprincipalchangeswere:

• providingtheflexibilitytostabilisetheGroup’s

financialposition,withafocusonmaximising

incomeandcapitalreturnsfromtheexisting

portfolioofassets;

• allowingtheflexibilitytoexploredemandforall

residentialusesintheStabilisationPeriod(defined

astheperiodpertheAmendedInvestmentPolicy,

beginningfrom21August2023andendingon

21August2025,orsuchlaterdate(notbeinglater

than21August2026)approvedbytheBoard,during

whichtheCompanywillhavetheobjectiveof

stabilisingtheGroup’sfinancialconditionthrough

initiativestomaximiseincomeandcapitalreturnsby

investinginaportfolioofUKresidentialrealestate

andfromotherSocialUseoccupiergroups;and

• aligningtheAmendedInvestmentPolicywiththe

demandsandneedsoftheunderlyingoccupants

togetherwithLocalAuthorities,Charities,

RegisteredProvidersandHousingAssociations,

particularlyinrespectofleaseterms.

Directors

IwasappointedtotheBoardon18January2024,to

succeedLynneFennahasIndependentNon-Executive

Chair.PeterWilliamswasappointedon2April2024as

SeniorIndependentNon-ExecutiveDirectorandas

ManagementEngagementCommitteeChairdesignate

replacingSimonMooreinthisrole.RodDaywas

appointedasIndependentNon-ExecutiveDirector

on7June2024andistheAuditCommitteeChair

designate.TheCompanyhaspreviouslyannouncedthe

intentionofthefourDirectorsinofficeatIPOtostep

downonpublicationoftheaccountsfortheyearended

31August2022and31August2023.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 13

Strategic report

Chair’s statement—continued

Managed Wind-Down and New Investment Policy

On5February2024,theGroupannouncedthatit

hadcommencedare-financingprocesstoconsider

alternativefinanceoptionsfortheCompany.On

17June2024,theCompanyannouncedthatithad

beenunabletosecureare-financingofitsexisting

debtfacilityontermsthatitcouldrecommend

toshareholders,despiteextensiveandadvanced

discussionswithapotentiallender.There-financing

ofthedebtwasakeycomponentofthecontinued

advancementofthestabilisationstrategydiscussed

aboveandasadoptedinAugust2023.Asthere-

financinghadnotbeenpossible,theCompanyalso

announcedthatitwasconsideringanumberofoptions

bothtore-paytheoutstandingdebtandprovidean

optimisedresolutionforshareholders,whichmay

includeamoreextensiverealisationstrategy.The

BoardandAEWcontinuedtoengagewithScottish

Widowswhichadvisedthatitsobjectiveisfor

repaymentoftheloanbalanceintheshorttermandno

laterthan31December2024.

Subsequenttoconcludingthatthere-financingwas

nolongerviable,theBoardconductedafullreviewof

thestabilisationstrategyandwhilstitrecognisedthat

thereisanopportunitytoaddvaluetotheportfolio

atapropertylevel,itconcludedthatthisstrategy

facedconsiderablechallenges.Theseincludedahigh

fixedcorporatecostbase,requiredduetotheREIT

structureandasaresultoftheissuesbeingdealtwith

bytheCompanyatthistime,andtherequirement

forcapitalexpendituretodriveanincreaseinrental

value.Inaddition,theBoardwasawarethatthesize

ofthevehiclefollowingtherepaymentofdebtmay

beconsideredtoosmallbymanyinvestorswhen

consideringitsfutureasalistedREIT.

Asaresultofthesefactorsandhavingcarefully

consideredtherangeofoptionsavailableforthe

Company,theBoardconcludedthatitwasinthebest

interestsofshareholderstoproposeamanagedwind-

downstrategyfortheCompanypursuanttowhichthe

assetsoftheGroupwouldbesoldwiththeobjectives

ofoptimisingremainingshareholdervalueandrepaying

theGroup’sloanbalance(the“ManagedWind-Down”).

TheimplementationoftheproposedManagedWind-

DownrequiredafurtherchangetotheCompany’s

investmentpolicy.Accordingly,on16September2024,

shareholdersapprovedtheNewInvestmentPolicy,

whichisintendedtoallowtheCompanytorealiseall

theassetsinitspropertyportfolioinanorderlymanner

withtheviewtorepayingborrowingsandmakingtimely

returnsofcapitaltoshareholderswhilstaimingto

optimisethevalueoftheGroup’sassets.

FulldetailsoftheNewInvestmentPolicyareonpage29.

OutlookandApproachtotheManagedWind-Down

ItisexpectedthattheCompany,viaAEW,willadopt

abroadandmanagedapproachtothedisposalof

assets,withaviewtooptimisingvalueforshareholders.

Althoughitwillbenecessarytorealiseaproportion

ofthepropertyportfoliobefore31December2024

tomeettherequirementsofScottishWidowsand

repaytheoutstandingdebt,saleswillotherwisebe

structuredandexecutedwiththeintentionofachieving

bestvalueandminimisingdisruptiontotheunderlying

occupiersoftheproperties.Adecisiononthepreferred

methodofdisposalwillbedeterminedbyanumberof

factors,includingpropertycondition,location,tenant

typeandleaseterms.

DuringtheManagedWind-Down,assetmanagement

initiativeswillbefocusedonaddingvaluetoproperties

andpreparingthemforsaletomaximiseliquidity.

Inaddition,giventheCompany’soriginallystated

objectiveofprovidingaccommodationforthe

homeless,therealisationprocesswillbemanagedina

waytominimiseimpactanddisruptiontounderlying,

vulnerableoccupiers.Inthatrespect,aspreviously

announced,alargerthanexpectedproportionofthe

portfolioisPRSratherthanhomelessaccommodation

backedbyexemptrentsfromlocalauthorities.

TheCompanywillcontinuetoprovideregular

updatesduringtheManagedWind-Down,however

this,andthelevelofdisclosureincluded,willbe

reviewedthroughouttheprocessinordertoprotect

theCompany’scommercialinterestsandallow

disposalstobecompletedinamannerthatpreserves

shareholdervalue.

Returnofcapitaltoshareholders

ItistheintentionoftheBoardfollowingtherepayment

oftheGroup’soutstandingdebtfacilitiesthatcapital

willbereturnedtoshareholdersuponthecompletion

oftherealisationstrategy.However,shareholders

shouldbeawarethattheabilityoftheCompanyto

makedistributionstoshareholderswillbeconstrained

whilsttheCompanyfacespotentialgrouplitigationand

anFCAinvestigation.Atpresent,theBoardisunableto

assessproperlyitsabilitytomakedistributionsunder

theapplicablelegalrequirements.Inaddition,the

Companyexpectstoretaincapitaltomeetcorporate

costsandallowittopursuelegalactionagainstthoseit

considersresponsibleforwrongdoing.

Themostappropriatetimingandmechanismto

returncapitaltoshareholderswillbedetermined

induecourse.

14 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Chair’s statement—continued

Financialstatementsandrestorationoflisting

Theauditedresultsfortheyearended31August2023

havebeenpreparedinparalleland,alongwith

interimresultsfortheperiodsto28February2023

and29February2024respectively,areexpectedto

bepublishedduringthefourthquarter.Following

publicationofalloutstandingfinancialinformation,

theCompanywillthenbeabletoapplytotheFCAfora

restorationofitslistingandtherecommencementof

tradingontheLondonStockExchange.

Furtherdetailsregardingtheexpectedtimetable

forrestorationoflistingwillbeannouncedupon

publicationoftheabovefinancialinformationandthe

Companyexpectstoengagewithshareholdersahead

ofthisimportantevent.

TheBoardsharesshareholdersfrustrationsonthe

progressoftheCompanyanddespitesubstantial

effortstostabilisethebusiness,theCompany

continuestofaceextensivefinancialandoperational

challenges.Againstthisbackdropandinlightofthe

expectedreducedsizeoftheCompany’sportfolio,

theBoardconcludedthatthebestcourseofactionto

optimiseremainingshareholdervaluewastheManaged

Wind-Down.Iwouldagainliketothankshareholders

fortheirongoingpatienceandsupportaswestrive

toaddress,andseekredressfor,theissuesfacing

theCompany.

Michael O’Donnell

Chair

10October2024

 HomeREITplc | AnnualReport | Fortheyearended31August2022 15

Strategic report

Management report

Introduction

AHRAwastheappointedInvestmentAdviserand

AlvariumFMwastheappointedAIFMduringtheperiod.

FollowingapprovalbytheshareholdersoftheAmended

InvestmentPolicyattheGeneralMeetingheldon

21August2023,AEWwasappointedtheInvestment

ManagerandAIFMoftheCompanyandassuchisnot

responsiblefortheperformanceoftheGroupinthe

yearto31August2022.

Thebelowdetailisintendedtoprovidestakeholders

withanunderstandingofthekeymattersandkey

accountingtreatmentwhichhasimpactedthese

financialstatements.Therevisedaccountingpolicies

aredetailedinNote2totheConsolidatedFinancial

StatementswithNote3totheConsolidatedFinancial

Statementsprovidingfurtherdetailonthesignificant

accountingjudgementsbasedoninformationavailable

totheGroupandNote4totheConsolidatedFinancial

Statementsdetailingthepriorperiodadjustments.

AspertheIPOprospectus,theBoardengagedAHRA

andAlvariumFMtoacquireadiversifiedportfolioof

high-qualitypropertiesinaccordancewiththeOriginal

InvestmentPolicyandinvestmentrestrictionswiththe

followingkeyinvestmentconsiderations:

1. propertiesprovidehigh-qualityaccommodation

tohomelessandvulnerableindividualsin

needofhousing;

2. propertiesdemonstratestrongresiduallandvalue

characteristics;

3. propertiesareletorpre-lettorobusttenantson

long-termleases(typically20to30yearstoexpiry

orfirstbreak);

4. leasesare‘triplenet,fullrepairingandinsuring

leases’;and

5. rentsaretobesupportedbyLocalHousing

Allowancepaymentsandrentreviewsareinflation-

linkedorcontainfixeduplifts.

UndertheOriginalInvestmentPolicyatIPO,

theCompanywastobededicatedtotackling

homelessnessintheUKtargetingawiderangeof

sub-sectorswithinhomelessnessincluding,butnot

limitedto,womenfleeingdomesticviolence,people

leavingprison,individualssufferingfrommentalhealth

ordrugandalcoholissuesandfostercareleavers.

TheCompanywouldneitherundertakeanydirect

developmentactivitynorassumeanydevelopment

risk.However,theCompanycouldinvestinfixed-price

forwardfundeddevelopments,providedtheywerepre-

lettoanacceptabletenantandfullplanningpermission

wasinplace,bothatsigning.

Thesecharacteristicswererequiredinorderto

provideincomesecurity,valuationstabilityandlow

costfinancing.

Investment Properties

Acquisitionofproperties

TheGroupacquired1,528propertiesduringthe

periodwithatotalof2,239propertiesheldasat

31August2022.Eachacquisitionwassupportedby

avaluationfromKnightFrank.

FollowingAEW’sreviewofallhistoricalacquisition

agreements,assessmentofthebuildingconditionat

acquisitionandreviewoftherelationshipsbetween

vendorsandtenants,aportionofthepurchaseprice

wasallocatedtoSeller’sWorksandeitheralease

incentiveasset(whereapropertywasconsidered

habitableatacquisition)oradebtor(wherethe

propertywasconsideredunhabitableatacquisition).

FurtherdetailisprovidedinNotes2,3and4tothe

ConsolidatedFinancialStatements.

Thebelowprovidesareconciliationofthetotal

acquisitioncostfrominceptionto31August2022

of£910.2million.

Asat

31August2022

£million

31August2021

£million

Investmentproperty

(includingpurchasecosts) 543.5 289.7

PrepaidSeller’sWorks

recognisedasreceivable 19.0 4.8

Leaseinducementswhere

buildingisconsidered

ashabitable 32.0 16.7

Leaseinducementwhere

buildingisconsidered

asunhabitable 2.9 1.6

Total acquisition cost

(including purchase costs) 597.4 312.8

Seller’sWorks

AlthoughtheBoardwasnotrequired,andindeed

wasnotasked,toapprovetheproposedacquisitions,

completedorprospectivepropertyacquisitions

werepresentedtotheBoard(andsubsequentlyto

valuersandinsurers)asbeinghigh-qualityproperties

suitableforhomelessaccommodationinlinewiththe

OriginalInvestmentPolicy.Afterdetailedreviewsof

theSPAsbyAEW,theBoardnowunderstandsthat

mostofthepropertiesacquiredweresubjecttoan

obligationforthevendortocompleteSeller’sWorks

withinaspecifiedperiod.Thevendorwastypically

givenbetween6and12monthstocompletetheSeller’s

Works(the“Seller’sWorksLongstopDate”or“SWLD”).

16 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Management report—continued

UnderthestandardSPAs,theGrouphadlimited

recourseagainstthevendorifitdidnotfulfil

contractualobligationstoimprovethepropertypost-

acquisition.

Postyearend,extensivereviewbyAEWhasidentified

thatsufficientdocumentationwasnotalways

maintainedoravailable,intermsofbuildingsurveyor

conditionreportsasatthedateofacquisitionsandas

suchtheBoardhasmadeanumberofassumptions

andestimatesindeterminingpre-paidSeller’sWorks.

FurtherinformationiscontainedinNote3tothe

ConsolidatedFinancialStatements.

AsdiscussedinNote11totheConsolidatedFinancial

Statements,theGroupwrote-off£11.9millionin

respectof608propertiesforthefinancialyearended

31August2022and£3.7millioninrespectof211

propertiesfortheperiodended31August2021for

whichthevendorhadnotcompletedtheSeller’sWorks

bytheSWLDandtheGrouphadlimitedlegalorfinancial

recoursetoenforcethevendortocompletetheworks.

Retentions

InsomeSPAs,aretentionwasrequiredtobeheld

byanindependentpartyattheacquisitiondateto

bereleaseduponcompletionofthecontractual

obligationsoratfixeddatesinthefuture.TheGroup

hadnotappropriatelyaccountedfortheseamountsin

the2021AnnualReportandthoseaccountshavebeen

restatedinthecurrentyearcomparativeConsolidated

FinancialStatementsbyestablishingtheretentionas

anassetwhichisreclassifiedintoinvestmentproperty,

withacorrespondingliability,asdisclosedinNote4to

theConsolidatedFinancialStatements.Theentryis

reverseduponeitherthesatisfactorycompletionofthe

contractualobligationoratthefixeddates(iftheonly

conditionforreleaseisthepassageoftime)orreversed

uponreceiptoftheretentioncashifthenecessary

conditionforreleasewasnotmet.ThishadnoP&L

impactinthecurrentorpriorperiod.

Propertycondition

TheGroupappointedVibrantinAugust2023to

undertakeaninternalpropertyinspectionprogramme

andappointedJLLinJuly2023astheindependent

valuer.Thiscomprehensiveinspectionprogramme

hasledtoasignificantre‐assessmentofthequalityof

thepropertyassets.Ofthe2,239propertiesowned

asat31August2022JLLexternallyinspected2,170

properties,comprising97.0%oftheGroup’sproperty

portfolio.Oftheseexternallyinspectedproperties,

JLLinternallyinspected195properties.Vibrant,JLLor

otherthirdpartiesalsoundertookinternalinspections

on1,843propertiesfromAugust2023toMay2024.

Basedontheresultsoftheinspectionprogramme,

JLLhasassessedtheconditionofthepropertiesas

0.1%verygood,9.0%good,64.0%fair,20.0%poor

and6.9%verypoor.Ofthepropertieswhichwerenot

inspected270propertieshavebeensold,ofwhich228

havecompleted.

JLLhasconsideredthequalityoftheassetsin

reachingitsassessmentofvalue,withproperties

consideredunhabitablebeingvaluedonavacant

possessionbasis.Further,manypropertieswerefound

tobeinneedofextensiverenovationbeforebeing

capableofoccupation,orreconfigurationtoprovide

anappropriatenumberofroomstosuitthelocal

market.Insuchcases,themarketvaluewasadjusted

downwardsaccordingly.

Propertyvaluation

TheGroup’sportfoliohasbeenindependently

valuedbyJLLinaccordancewiththeRICSValuation

ProfessionalStandards.Asat31August2022,the

Group’sportfoliohadamarketvalueof£414.3million

representing45.5%ofthehistoricalacquisitioncostsof

£910.2million(includingpurchasecosts).Thereduction

inthepropertyvaluationisprincipallyaresultofa

re‐assessmentofthequalityoftheassetsandthe

covenantstrengthofthetenants,severalofwhichhave

goneintoliquidationpostperiodend.

Indeterminingthefairvalueasat31August2022,JLL

hasusedacombinationofvaluationbases,adoptingan

investmentvaluationfor60.9%oftheportfolioandMV-

VPvaluefor39.1%oftheportfolio.Inallcases,JLLhas

consideredtherentalvaluefortheexistingusesofthe

propertiesandLocalHousingAllowance(“LHA”)rates.

Whilstallpropertieswithintheportfolioweresubject

toalease,thesecurityoftheunexpiredtermforthese

leasesdiffersacrosstheportfoliodependingonthe

covenantstrengthofthetenant.Fortenantswith

aweakcovenantstrength,orwhereapropertywas

deemedunhabitableJLLdisregardedtheleasesand

valuedthepropertiesonthebasisofMV-VP.

Whereavaluationhasbeenpreparedonaninvestment

basis,limitationsonthedurationoftheincome

streamshavebeenappliedtoaccountforthecovenant

strengthsofthetenants,andtheabove-marketrent

levelsdemandedunderthein-placeleases.JLLcapped

theunexpiredleasetermat5yearsduetothelackof

confidenceinthosetenantsbeingabletofulfiltheir

leaseobligations.Furthermore,forthoseproperties

whicharesublettoatenantwithastrongcovenant,

JLLignoredtheprimaryin-placeleaseandinstead

capitalisedthesubleasepassingrentforitsremaining

term(uptoeightyears).Whereapropertyhasahigh

passingrentincomparisontoJLL’sopinionofMV-VP,

JLLcappedthefairvalueat150%ofMV-VP.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 17

Strategic report

Management report—continued

The2021KnightFrankvaluationvaluedeachassetontheinvestmentapproach.Havingretrospectivelyconsidered

thesubstanceofthetransactionsandconsideredthelevelofworksrequired,theDirectorsnowconsiderthat

thesubstanceofsometransactionswasthatofaforwardfundingarrangement.AsdescribedmorefullyinNote

9totheConsolidatedFinancialStatements,theDirectorshavedeductedtheestimateofprepaidSeller’sWorks

fromthefairvalueoftheKnightFrankvaluation.Additionally,asdiscussedinNotes3and4totheConsolidated

FinancialStatements,theDirectorsalsoconsiderthatthesubstanceofenteringintosimultaneousacquisitionand

leasingtransactionsresultedintheindirectpaymentofleaseinducementsandtheaccountingshouldbecorrected

accordingly.TheseamountshavealsobeendeductedfromthevalueoftheKnightFrankvaluation,including

adjustmentforassociatedamortisation.TheDirectorshavealsoconsideredwhetherthe31August2021Knight

Frankvaluationrequiredadditionaladjustmentsandconcludedthatnofurtheradjustmentswererequired.

Thebelowtableshowsthebreakdownofpropertiesandvaluebyvaluationapproach.

31August2022 31August2021

Asat

Number

ofproperties

FairValue

£millions

Number

ofproperties

FairValue

£millions

Investmentvaluationapproach 1,363 222.4 711 327.9

Marketvalue–vacant

possessionapproach 876 191.9 – –

Total 2,239 414.3 711 327.9

Asat31August2022,172propertiesofthe2,239were

consideredunhabitable(2021:52of711properties).

Theannualcontractedrentonandfairvalueofthese

propertiesasat31August2022was£4.6million

and£27.2million(2021:£1.6millionand£28.5million

respectively).Subsequentto31August2022,157

propertieswhichwereconsideredunhabitableat

31August2022weresold,ofwhich142havecompleted.

Tenants

Tenantarrangements

TheBoardhasreviseditsaccountingpoliciesinthe

periodasdetailedinNote2totheConsolidated

FinancialStatementstoappropriatelyaccountfor

alevelofdirectinteractionbetweentenantsand

vendorsandforpropertieswhichareunhabitable

assummarisedbelow(leaseinducements,lease

commencementdateandpaymentsto/onbehalfof

tenants).FurtherdetailisprovidedinNotes2,3and4

totheConsolidatedFinancialStatements.

Leaseinducements

TheGroupdidnotprovideleaseinducement

considerationtotenantsdirectly;however,the

Directorshaveconsideredtherelationshipbetween

thevendorandtenantandAHRA’sexpectationthat

thevendorsgenerallyprovidethetenantwithcash

intheamountofthefirstyear’srentfundedthrough

theoriginalacquisitionpaymentmadebytheGroup

tothevendor.TheDirectorshaveconcludedthat

thesubstanceofthesetransactionsissuchthatthe

leaseandtheSPAshouldbeaccountedforasasingle

contractassetforthinIFRS16,paragraphB2resulting

inanamountequaltotwelvemonthsofrentpayable

recognisedaseitheraleaseinducementassetor

adebtor(forhabitableandunhabitableproperties

respectively)representingthefirstyearofrentand

reductiontotheinvestmentpropertypurchase

priceaccordingly.

Leasecommencementdate

Thecommencementdateofaleaseisusuallythe

leaseinceptiondate,andthisisthecaseforhabitable

properties.Forthosepropertiespurchasedwhich

wereinverypoorconditionorboardeduporrequired

conversion,theDirectorsconsiderthatthese

propertieswereunhabitableandthereforedidnot

meetthecriteriafortherecognitionofanoperating

leaseatitscommencementdate.Accordingly,revenue

recognitiononlybeginswhenthepropertyisina

habitablecondition.Anycashreceivedfromthetenant

whilethepropertyisjudgedtobeunhabitableisapplied

asareductioninthecostofthedebtororthecarrying

valueoftheproperty.

Paymentto/onbehalfoftenants

On18June2021,AHRA,onbehalfoftheCompany,

withouttheknowledgeorauthorityoftheBoard,

enteredintoanescrowagreementwithNoble

TreeFoundationLimited,atenant,andIntertrust

Trustee3(Jersey)Limitedwherebyanaffiliateof

KarlaAssetManagementLimited(“KAM”)(KAMis

nowinliquidation)provided£0.8milliontoanescrow

accountintheCompany’snamewithsuchfundsto

beusedasapprovedbytwoAHRAfundmanagers.

Theescrowfundscouldbeaccessedbytwotenants,

NobleTreeFoundationLimitedandBigHelpProject,

asapprovedbythetwoAHRAfundmanagers.Asat

31August2021,£0.4millionhadbeendistributedwith

therestdistributedinthe2022financialyear.The2021

comparativesintheseaccountshavebeenrestatedto

accountfortherevenueandexpensesassociatedwith

thisarrangement.

18 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Management report—continued

DuringtheperiodfromSeptember2021toOctober

2022,withoutknowledgeorauthorityoftheDirectors,

debtorsweresettledinseveralnon-traditional

waysasfollows:

• Asnotedabove,atacquisitionvendorsusually

hadanobligationtoimproveapropertytoagood

lettablestandardandinsomecases,vendorspaid

tenantstotransfertheobligationtothetenants.

Inseveralcasesthesettlementagreementsto

transitiontheseobligationsfromvendorstotenants

resultedincashof£1.7millionbeingtransferredto

theGrouptobeusedtosettledebtorsinsteadof

paidtothetenantsbythevendors.Cashinexcessof

outstandingdebtorsatthetimewasreceivedinthe

amountof£0.3millionandtheexcessfundswere

reimbursedtotheassociatedtwotenants;

• Vendorsmadepaymentsonbehalfof14tenantsin

theamountof£7.2million;

• Onetenantsettledamountsonbehalfoftwoother

tenantsintheamountof£1.6million;and

• TheGroupwithheld£2.1millionfromtheacquisition

ofpropertieswithanagreedpriceof£17.0million,

suchthatfundstransferredatacquisitionwere

£14.9million.Thefundswithheldwereoffsetagainst

debtorsfromthreetenants.

Thesetransactionswereusedtosettledebtorsfrom

specifictenantsasdirectedbyAHRA.TheDirectors

haveconsideredwhetherthemoreappropriate

accountingwouldbetoapplythecashreceiptsasa

reductioninthecarryingvalueofthepropertyorasa

creditor.Thedebtorbalanceswouldthenbewritten

offasuncollectibleunderIFRS9.However,therewas

correspondencebetweenAHRAandcounterparties

whichprovidedevidenceoftheintentofthecash

transfers.Further,therewerenosignednotesor

otheragreementsexecutedwhichwouldsignifyany

lendingarrangements.Accordingly,theDirectorshave

concludedthatapplyingthecashreceivedagainst

outstandingdebtorswasin-linewiththeintentof

thetransaction.

Theoutstandingdebtorsat31August2022after

makingallcashapplications(includingtheabove)of

£1.9millionwereprovidedforinfull.

Rentfreeperiods

WithoutBoardknowledgeorconsent,theGroup,

postperiodend,enteredintodeedsofvariationsfor

87leasesrepresentingrentalincomeof£1.2million

perannumwithN-TrustHomesCIC,SelectSocial

HousingCICandICDEHomesCIC.Thosetenants

receivedrentfreeperiodsonalloftheirleases

retroactiveto1March2022andextending18months

to31August2023inexchangeforchangingthelease

extensiontermfromfiveyearstotenyearsinthe

agreement.FurtherdetailisprovidedinNote26tothe

ConsolidatedFinancialStatements.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 19

Strategic report

Management report—continued

Tenantconcentration

Asat31August2022,theportfoliowas100%letto29tenants.Thebelowtablesummarisesrentalexposureas

apercentageofannualcontractedrentasat31August2022:

Top10tenants

Number

ofproperties Rentalexposure

Contractedrent

£million

LotusSanctuaryCIC 109 12.1% £6.6

SupportiveHomesCIC 202 10.4% £5.6

RedemptionProjectCIC 139 9.1% £4.9

OneCIC 156 8.3% £4.5

BigHelpProject 325 8.1% £4.4

GenLivUKCIC 107 6.3% £3.4

BloomSocialHousingCIC 92 5.3% £2.9

CGCommunityCouncil 54 5.0% £2.7

DovecotandPrincessDriveCommunityAssociation 52 4.5% £2.4

NobleTree 143 4.5% £2.4

Top10tenants 1,379 73.6% £39.8

19othertenants 860 26.4% £14.1

Total 2,239 100.0% £53.9

Connectedtenants

Whilsttenantsdidnotformagroupforthepurposesofmeasuringexposuretoasingletenant,manyofthetenants

wereconnectedbycommondirectors/trustees.BasedoninformationnowreceivedbytheBoard,thebelowtable

summarisestheconnectedtenantsandconnectedtenantconcentrationasat31August2022asiftheydidmeet

thecriteriaofagroup:

Connectedtenantsasat31August2022 Rentalexposure Connectedrelationships

Connectedtenanttotal

exposure

BigHelpProject

CGCommunityCouncil

DovecotandPrincessDrive

CommunityAssociation

8.1%

5.0%

4.5%

Commontrustees–someorallof:

ColetteGoulding,JosephGoulding,

PaulBanksandPeterMitchell

20.2%

N-TrustHomesCIC

BigHelpHomesCIC

SelectSocialHousingCIC

1.2%

0.9%

0.5%

LotusSanctuaryCIC

RedemptionProjectCIC

EdenSafeHomesCIC

12.1%

9.1%

2.1%

Commondirector–

GurpaalSinghJudge

23.3%

SerenitySupportCIC

AshwoodHousingSolutionsCIC

1.2%

2.6%

Formercommondirector–

GabrielleDuberry

3.8%

20 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Management report—continued

Tenantcovenantstrengthandliquidations

Asat31August2022,100%oftheportfoliowaslet

toregisteredcharities,housingassociationsand

communityinterestcompanies.InlinewiththeOriginal

InvestmentPolicy,theGrouphadintendedtoacquire

assetsletorpre-lettoawiderangeoftenantswith

robustfinancialsandaprovenlong-termoperating

trackrecordacrossadiverserangeofhomelesssub-

sectorsandlocations.RentallevelsfortheGroup’s

tenantswereconfirmedbyAHRAtobeasustainable

levelwithsignificantheadroombetweenproperty

rentandhousingbenefitallowancereceivedfromthe

localauthority.Theheadroombetweencoreleaserent

payableontheGroup’spropertiesandhousingbenefit

wasintendedtocoverthetenant’smanagement

chargeandthecostofintensivehousingmanagement/

buildingsupkeepassociatedwiththeprovisionof

accommodationtohomelesspeople.

Asaresultofinvestigationsperformedpostyearend,

AEWhasdeterminedthatthemajorityoftenantswere

poorlycapitalisedandlackedlong-termoperatingtrack

records,orthebenefitoflocalauthoritysupport.In

someinstances,forexamplesinglefamilyhomes,the

rentburdenundertheoriginalleasewasunsustainable

basedonthelocation,lay-out,useandconditionof

theproperty.

AEWandtheBoardhavedeterminedthatasat

31August2022,17ofthe29tenantswereofweak

covenantstrengthrepresenting68.3%ofproperties

and66.6%ofannualcontractedrentasatthat

time.Onetenanthadenteredadministrationasat

31August2022andafurther11tenantsenteredinto

voluntaryadministrationpostperiodend,representing

53.9%ofpropertiesand62.1%ofannualcontracted

rentasat31August2022.

Anumberoftenantshavesurrenderedleasesor

enteredintocreditorsvoluntaryliquidationor

administration.Ofleasesassociatedwiththetenants

inplaceforthe2,239propertiesownedbytheGroupon

31August2022,369arestillininplace,452properties

havebeenturnedovertoapropertymanagerandthe

Grouphasdirectleaseswiththeoccupants,349arere-

tenanted,and1,069havebeensold.

Rentcollection

Ofthearrearsat31August2022allbut£1.9millionwere

substantiallyrecoveredfromtenantspostyearend

andthisbalancewasfullyimpaired.Asdetailedabove,

£12.3millionweresettledinnon-traditionalmanners.

MoredetailisprovidedinNotes3,5and11tothe

ConsolidatedFinancialStatements.

Rentcollectiondeterioratedsignificantlypostperiod

endwithrentcollectedunderoperatingleases

includingarrearsof£4.1millionfrom1September2023

to31August2024comparedtorentdemandedinthe

periodof£35.9million.

OccupancyandSocialUse

Whilstpropertieswere100%lettotenants,thepost

periodendinspectionprogrammehasidentified172

propertieswereunhabitableasat31August2022.

ContrarytoreportingbyAHRAtotheBoard,the

Grouphadnoreliabledataformonitoringunderlying

occupancyofpropertiesasat31August2022andthe

Directorshavethereforemadeassumptionsbased

onthepostperiodendinspectionprogramme(see

furtherdetailinNote3totheConsolidatedFinancial

Statements).

Theinspectionprogrammewhichhasbeenon-going

sinceAugust2023providessomereferencepointas

atthedateofinspection,however,thisisinregards

ofoccupation(beingoneormorebedroomoccupied)

comparedtowholebuildingsvacancy(nobedrooms

occupied).AsatthedateofinspectionbyVibrant

(fromJuly2023onwards),ofthe2,239properties

ownedat31August2022,54.9%wereconsidered

occupied,14.9%wereconsideredunoccupied,12.6%

wereinspectedbyafirmotherthanVibrant(who

madenocommentonoccupation)and17.6%remain

uninspected.

AEWcontinuestoundertakeacomprehensivereview

anddatacollectionexerciseofthepropertyportfolio.

Analysisoftheunderlyingpropertyconditionand

useisparamountaspartofanexercisetodetermine

suitability,capitalexpenditurerequirements,andthe

prospectsforincomeandcapitalreturnsprospects

asAEWworkstorationaliseandre‐tenantthe

portfolioduringtheStabilisationPeriodandnowthe

ManagedWind-Down.

Whilstalltenantshadtheintentiontoprovidehomeless

accommodation,AEWcontinuestoobtainreliabledata

fromtenantsthatthemajorityoftheportfoliohas

currentlybeenidentifiedasPRSratherthanhomeless

accommodationbackedbyexemptrentsfromlocal

authorities.PRSoccupiers,however,couldbeatriskof

homelessnessandmeetthecriteriaofbroaderSocial

Use,asdefinedintheAmendedInvestmentPolicy,

basedonthelocationofthepropertiesandthetypeof

accommodationtheyprovide.

Netassetvalue

TheNAVperSharehasdecreasedto43.76penceasat

31August2022,adecreaseof57.5%fromtherestated

103.03penceat31August2021.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 21

Strategic report

Management report—continued

Post period end activity

Acquisitions

TheGroupacquired232propertiestotalling£104.1

million(includingpurchasecosts)acrossvarious

geographicallocationsineightregionsofEngland.

UnauthorisedSettlementAgreement

On8December2022,arepresentativeofAHRA,acting

withouttheknowledgeorauthorityoftheBoard,

enteredintoasettlementagreementonbehalfofthe

Companyandtwoofitswhollyownedsubsidiaries

HomeHoldings1LimitedandHomeHoldings2Limited

withtheAggregators.TheDirectorswerenotmade

awareofthesettlementagreementbeforeitwas

signed.TheagreementrequiredtheCompanytopay

£0.7millionandpurportedlywaivedanyclaimsagainst

theAggregatorsarisingfromallsalescontractsandany

non-performanceofanyrefurbishmentworksfor488

propertiesinexchangeforanyclaimstheAggregators

mayhavehadagainsttheCompany.

AmendedInvestmentPolicy

TheAmendedInvestmentPolicyeffectivefrom

21August2023intendedtoensuretheCompanywas

abletocontinuetooperateinthesectorandpreserve

itslonger-termsocialobjectiveofhelpingtoalleviate

homelessnessintheUK:

• aStabilisationPeriodhadbeenintroduced,during

whichtime,theCompanywouldhavetheobjective

ofstabilisingtheGroup’sfinancialconditionthrough

initiativestomaximiseincomeandcapitalreturns.

TheStabilisationPeriodwasforaperiodof2years

from21August2023orsuchlaterdate(notbeing

laterthanoneyear)approvedbytheBoard.

• thepermittedusesofpropertieshadbeen

diversifiedtoincludeduringtheStabilisationPeriod

anyformofresidentialuse.Poststabilisationthe

Companywouldtargetpredominantlyhomeless

accommodationassetsandassetswithanySocial

Use;and

• anewleasingmodelhadbeenadoptedwhichwas

betteralignedtotheneedsofLocalAuthorities,

Charities,RegisteredProvidersandHousing

Associationsandtheneedsoftheunderlying

occupantsoftheproperties.

NewInvestmentPolicy–ManagedWind-Down

On5February2024,theGroupannouncedthatit

hadcommencedare-financingprocesstoconsider

alternativefinanceoptionsfortheCompany.On

17June2024,theCompanyannouncedthatithad

beenunabletosecureare-financingofitsexisting

debtfacilityontermsthatitcouldrecommend

toshareholders,despiteextensiveandadvanced

discussionswithapotentiallender.There-financing

ofthedebtwasakeycomponentofthecontinued

advancementofthestabilisationstrategydiscussed

aboveandasadoptedinAugust2023.Asthere-

financinghadnotbeenpossible,theCompanyalso

announcedthatitwasconsideringanumberofoptions

bothtore-paytheoutstandingdebtandprovidean

optimisedresolutionforshareholders,whichmay

includeamoreextensiverealisationstrategy.The

BoardandAEWcontinuedtoengagewithScottish

Widowswhichadvisedthatitsobjectiveisfor

repaymentoftheloanbalanceintheshorttermandno

laterthan31December2024.

Subsequenttoconcludingthatthere-financingwas

nolongerviable,theBoardconductedafullreviewof

thestabilisationstrategyandwhilstitrecognisedthat

thereisanopportunitytoaddvaluetotheportfolio

atapropertylevel,itconcludedthatthisstrategy

facesconsiderablechallenges.Theseincludeahigh

fixedcorporatecostbase,requiredduetotheREIT

structureandasaresultoftheissuesbeingdealtwith

bytheCompanyatthistime,andtherequirement

forcapitalexpendituretodriveanincreaseinrental

valueandvaluationoftheportfolio.Inaddition,the

Boardwasawarethatthesizeofthevehiclefollowing

therepaymentofdebtmaybeconsideredtoosmall

bymanyinvestorswhenconsideringitsfutureasa

listedREIT.

Asaresultofthesefactors,andhavingcarefully

consideredtherangeofoptionsavailableforthe

Company,theBoardconcludedthatitwasinthe

bestinterestsofshareholderstoproposeamanaged

wind-downstrategyfortheCompanypursuantto

whichtheassetsoftheCompanywouldbesoldwith

theobjectivesofoptimisingremainingshareholder

valueandrepayingtheCompany’sloanbalance.The

implementationoftheproposedManagedWind-

DownrequiredanotherchangetotheCompany’s

investmentpolicy.Accordingly,on16September2024,

shareholdersapprovedtheNewInvestmentPolicy,

whichisintendedtoallowtheCompanytorealiseall

theassetsinitspropertyportfolioinanorderlymanner

withtheviewtorepayingborrowingsandmaking

returnsofcapitaltoshareholderswhilstaimingto

optimisevaluefortheCompany’sassets.

22 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Management report—continued

InvestmentManageractivity

On22May2023theCompanyappointedAEWto

providepropertyadvisoryservicesandannounced

itsintenttoengageAEWasInvestmentManagerand

AIFMafterreceiptofFCAandshareholderapproval

foranewinvestmentpolicy.On21August2023

shareholdersapprovedtheAmendedInvestment

PolicyandtheCompanyappointedAEWasInvestment

ManagerandAIFM.

AEWhasundertakenthefollowingactivitysince

appointment:

Propertydisposals

SinceAugust2023theGrouphasundertakenaseries

ofauctionsalesinordertorepaybankdebtandprovide

workingcapital.Asatthedateoftheseaccounts,1,491

propertieshavebeensoldatauctionfortotalgross

proceedsof£216.5millionofwhich1,228properties

havecompletedfor£169.7millionand263remain

exchangedforsalefor£46.8million.

Assetmanagementinitiatives

i. On23August2023,One(Housing&Support)CIC

(“OneCIC”)agreedtosurrenderitsleaseson100

properties.MearsLimited(“Mears”),whichhad

beenasub-tenantbecameadirecttenantforits

remainingleaseterm.Thesurrenderagreement

allowedtheGrouptoreceiveasustainableincome

streamof£0.9millionperannumfromastrong

tenantcovenantwiththeexpectationtogenerate

significantlyhigherrentcollectionthanhas

previouslybeenreceivedfromOneCICinrelation

totheproperties,despitealowerheadlinerent

(previously£1.2millionperannum).

ii. InSeptember2023,leasesurrenderswere

completedon146propertiespreviouslyleasedto

RedemptionProjectCIC.Thesub-tenantMears

becametheCompany’sdirecttenanton77ofthese

properties.Theremaining69propertieswere

leasedtoCommunityAccommodationGroup.

iii. InNovember2023,leasesurrenderswerecompleted

withEdenSafeCICon38properties.Centrickwere

appointedaspropertymanagersontheproperties

identifiedaslettoPRStenants.

iv. InApril2024,theGroupsignednew5-yearleaseson

eightpropertieswithaspecialistproviderofsocial

useaccommodation.

v. InMay2024,theCompanyreachedanagreement

withentitiesassociatedwithPeterMitchell,

ColletteGoulding,JosephGouldingandPaulBanks

comprising:BigHelpProject,BigHelpHomesCIC,

CGCommunityCouncil,Dovecot&PrincessDrive

CommunityAssociation,N-TrustHomesCICand

SelectSocialHousingCIC)forthesurrenderof

itsleaseson605properties.TheBoardandAEW

believethisachievedthebestsolutionforthe

CompanybyenablingtheCompanytogaincontrol

oftheproperties,appointpropertymanagers,

collecttheunderlyingrentalincomeandremove

theseentitiesastenantsfromtheportfolio.

vi. NobleTreeFoundationLimited(“NobleTree”),a

non-performingtenantof143propertiesinthe

Company’sportfolioenteredintoadministrationon

3June2024.TheCompanyandAEWworkedclosely

withtheappointedadministrator,CBWRecovery

LLP,toarrangethesurrenderofNobleTree’sleases

andahandoverofitstenancies.

vii.InJune2024,theCompanyreachedanagreement

withBloomHousingCICforthesurrenderof76

propertiesenablingtheCompanytoaccessPRS

rent,gainpossessionofvacantstockandtakeon

thedirectcontractualrelationshipof26underleases

ofexistingsupportedaccommodationwith

Concept,JulianHouseandGateway2House.Bloom

HousingCIChaveretainedsevenpropertieswhich

theydirectlymanageandarealreadyinpayment

underanewflexibleleasestructure.

viii.InAugust2024,theCompanyreachedanagreement

withMansitHousingCIC,anon-performing

tenant,forthesurrenderofitsleaseson68

propertiesenablingtheCompanytodirectlycollect

theunderlyingincomefromtheseproperties,

increasingrentcollectionandfacilitatingasset

managementopportunities.Themajorityofthe

propertieswereoccupiedbyPRStenants.

ix. FollowingOne(Housing&Support)CIC,a

tenantof110properties,enteringintovoluntary

administration,on5August2024,MyshonLimited,

aspecialistintensivehousingmanagerwitha

specificfocusonspecialistsupportedhousing,

supportedhousingandaffordablehousing,is

expectedtobeappointedbytheadministratorto

managethehandoverofproperties,focusedon

minimisinganypotentialdisruptiontounderlying

occupantsandsupportservices,aswellas

facilitatingcollectionofrent.

x. AEWisinactivedialoguewithanumberofhousing

providerswhohavesignificantdemandforbedswith

ablendofregionalandnationwiderequirements.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 23

Strategic report

Management report—continued

xi. AEWcontinuetoengagewithprovidersofvarious

formsofSocialUseaccommodation.SocialUse

includesrealestateusedtohousevulnerable

individualsincludingbutnotlimitedto:Homeless,

ex-servicemenandwomen,individualsfleeing

domesticabuse,vulnerablewomen,prisonleavers,

asylumseekers,refugees,fostercareleavers,care

leavers,anyoneexperiencingsubstancemisuse,

mentalillnessordisability.

xii.Aspartofare-tenantingstrategyAEWhas

developedagrowinglistofproviderswith

relationshipswithLocalAuthoritiescapableof

receivingexemptrent.

xiii.AEWhasdevelopedaframeworkleaseand

managementagreementtoaccommodate

theonboardingofpropertiesandthere-

tenantingstrategy.

Debtfinanceandrepayment

TheGrouphadenteredintothefollowingloan

agreements(the“Facilities”)withScottishWidows:

• a12-yearinterest-only,fixed-rate,£120millionterm

loanagreementon11December2020.Thefacility

wasrepayableinDecember2032andhasafixedall-

inratepayableof2.07%perannum,fortheduration

ofthe12-yearloanterm.

• a15-yearinterest-only,fixedrate,£130millionterm

loanagreementon1December2021.Thefacility

wasrepayableinDecember2036andhasafixedall-

inratepayableof2.53%perannum,fortheduration

ofthe15-yearloanterm.

BothloanswerefullydrawnandtheFacilitiessecured

againsttheassetsacquiredbytheGroup.TheGroup’s

debtwas100%fixedtomaturitywithaverylow

weightedaverageallincostof2.31%perannumasat

31August2022.

ThesubsidiariesoftheCompanyandtheCompanyare

partytoagreementswith(amongstothers)Scottish

Widowsincluding(inthecaseofthesubsidiariesofthe

Company)facilityagreementsand(inthecaseofthe

Company)guarantees.Sinceaninitialwaiverletter

dated30January2023foraninitialwaiverperiodand

waivingcertainbreaches,newwaiverlettershavebeen

issuedontheexpiryofeachpreviouswaiverperiod.

Thecurrentwaiverletterisscheduledtoexpireon

31October2024.Thecurrentwaiverletterrelates

tovariousmattersincludingfinancialcovenants,an

adversechangeinthepositionoftheCompanyandits

subsidiaries,afailuretodeliverauditedaccountsand

otherinformation,thesuspensionofthesharesofthe

CompanyontheLondonStockExchangeandthetax

statusoftheCompany.ScottishWidowshasadvised

thattheirobjectiveisforrepaymentoftheloanbalance

priorto31December2024.

TheGrouphaspostperiodendrepaidatotalof

£178.0millionasatthedateoftheseaccounts

comprising£159.0millionofcashand£19.0millionNet

BreakGainsresultingfromthesettlementoffixed

ratedebt.Thecashrepaymentincluded£38.9million

fromuninvested/unavailableloanamountsdrawn,and

proceedsfrompropertysalesof£120.1million.

On19June2023,ScottishWidowsimposeda

DeferredFeeof0.5%oftheaggregateamounts

outstandingonthetwoloansateachof31August2023

and30November2023,payableontheearlierof

28June2024orthefullandfinalrepaymentofthe

loan.On4December2023,ScottishWidowsimposed

afurtherDeferredFeebeingtheequivalentof5.0%

perannumontheaggregateamountsoutstanding

onthetwoloansascomputedonadailybasisfrom

30November2023.On2July2024theLender

increasedtheDeferredFeeto7%from1July2024until

theloanisfullyrepaid.DeferredFeesareestimatedto

total£9.1milliononfinalrepaymentinDecember2024.

Outlook

Asnotedabove,shareholdersapprovedtheNew

InvestmentPolicyfortheManagedWind-Downon

16September2024.

ApproachtotheManagedWind-Down

ItisexpectedthattheCompany,viaAEW,willadopt

abroadandmanagedapproachtothedisposalof

assets,withaviewtooptimisingvalueforshareholders.

Althoughitwillbenecessarytorealiseaproportion

ofthepropertyportfoliobefore31December2024

tomeettherequirementsofScottishWidowsand

repaytheoutstandingdebt,saleswillotherwisebe

structuredandexecutedwiththeintentiontoachieve

bestvalueandtominimisedisruptiontotheunderlying

occupiersoftheproperties.Adecisiononthepreferred

methodofdisposalwillbedeterminedbyanumberof

factors,includingpropertycondition,location,tenant

typeandleaseterms.

DuringtheManagedWind-Down,assetmanagement

initiativeswillbefocusedonaddingvaluetoproperties

andpreparingthemforsaletomaximiseliquidity.

Inaddition,giventheCompany’soriginallystated

objectiveofprovidingaccommodationforthe

homeless,therealisationprocesswillbemanagedina

waytominimiseimpactanddisruptiontounderlying,

vulnerableoccupiers.Inthatrespect,aspreviously

announced,alargerthanexpectedproportionofthe

portfolioisPRSratherthanhomelessaccommodation

backedbyexemptrentsfromlocalauthorities.

24 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Management report—continued

TheCompanywillcontinuetoprovideregular

updatesduringtheManagedWind-Down.However

this,andthelevelofdisclosureincluded,willbe

reviewedthroughouttheprocessinordertoprotect

theCompany’scommercialinterestsandallow

disposalstobecompletedinamannerthatpreserves

shareholdervalue.

Returnofcapitaltoshareholders

ItistheintentionoftheBoardfollowingtherepayment

oftheCompany’soutstandingdebtfacilitiesthat

capitalwillbereturnedtoshareholdersuponthe

completionoftherealisationstrategy.However,

shareholdersshouldbeawarethattheabilityofthe

Companytomakedistributionstoshareholderswillbe

constrainedwhilsttheCompanyfacespotentialgroup

litigationandanFCAinvestigation.Atpresent,the

Boardisunabletoassessproperlyitsabilitytomake

distributionsundertheapplicablelegalrequirements.

Inaddition,theCompanyexpectstoretaincapitalto

meetcorporatecostsandallowittopursuelegalaction

againstthoseitconsidersresponsibleforwrongdoing.

Themostappropriatetimingandmechanismto

returncapitaltoshareholderswillbedetermined

induecourse.

Financialstatementsandrestorationoflisting

Theauditedresultsfortheyearended31August2023

havebeenpreparedinparalleland,alongwith

interimresultsfortheperiodsto28February2023

and29February2024respectively,areexpectedto

bepublishedduringthefourthquarter.Following

publicationofalloutstandingfinancialinformation,

theCompanywillthenbeabletoapplytotheFCAfor

arestorationofitslistingandtherecommencement

oftradingontheLondonStockExchange.

Furtherdetailsregardingtheexpectedtimetable

forrestorationoflistingwillbeannouncedupon

publicationoftheabovefinancialinformationandthe

Companyexpectstoengagewithshareholdersahead

ofthisimportantevent.

AEW UK Investment Management LLP

10October2024

 HomeREITplc | AnnualReport | Fortheyearended31August2022 25

ThisEnvironmental,SocialandGovernancePolicy

appliestotheCompanyandtheGroup.

TheBoardtogetherwithAEWfromtheirappointment

inAugust2023(together,“we”forthepurposesofthis

ESGreportonly),havearesponsibilitytoconductthe

Group’sinvestmentbusinessinasociallyresponsible

wayandrecognisethatourinvestorsmayhavethe

samevalues.

TheGroupisnotformallyrequiredtoreportunderthe

TaskForceforClimate-RelatedFinancialDisclosures.

Environmental, Social & Governance (“ESG”)

TheBoardbelievesthatESGshouldbeakeyprinciple

ofAEW’sapproachtoResponsiblePropertyInvesting

(RPI)andthatasustainableandsociallyresponsible

approachtorealestateinvestmentmanagementboth

protectsandenhancesthevalueofourassets,nowand

inthefuture.

AEWarefullyawareoftheimpactofouractivities

onenvironmentalandsocialissuesbothfromour

businessandourinvestment,assetmanagementand

developmentactivities.TothisendAEWarecommitted

toimplementingacomprehensiveSociallyResponsible

Investment(SRI)policy.BydoingsoAEWexpectto

meetourstakeholders’expectations,whetherthey

areclients,tenants,providers,employees,oranyother

individualwithwhomweinteract.

AEW’spolicyisalignedwiththeinternationalclimate

agreementsignedinParisinDecember2015asclimate

changeisamajorchallengeforhumanitythatposes

importantrisksandcreatesopportunitiesforthe

realestateindustry.TherealestatesectorinEurope

accountsforsome40%oftotalenergyconsumption

andabout25%ofgreenhousesgases(GHG)emissions.

Overthecomingyearswebelievethatbothoccupiers

andinvestorswillincreasinglyfocusonthewayinwhich

ESGissuesaremanaged.Inturn,thisisexpectedto

impactonbuildingobsolescence,lettability,ratesof

leaserenewalsandultimatelytherentalandcapital

valuesforindividualassetsifESGissuesareignored.

However,theBoard’sandAEW’sfiduciarydutyto

investorsmustalwayscomefirstinallinvestment

decision-making.AEWengagewithclientswherever

possibletoeducateontheimportanceofESG.Where

wefeelitisimportanttodosoandcostscanbejustified

intermsofperformanceobjectives,orarerequiredto

complywithUKlegislation,wewillseektoincorporate

oradoptbestpractice.

Environmental

Bylawallrentedresidentialpropertymusthavean

energyperformancecertificate(EPC)ratingof“E”

orabove.Thegovernmenthaveproposedthatby

December2028,allexistingprivatelyrentedproperties

willneedanEPCratingof“C”orabove.AspartofAEW’s

inspectionprogramme,includingtheVibrantsurveys,

complianceisbeingmonitoredandwillberegularly

reportedtotheBoard.

Ofthepropertiesheldasat31August2022theGroup’s

currentEPCratingsareasdetailedbelow:

Rating

Numberof

Properties %

A 2 0.1

B 7 0.3

C 537 24.0

D 1,208 54.0

E 371 16.6

F 6 0.3

G 10 0.4

Unknown 98 4.3

Total 2,239 100.0

Social

Wehaveidentifiedthemajorstakeholdersinthe

Group’sbusinessandendeavourtoconsidertheimpact

ofourdecisionsuponthese.

Shareholders:AsapublicgrouplistedontheLondon

StockExchange,theGroupissubjecttotheListing

RulesandtheDisclosureGuidanceandTransparency

Rules.TheListingRulesincludealistingprinciplethat

alistedgroupmustensurethatittreatsallholdersof

thesameclassofsharesthatareinthesameposition

equallyinrespectoftherightsattachingtosuch

shares.Weuseourbestendeavourstoabidebythe

ListingRulesatalltimes.

Employees:Asanexternallymanagedrealestate

investmenttrust,theGroupdoesnothaveany

employeesasallitsfunctionsarecarriedoutby

thirdpartyserviceproviders.However,theGroup

hasaboardcomprisedofnon-executiveDirectors

whoreceivefixedfeeremuneration.TheBoard

receiveregularmarketandregulatoryupdates

fromitsprofessionaladviserssuchasAEW,Broker

andCompanySecretaryandattendseminars

whererequired.

Strategic report

ESG report

26 HomeREITplc | AnnualReport | Fortheyearended31August2022

Tenants: AEWperformsextensiveduediligencebefore

atenantisselected,andduringthetenancyagreement

weaimtomaintainaconstructiverelationship.We

takeintoaccountourtenants’changingneedsand

weuseourexpertisetoassisttheminanywaywithin

ourability.

Service Providers:AlistoftheGroup’skeyservice

providerscanbefoundintheCompanyInformationon

page160.TheGroupconductsallitsbusinessthrough

itskeyserviceproviders.Beforetheengagement

ofaserviceprovider,weaimtoensurethatour

businessoutlookaswellasourvaluesaresimilar.The

Groupperformsanannualevaluationofallofitskey

serviceproviderstoensureinteraliathatourvalues

remainaligned.

Governance

AHRAandAlvariumFMwereexpectedtowork

togethertoensuretheexecutionoftheCompany’s

investmentstrategy,overseenbytheBoard.

Accordingly,theBoardexpectedthattheCompany’s

investmentactivitywouldbeconsistentwiththe

Company’spoliciesandcompliantwithitsprocedures

andwithlocalandregionalregulatoryrequirements.

Sincetheperiodend,theBoardhasdeterminedthat,

significantandmaterialinformationhascometolight

whichisincontradictiontoreportingprovidedto

theBoardandotheradvisersbyAHRAandAlvarium

FMduringtheperiod.TheBoardhasappointeda

newInvestmentManagerandAIFMwitheffectfrom

21August2023.

Compliance

TheCompanywasincorporatedandregisteredin

EnglandandWalesasapubliccompanylimitedby

shares.TheGroupisnotauthorisedorregulatedasa

collectiveinvestmentschemebytheFCA,however

itissubjecttotheListingRulesandtheDisclosure

GuidanceandTransparencyRules.Theprincipal

legislationunderwhichtheGroupoperatesisthe

CompaniesAct2006.WhiletheGroupholdsincome-

producingpropertyassets,theDirectorsintend,at

alltimes,tocontinuetoconducttheaffairsofthe

GrouptoenabletocontinuetoqualifyasaREITfor

thepurposesofPart12oftheCTA2010(andthe

regulationsmadethereunder).

TheGroupseekstocomplywiththeAICCodeof

CorporateGovernance(the“AICCode”)andwillreport

onitscompliancewiththeAICCodeeachyearinits

AnnualReport.

Risk Management

Ourgovernancemodelisdesignedtomanage

investmentriskandoperationalrisk.Therisk

managementprocessandsystemsofinternalcontrol

aredesignedtomanageratherthaneliminatetherisk

offailuretoachievetheCompany’sobjectives.Itshould

berecognisedthatsuchsystemscanonlyprovide

reasonable,notabsolute,assuranceagainstmaterial

misstatementorloss.

TheBoardhasreviewedtheriskmanagement

governancemodelpost-periodendandhasmadesome

amendmentstothemodel.

i. InternalinspectionofpropertiesbyJLL,Vibrantand

otherthirdparties;

ii. enhancementoftheGroup’swhistleblowingpolicy

forthirdpartiesincludingacontactaddressfor

theChairandrequestforkeyserviceprovidersto

providerelevantemployeeswiththecontactdetails

oftheChairtoraiseconcerns;

iii. HealthandSafety–AsaresultoftheAmended

InvestmentPolicywhichincludesremovingthe

requirementforallleasestobefullyrepairingand

insuring(FRI),theGroupisexposedtoincreased

healthandsafetyrisk.Healthandsafetyisa

standardpriorityitemontheBoard’sagendawith

AEWhavinganestablishedHealthandSafety

Committeewhichregularlyreportsmaterialmatters

totheBoard.

InvestmentRisk

TheGroupwillnotatanytimeconductanytrading

activitywhichissignificantinthecontextofthe

businessoftheGroupasawhole.TheGroupandthe

Boardhadintended,atalltimes,toinvestandmanage

itsassetsinawaythatwasconsistentwithitsobjective

ofspreadinginvestmentriskandinaccordancewithits

publishedOriginalInvestmentPolicy.

AsdetailedinManagementReportbeginningon

page15,sinceperiodend,significantinvestment

riskhasbeenidentifiedthatwasnotdisclosedtothe

Boardconcerning:

• qualityoftheassets,includinguncompletedSeller’s

Worksandunhabitableproperties;

• tenantsuitabilityandconnectionsbetweentenants;

and

• underlyingoccupancyofproperties.

Strategic report

ESG report—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 27

OperationalRisk

AHRAhadundertakentofollowEPRAbestpractice

recommendationsassessingoperationalriskona

continuousbasisandreportingregularlytotheGroup’s

Board.Sincetheperiodend,theBoardhasdetermined

thatsignificantandmaterialinformationhascometo

lightwhichisincontradictiontoreportingprovidedto

theBoardduringtheperiod.

AEWsinceappointmenton21August2023continuesto

assessoperationalriskonacontinuousbasisandreport

regularlytotheBoardonoperationalriskmatters.

Responsible investment

Ownership

TheGroup’sInvestmentAdviserwastheownerof

thispolicyduringthereportingperiod.Thepolicywas

subjecttoannualreview.

AEW,appointedon21August2023,iscommittedto

creatinglong-termvalueforshareholdersandadheres

toapolicyofsustainableandresponsibleinvestment.

AEW’sSRIpolicycanbefoundwithintheCorporate

ResponsibilityareaontheGroup’swebsitewww.

homereituk.com.AEWreviewsitsSustainabilityPolicy

onanannualbasis,andthepolicyisapprovedbythe

BoardofAEW.

Strategic report

ESG report—continued

28 HomeREITplc | AnnualReport | Fortheyearended31August2022

TheGrouppresentedvariousEPRAPerformanceMeasuresandotherKeyPerformanceIndicatorsinthe

ManagementReportfortheperiodended31August2021.Giventhesignificantnumberandquantumofnon-

recurringadjustmentsrecordedinthese2022financialstatements,theBoarddoesnotconsiderthattheEPRAand

otherkeyperformancemeasurementswillbenefittheuserofthesefinancialstatementsandaccordingly,weare

notpresentinganyEPRAPerformanceMeasuresintheseReportandAccounts.However,theBoardwillcontinue

tokeepthepresentationofEPRAmeasurementsunderreview.

InlieuofEPRAmetrics,theBoardconsidersthefollowingkeyperformanceindicators(“KPIs”)asappropriatefor

theuseroftheseReportandAccounts:

SetoutbelowaretheKPIsthatareusedtotracktheGroup’sperformance.

KPI and definition Relevance to strategy

Performance

Results2022 2021

1. Total expense ratio

Thepercentageoftotaloperating

expenses,includingmanagement

feesandadministrativeand

operationalcostsexpressedasa

percentageoftheNAV.

Thetotalexpenseratioisa

keymeasureoftheGroup’s

operationalperformanceand

canbeusedtomeasureGroup

performanceagainstpeer

companies.

3.0% 1.4% Theexpenseratiogrew

becausesomekeyexpenses

(i.e.,investmentadviserand

administrativefees)were

chargedbasedonNAVatthe

time.NAVwassubsequently

writtendownmaterially,

resultinginthesignificant

increaseintheratio.

2. NAV per Share

TheNAVattributableto

shareholdersdividedby

averagesharesoutstanding

duringtheperiod.

NAVpershareprovides

shareholderswithan

indicationofGroupvalue.

43.76

pence

103.03

pence

Decreaseof57.5%,primarily

resultingfrom:i)decrease

intheFVofinvestment

propertyof£452.9million,

ii)write-offofSeller’s

Worksof£11.9million,and

iii)impairmentcharges

onleaseinducementsof

£28.3million.

3. Loan-to-Value

Ratioofgrossdebtasa

percentageofthevaluationof

investmentproperty.

LTVmeasuresthe

prudenceofbalancing

highershareholderreturns

andadditionalportfolio

diversificationagainstthe

additionalriskofleverage.

60.3% 36.6% GroupLTVgrewasnew

debtwasobtainedandthe

propertyportfoliosustained

significantwrite-downs

invalue.

Strategic report

Key performance indicators

 HomeREITplc | AnnualReport | Fortheyearended31August2022 29

Strategic report

Strategic overview

Purpose, business model and strategy

TheBoardisresponsiblefortheoverallmanagement

oftheGroupand,inaccordancewiththeAICCode,

theBoardestablishestheGroup’spurpose,valuesand

strategy,andreportstoshareholdersonthedetailof

howthisisachieved.

Asaninvestmentgroup,theGroup’spurposeis

expressedinitsinvestmentobjective.Itsinvestment

policydescribesthestrategyadoptedbytheGroup

toachieveitsobjective.Theinvestmentobjectiveand

policystatedbelowshouldbeconsideredinconjunction

withtheChair’sstatementandtheotherdisclosures

withintheStrategicReportwhichprovideanin-depth

reviewoftheGroup’sperformanceandfuturestrategy.

Postperiodend,theAmendedInvestmentPolicy,

whichissummarisedonpage33,wasapproved

byshareholderson21August2023.TheNew

InvestmentPolicywasapprovedbyshareholders

on16September2024.InaccordancewiththeAIC,

thecurrentinvestmentobjectivepolicy,whichwas

effectivefrom16September2024,isdetailedbelow.

Investmentobjective

TheCompany’sinvestmentobjectiveistorealiseall

existinginvestmentsintheCompany’sportfolioin

anorderlymanner,withaviewtoultimatelyreturning

availablecashtoshareholders,followingtherepayment

oftheCompany’sborrowings.

NewInvestmentPolicy

TheCompanywillendeavourtorealiseallof

theCompany’sinvestmentsinamannerthat

achievesabalancebetweenmaximisingthevalue

ofitsinvestmentsandmakingtimelyreturnsto

shareholders.

TheBoardintendsthattheproceedsofanyasset

realisationswillbeusedtorepaytheCompany’s

borrowingsbeforeanysuchproceedsaredistributed

toshareholders.

TheCompanywillnotmakeanyfurtherinvestments.

Capitalexpenditurewillbepermittedwhereitis

deemednecessaryordesirablebytheInvestment

ManagerinconnectionwiththeManagedWind-Down,

primarilywheresuchexpenditureisnecessaryto

protectorenhanceanasset’srealisablevalue,orin

ordertocomplywithstatutoryobligations.

DiversificationofRisk

Thenetproceedsfromassetrealisationswillbeused

torepayborrowingsandreturncapitaltoshareholders

(netofprovisionsfortheCompany’scosts,expenses

andpotentialliabilities)insuchmannerastheBoard

considersappropriateandwhenitisabletodoso.

Netproceedsfromrealisationswillbeusedtorepay

borrowings,withexcesscash(whichwillbeheldin

sterlingonly)placedondepositand/orheldascash

equivalentsecurities,othercashequivalents,cash

fundsorbankcashdeposits,pendingitsreturn

toshareholders.

Borrowingpolicy

Thenetproceedsfromrealisationswillbeusedto

repayborrowings.TheCompanywillnottakeonany

newborrowings.

AnymaterialchangetotheCompany’sinvestment

policysetoutabovewillrequiretheapprovalof

shareholdersbywayofanordinaryresolutionata

generalmeetingandtheapprovaloftheFinancial

ConductAuthority.Non-materialchangestothe

investmentpolicymaybeapprovedbytheBoard.

Approach to the Managed Wind-Down

ItisexpectedthattheCompany,viaAEW,willadopt

abroadandmanagedapproachtothedisposalof

assets,withaviewtooptimisingvalueforshareholders.

Althoughitwillbenecessarytorealiseaproportion

ofthepropertyportfoliobefore31December2024

tomeettherequirementsofScottishWidowsand

repaytheoutstandingdebt,saleswillotherwisebe

structuredandexecutedtoachievebestvalueand

tominimisedisruptiontotheunderlyingoccupiersof

theproperties.Adecisiononthepreferredmethod

ofdisposalwillbedeterminedbyanumberoffactors,

includingpropertycondition,location,tenanttypeand

leaseterms.

DuringtheManagedWind-Down,assetmanagement

initiativeswillbefocusedonaddingvaluetoproperties

andpreparingthemforsaletomaximiseliquidity.

Inaddition,giventheCompany’soriginallystated

objectiveofprovidingaccommodationforthe

homeless,therealisationprocesswillbemanagedina

waytominimiseimpactanddisruptiontounderlying,

vulnerableoccupiers.Inthatrespect,aspreviously

announced,alargerthanexpectedproportionofthe

portfolioisPRSratherthanhomelessaccommodation

backedbyexemptrentsfromlocalauthorities.

TheCompanywillcontinuetoprovideregular

updatesduringtheManagedWind-Down,however

this,andthelevelofdisclosureincluded,willbe

reviewedthroughouttheprocessinordertoprotect

theCompany’scommercialinterestsandallow

disposalstobecompletedinamannerthatpreserves

shareholdervalue.

30 HomeREITplc | AnnualReport | Fortheyearended31August2022

Return of capital to shareholders

ItistheintentionoftheBoard,followingtherepayment

oftheCompany’soutstandingdebtfacilities,that

capitalwillbereturnedtoshareholdersuponthe

completionoftherealisationstrategy.However,

shareholdersshouldbeawarethattheabilityofthe

Companytomakedistributionstoshareholderswillbe

constrainedwhilsttheCompanyfacespotentialgroup

litigationandanFCAinvestigation.Atpresent,the

Boardisunabletoassessproperlyitsabilitytomake

distributionsundertheapplicablelegalrequirements.

Inaddition,theCompanyexpectstoretaincapitalto

meetcorporatecostsandallowittopursuelegalaction

againstthoseitconsidersresponsibleforwrongdoing.

Themostappropriatetimingandmechanismto

returncapitaltoshareholderswillbedetermined

induecourse.

Financial statements and restoration of listing

Theauditedresultsfortheyearended31August2023

havebeenpreparedinparalleland,alongwithinterim

resultsfortheperiodsto28February2023and2024

respectively,areexpectedtobepublishedduringthe

fourthquarter.Followingpublicationofauditedresults

fortheyearended31August2024,theCompanywill

thenbeabletoapplytotheFCAforarestorationof

itslistingandtherecommencementoftradingonthe

LondonStockExchange.

Furtherdetailsregardingtheexpectedtimetable

forrestorationoflistingwillbeannouncedupon

publicationoftheabovefinancialinformationandthe

Companyexpectstoengagewithshareholdersahead

ofthisimportantevent.

Business and status of the Company

TheCompanyisregisteredasapubliclimitedcompany

andisaninvestmentcompanywithinthetermsof

section833oftheCompaniesAct2006.TheCompany

isaREITforthepurposesofPart12oftheCorporation

TaxAct2010.ItwillbetreatedasaREITsolongasit

continuestomeettheREITconditionsinrelationtoany

accountingperiod.

TheCompanymadedistributionsforthe2021and

2022financialyearsasdocumentedinitsproperty

incomedistribution(“PID”)trackerassubmittedto

HMRevenue&Customs(“HMRC”)basedonestimates

ofitsPropertyIncome,whichisrequiredtomaintain

REITstatus.AsdiscussedinNote4totheConsolidated

FinancialStatements,comprehensiveincomefor2021

hasbeenrevisedtoalowerlevelandtheresultfor2022

isacomprehensiveloss.TheCompanyhasagreedwith

HMRCthatitwillreviseitsPIDtracker,butitwillnot

recallpastPIDsandreissueordinarydividends.AsPIDs

areassessedannually,thisoverpaymentofPIDforFY21

andFY22arenotexpectedtoimpactfutureperiods.

TheCompanywasincorporatedon19August2020.

ItsSharestradeonthePremiumSegmentoftheMain

MarketoftheLondonStockExchange.Thelistingof

theCompany’sordinaryshareswassuspendedon

3January2023duetothenon-publicationofitsannual

financialreportwithinfourmonthsaftertheendof

itsfinancialyear,contrarytotheFCA’sDisclosure

GuidanceandTransparencyRule4.1.3.

Employees,humanrights,socialand

community issues

TheBoardrecognisestherequirementunder

CompaniesAct2006todetailinformationabouthuman

rights,employeesandcommunityissues,including

informationaboutanypoliciesithasinrelationto

thesemattersandtheeffectivenessofthesepolicies.

Theserequirements,whichmayapplytotheGroup’s

investments,donotapplytotheCompanyasithasno

employees,alltheDirectorsarenon-executiveandit

hasoutsourcedallitsfunctionstothirdpartyservice

providers.TheCompanyhasthereforenotreported

furtherinrespectoftheseprovisions.

AEWisanequalopportunitiesemployerwhorespects

andseekstoempowereachindividualandthediverse

cultures,perspective,skillsandexperienceswithinits

workforce.ForfurtherinformationonAEW’sprinciples

inrelationtopeopleincludingdiversity,genderpay,

employeesatisfactionsurveys,wellbeingandretention,

pleaserefertotheESGlinkwithintheCorporate

Responsibilityareaatwww.homereituk.com.

ModernSlaveryAct2015,BriberyAct2010and

CriminalFinancesAct2017

TheDirectorsaresatisfiedthat,tothebestoftheir

knowledge,theGroup’sprincipalsupplierscomply

withtheprovisionsoftheModernSlaveryAct2015

andmaintainadequatesafeguardsinkeepingwith

theprovisionsoftheBriberyAct2010andCriminal

FinancesAct2017.AEWispartoftheNatixisGroup

whosestatementonSlaveryandHumanTrafficking

hasbeenpublishedinaccordancewiththeModern

SlaveryAct2015.https://natixis.groupebpce.com/

wp-content/uploads/2022/11/Modern-Slavery-Act-

statement-2024.pdf.

DetailsabouttheGroup’sapproachtoESGaresetout

onpages25to27.

Gender diversity

Asat31August2022,theBoardcomprisedtwofemale

andtwomaleDirectors.Theappointmentofanynew

DirectorismadeinaccordancewiththeCompany’s

diversitypolicyasdetailedonpage71.

Strategic report

Strategic overview—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 31

Strategic report

Strategic overview—continued

Stakeholder engagement

Stakeholdersareintegraltothelong-termsuccessof

theGroup.TheBoardrecognisesthat,bothindividually

andcollectively,itsoverarchingdutyistoactingood

faithandinawaythatismostlikelytopromotethe

successoftheCompanyandtheGroup.Assetoutin

section172oftheCompaniesAct2006,theDirectors

actforthebenefitofshareholdersandintheinterests

ofstakeholdersasawhole,havingregard,amongst

othermatters,to:

• thelikelyconsequencesofanydecisioninthe

longterm;

• theneedtofostertheGroup’sbusiness

relationshipswithsuppliers,customersandothers;

• theimpactoftheGroup’soperationsonthe

communityandtheenvironment;

• thedesirabilityoftheGroupmaintaininga

reputationforhighstandardsofbusinessconduct;

and

• theneedtoactfairlybetweenshareholdersof

theGroup.

AllBoarddiscussionsincludeconsiderationofthe

longer-termconsequencesofanykeydecisionsand

theirimplicationsfortherelevantstakeholders.

Agroup’sstakeholdersarenormallyconsideredto

compriseitsshareholders,employees,customers,

suppliersaswellasthewidercommunityinwhichthe

Groupoperatesandimpacts.TheGroupdiffersas

itisanexternally-managedinvestmenttrustithas

noemployeesand,intermsofsuppliers,itreceives

professionalservicesfromanumberofdifferent

providers,principalamongthembeingAEW(or

previouslyAHRAasappropriate).

Throughregularengagementwithitsstakeholders,

theBoardaimstogainaroundedandbalanced

understandingoftheimpactofitsdecisions.Feedback

fromstakeholdersisgatheredbyAEW(orpreviously

AHRAasappropriate)inthefirstinstanceand

communicatedtotheBoardinitsregularquarterly

meetingsandotherwiseasrequired.

Theimportanceofstakeholdersistakenintoaccount

attheboardmeetings,withdiscussionsinvolving

carefulconsiderationofthelonger-termconsequences

ofanydecisionsandtheirimplicationsforstakeholders.

DetailsofhowtheBoardseekstounderstandthe

needsandprioritiesoftheGroup’sstakeholders

andhowthesearetakenintoaccountduringallofits

discussionsandaspartofitsdecision-makingare

setoutbelow:

Shareholders

TheBoardwelcomesshareholders’viewsand

iscommittedtomaintainingopenchannelsof

communicationswiththem.TheBoardisresponsible

forthecontentofcommunicationregarding

corporateissuesandforcommunicatingitsviewsto

shareholders.Itaimstoensurethatshareholdersare

providedwithsufficientinformationtounderstand

therisk/rewardbalancetowhichtheyareexposedby

investingintheGroup.Thechannelsofengagingwith

shareholdersinclude:

AnnualGeneralMeeting

Allshareholdersareencouragedtoattendandvote

attheAnnualGeneralMeeting(“AGM”)andatany

generalmeetingsoftheCompany,duringwhichthe

BoardandAEWareavailabletodiscussissuesaffecting

theGroupandtoprovideanoverviewontheGroup’s

performanceanditsfutureoutlook.TheCompany

valuesanyfeedbackandquestionsitmayreceivefrom

shareholdersaheadofandduringtheAGMandtakes

action,asappropriate.

Meetingswithshareholders

AEW,alongwiththeBroker,regularlymeetswiththe

Company’sshareholderstoprovideGroupupdates

andtofosterregulardialogue.Feedbackfromall

shareholdermeetings,andshareholders’views,are

sharedwiththeBoardonaregularbasis.Shareholders

wishingtocommunicatedirectlywiththeBoardshould

contacttheCompanySecretaryattheregisteredoffice

address.TheChairandtheotherDirectorsareavailable

throughouttheyeartomeetwithshareholdersto

understandtheirviewsontheGroup’sperformance

andgovernancewheretheshareholderswishtodoso.

Publications

TheAnnualandHalf-YearlyReportsaremadeavailable

ontheCompany’swebsite.Thesereportsintendto

provideshareholderswithaclearunderstandingofthe

Group’sportfolioandfinancialposition.Asdetailed

inNote4totheConsolidatedFinancialStatments,

the2021comparativesintheseaccountshavebeen

restatedresultingfromthechangeinaccounting

policies.InadditiontotheAnnualandHalf-Year

Reports,theinvestorpresentationsmadebyAHRAand

anyprospectusesandcircularsissuedbytheGroupare

alsoavailableonthewebsite.TheCompanyprovides

regularupdatesonportfolioacquisitions,capitalraises,

disposals,tenantupdatesandanyotherrelevant

matterbywayofmarketannouncements.Duetothe

delayinthepublicationoftheFY22andFY23annual

reports,AEW,sinceitsappointmentinAugust2023,

hasbeenprovidingmonthlyupdatesbywayofmarket

announcementsandquarterlyshareholderwebinars.

32 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Strategic overview—continued

Shareholderconcerns

Intheeventthatshareholderswishtoraiseissuesor

concernswiththeBoardorAEW,theyarewelcometo

writetotheCompanyattheregisteredofficeaddress.

TheSeniorIndependentDirectorandothermembers

oftheBoardarealsoavailabletoshareholdersifthey

haveconcernsthathavenotbeenaddressedthrough

thenormalchannels.

Tenant s

AEWhasbeenactivelyengagingwithalltenantsas

itassessestheirsuitabilityanddevelopsitstenant

specificstrategyforre-tenantingassets.AEW

hasattemptedtoworkwithtenantstorationalise

portfoliosandwhereappropriatenegotiatesurrender

ofleasesinordertotakebackcontroloftheassets.

AEW,morespecificallyitsassetmanagementteam,

maintainsanongoingdialoguewithtenantseither

directlyorinthecaseofoccupiersonASTsthrough

itsappointedpropertymanager.AEWcontinuesto

engagewithprospectivetenantsaspartofthestrategy

tore-tenanttheportfolioduringtheStabilisation

PeriodandtheManagedWind-Down.

Lenders

RegularmeetingsareheldbetweentheLender,the

BoardandAEWtodiscussandassesstheCompany’s

compliancewithbankingcovenantsandagreean

appropriatestrategyincludingwaivers,partial

repaymentofloanfacilitiesandadditionalfeespayable.

Societyandtheenvironment

Asaninvestorinrealestate,theGroup’sassetshave

animpactonthebuiltenvironment.TheGrouphasan

ESGpolicywhichisincludedonpages25to27ofthis

AnnualReport.

Key decisions made during the year

Bankdebt

TheGroupenteredintoa15-yearinterest-only,fixed-

rate,£130milliontermloanagreementwithScottish

Widowson1December2021.TheFacilitywasrepayable

inDecember2036andhadafixedall-inratepayableof

2.53%perannum,forthedurationofthe15-yearloan

term.Thiswasinadditiontothe12-yearinterest-only,

fixed-rate(2.07%perannum),£120milliontermloan

agreementwithScottishWidowson11December2020.

AsnotedintheChair’sReport,ScottishWidowshas

statedthatitexpectsbothloanstoberepaidpriorto

31December2024.

Equityissues

On2September2021,theGrouppublisheda

prospectusinconnectionwiththelaunchofanOpen

Offer,InitialPlacing,IntermediariesOfferandOfferfor

SubscriptionofnewSharesinthecapitaloftheGroup,

togetherwiththeimplementationofanew12-month

placingprogramme(the“PlacingProgramme”).

Duetothestronglevelandqualityofdemandfrom

investorsinthecapitalraise:on22September2021,

theBoarddecidedtoincreasethesizeoftheinitial

issuefromthetargetof£262millionto£350million;

andon27May2022,theBoarddecidedtoincrease

thesizeofthesubsequentplacingfrom£150million

to£263million.Followingthisplacing,theGrouphad

issuedalltheSharescoveredinthePlacingProgramme.

ThedetailsofthesharesissuedunderthePlacingare

setoutintheDirectors’Reportonpages47and48.

Key decisions made post period end

Dividends

TheBoarddeclaredaninterimdividendof1.38pence

perShareon12December2022andpaidthison

20January2023inrespectofthequarterended

31August2022basedonthedraftfinancialstatements

andforecastsprovidedbyAHRAandtoensureit

distributedPropertyIncome,asdefined,inorder

tocomplywithREITregulations.Inaddition,the

BoardconsideredthatithadthesubstantialSpecial

DistributableReserve(Note17totheConsolidated

FinancialStatements)whichcouldcoverany

imprecisioninAHRA’sestimates.

However,hadthefull,accurateinformationregarding

thematerialcorrectionsmadetotheseFinancial

StatementsbeenprovidedtotheBoardatthetimeof

approvingthedistribution,theBoardwouldnothave

approvedthedistribution.

AppointmentofAlverez&Marsal

InJanuary2023,theBoardinstructedA&Mtoconduct

aninvestigationintoallegationsofwrongdoing,

includingmattersraisedintheViceroyResearch

Report.On5May2023,A&MdeliveredtotheCompany

adetailedreport.

TerminationofIAandAIFM

Duetoinformationthatcametolightwhichwasin

contradictiontoreportingpreviouslyprovidedtothe

BoardbyAHRAandAlvariumFMduringtheperiod,

togetherwithlowrentcollectionandfurtherevidence

ofmaterialinformationbeingwithheldfromtheBoard,

on15March2023,theBoardagreedwithAHRAby

wayofletterofagreementthattheCompanywas

entitledtoterminatetheIAAonorbefore30June2023.

On30June2023,theIAAwasterminated.On

25May2023,theCompanyandAlvariumFMagreed

bywayofvariationagreement,asfurthervariedon

18July2023,thattheIMAwouldbevariedtoallowfor

terminationimmediatelyupontheCompanygiving

noticeinwritingtoAlvariumFM,providedsuchnotice

wasgivenbynotlaterthan31August2023,orupon

eitherpartygivingnotlessthansixmonths’noticein

writing.On21August2023,theCompanyterminated

theIMAontheappointmentofAEWasInvestment

ManagerandAIFM.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 33

Strategic report

Strategic overview—continued

AppointmentofInvestmentManager&AIFM

On22May2023theBoardappointedAEWtoprovide

propertyadvisoryservicesandannounceditsintent

toengageAEWasInvestmentManagerandAIFM

afterreceiptofFCAandshareholderapprovalfor

anamendedinvestmentpolicy.On21August2023

shareholdersapprovedtheAmendedInvestment

PolicyandtheBoardappointedAEWasInvestment

ManagerandAIFM.

Changeofinvestmentpolicy

TheBoardproposedanAmendedInvestmentPolicy

whichwasapprovedbyshareholderson21August2023.

TheAmendedInvestmentPolicyintendedtoensure

theCompanywasabletocontinuetooperateinthe

sectorandpreserveitslonger-termsocialobjectiveof

helpingtoalleviatehomelessnessintheUK:

• aStabilisationPeriodhadbeenintroduced,during

whichtime,theCompanywouldhavetheobjective

ofstabilisingtheGroup’sfinancialconditionthrough

initiativestomaximiseincomeandcapitalreturns.

TheStabilisationPeriodwasforaperiodof2years

from21August2023orsuchlaterdate(notbeing

laterthanoneyear)approvedbytheBoard;

• thepermittedusesofpropertieshadbeen

diversifiedtoincludeduringtheStabilisationPeriod

anyformofresidentialuse.Poststabilisationthe

Companywouldtargetpredominantlyhomeless

accommodationassetsandassetswithanySocial

Use;and

• anewleasingmodelhadbeenadoptedwhichbetter

alignedtotheneedsofLocalAuthorities,Charities,

RegisteredProvidersandHousingAssociations

andtheneedsoftheunderlyingoccupantsofthe

properties.

TheBoardproposedaNewInvestmentPolicyfor

theManagedWind-DownoftheGroupwhichwas

approvedbyshareholderson16September2024.

TheNewInvestmentPolicyisintendedtoallowthe

Grouptorealisealltheassetsinitspropertyportfolio

inanorderlymannerwiththeviewtorepaying

borrowingsandmakingtimelyreturnsofcapitalto

shareholderswhilstaimingtooptimisethevalueofthe

Group’sassets.

Appointmentofvaluer

JLLwasappointedIndependentValuertotheGroup

on18July2023toundertakevaluationsinaccordance

withtheRICSValuationProfessionalStandards.The

instructionincludedretrospectivevaluationsasat

31August2022.

Repaymentofdebt

TheBoardhasapprovedrepaymentofloansforatotal

of£178.0millionpostperiodendcomprising£159.0

millionofcashand£19.0millioninNetBreakGains.

ScottishWidowshasimposedDeferredFees,payable

onfullandfinalrepaymentoftheloans,of:

• 0.5%oftheaggregateamountsoutstanding

onthetwoloansateachof31August2023and

30November2023;and

• 5.0%perannumontheaggregateamounts

outstandingonthetwoloansascomputedonadaily

basisfrom30November2023,whichincreasedto

7%from1July2024untiltheloanisfullyrepaid.

AppointmentofNon-ExecutiveDirectors

TheBoardapprovedtheappointmentofMichael

O’DonnellastheChairoftheCompanywitheffect

from18January2024andPeterWilliamsasthe

SeniorIndependentDirectorfrom2April2024andas

ManagementEngagementCommitteeChairdesignate.

RodDaywasappointedasIndependentNon-Executive

Directoron7June2024andasAuditCommittee

Chairdesignate.

34 HomeREITplc | AnnualReport | Fortheyearended31August2022

TheBoard,throughdelegationtotheAuditCommittee,hasundertakenarobustassessmentandreviewofthe

emergingandprincipalrisksfacingtheCompanyandtheGroup,togetherwithareviewofanynewriskswhichmay

havearisenduringtheyear,includingthosethatwouldthreatenitsbusinessmodel,futureperformance,solvency

orliquidity.TheserisksareformalisedwithintheGroup’sriskmatrix,whichisregularlyreviewedbytheAudit

Committee.Aspartofitsriskmanagementprocess,theAuditCommitteeseekstoidentifyemergingrisksto

ensurethattheyareeffectivelymanagedastheydevelopandrecordedintheriskmatrix.

Duringthefinancialyearunderreview,theDirectorshadnotidentified,norbeenadvisedof,anyfailingsor

weaknesseswhichtheydeterminedtobeofamaterialnature.Asaresultoftheeventspostyearend,asdetailed

onpages9to14,theBoardhasupdatedregularlytheriskmatrixtobetterrepresentthecurrentprincipalrisksand

theriskmitigationtoeffectivelymanagetheserisks.TheprincipalrisksanduncertaintieswhichtheGroupfaces

undertheNewInvestmentPolicyasapprovedbyshareholderson16September2024aresetoutbelow.

InformationabouttheGroup’sinternalcontrolandriskmanagementproceduresaredetailedintheCorporate

GovernanceStatementbeginningonpage51.TheprincipalfinancialrisksandtheGroup’spoliciesformanaging

theserisks,andthepolicyandpracticewithregardtothefinancialinstruments,aresummarisedinNote14tothe

ConsolidatedFinancialStatements.

Risk Mitigation

Investment strategy and operations

Ability to meet objectives:

TheCompanymaynotachieveitsinvestment

objectivetorealiseallexistinginvestmentsin

theGroup’sportfolioinanorderlymanner,with

aviewtoultimatelyreturningavailablecashto

shareholders,followingtherepaymentofthe

Group’sborrowings.

TheCompany’sreturnsaresubjecttosignificant

uncertaintiesandcontingenciesandthe

Company’sabilitytomakedistributionsmaybe

constrainedwhilsttheCompanyfacespotential

grouplitigationandanFCAinvestigation.

TheBoardregularlyreviewstheGroup’sperformanceagainstitsstated

objectiveandAEW’sbusinessplans.

TheBoardwillcontinuetoreviewperformanceinrelationtoreturnsto

shareholders.TheBoardseekregularadvicefromitsadvisers.Themost

appropriatetimingandmechanismtoreturncapitaltoshareholderswill

bedeterminedinduecourse.

TheBoardhassignificantandrelevantexperienceofdirectinglistedfunds

and/ormanagingbusinessesincludingrestructuring.

DuringtheManagedWind-Down,theCompany

wouldendeavourtorealisealloftheCompany’s

investmentsinamannerthatachievesabalance

betweenmaximisingvalueandmakingtimely

returnstoshareholders.

Sinceitsappointment,AEWhasundertakenextensiveanddetailed

stepstoimprovetheviabilityandperformanceoftheGroup’sassetsand

therebyprovidingafirmerplatformforitsoperations.Thishasinvolved

substantialtenantengagement,theremovalofnon-performingtenants,

theappointmentofpropertymanagersandre-tenantingofassetswhere

appropriate.Throughtheseactivities,theGrouphasgainedcontrolofthe

majorityofitspropertiesandtherebyenhancedtheliquidityofthePortfolio.

Inaddition,approximately90%.ofthePortfoliohasbeensubjecttointernal

inspectioneitherbyAEW,JLL,Vibrantorothers,therebysignificantly

improvingthelevelofunderstandingofthePortfolio.Analysisofthe

underlyingconditionandoccupationofeachpropertyhasbeenparamountto

determinesuitability,capitalexpenditurebudgets,prospectsforincomeand

capitalreturnsandforformulatingstrategiestodriverentcollection.

DuringtheManagedWind-Down,assetmanagementinitiativeswillbe

focusedonaddingvaluetopropertiesandpreparingthemforsaleto

maximiseliquidity.

TheCompanymaynotachieveitsobjectiveof

maximisingreturnswhilstrealisingassetsinan

orderlymanner.

Theimpactofbringingassetstomarketaspart

ofapublicwind-downstrategyandthetime

requiredtoexecutedisposalsmayalsohave

animpactondisposalproceeds.Assetsmay

thereforeberealisedatvalueswhichrepresenta

materialdiscounttothemostrecentlypublished

independentvaluations.

SalesoftheGroup’sassetsmaytakelonger

thananticipated.

Therealisationprocesswillbecarriedoutinawayintendedtominimise

impactanddisruptiontovulnerableoccupiers.Itisintendedsaleswill

bestructuredandexecutedtoachievebestvalueandtheCompanywill

considervariousformsofpropertysalesincludingviaauction,private

treaty,portfolioandindividualassetsales.Adecisiononthepreferred

methodofdisposalwillbedeterminedbyanumberoffactors,including

propertycondition,location,tenanttypeandleaseterms.

Strategic report

Principal risks and uncertainties

 HomeREITplc | AnnualReport | Fortheyearended31August2022 35

Risk Mitigation

Return of capital may be delayed and reduced:

TheCompanymaynotachieveitsinvestment

objectiveofreturningavailablecashto

shareholdersinatimelymannerandreturnsmay

beimpacted.

Thereturnofcapitaltoshareholdersmaybe

delayedbyanumberoffactors,including,without

limitation,theavailabilityofthedistributable

reservesnecessaryfortheCompanytomeet

applicablerequirementsundertheCompanies

Act2006toreturncapitaland/ormake

distributionstoshareholders.

Thereturnsthatshareholdersmayreceivewillbe

subjecttodeductionsfor,amongotherthings,

directdisposalcosts,tax,managementfees,

thepaydownoftheexistingdebtandcosts

associatedwiththereviewandimplementationof

strategicoptionsaswellasthemeansofreturning

capitaltoshareholders.Thesecostsmayreduce

thesumsavailablefordistributiontoshareholders

inthefuture.

TheDirectorsintend,followingrepaymentoftheGroup’soutstanding

debt,toreturncapitaltoshareholdersuponthecompletionofthe

realisationstrategy.

TheCompany’sabilitytomakedistributionsmaybeconstrainedwhilst

theCompanyfacespotentialgrouplitigationandanFCAinvestigation.

Inaddition,indeterminingthesizeofanydistributions,theBoardwilltake

intoaccounttheCompany’songoingcosts,andtheeventualliquidation

costs.Shouldthesecostsbegreaterthanexpected,orshouldcash

receiptsfortherealisationsofinvestmentsbelessthanexpected,thiswill

reducetheamountavailableforshareholdersinfuturedistributions.

Themostappropriatetimingandmechanismtoreturncapitalto

shareholderswillbedeterminedinduecourse.

Dividend:

TheCompanycurrentlyhasinsufficient

distributablereserves.TheDirectorsdonot

intendtodeclaredividendsintheshortterm.

TheDirectorsdonotintendtodeclaredividendsintheshortterm.

Borrowing risk:

TheGrouphasbeenoperatingunderperiodic

debtcovenantwaiversfromandwiththesupport

ofScottishWidows.TheDirectorsanticipate

ScottishWidowswillcontinuetosupportthe

Groupuntilthedebtisfullyrepaid.TheGroupis

reliantoncontinuedLendersupport.

RegularmeetingsareheldbetweentheLender,theBoardandAEWto

discussandassesstheGroup’scompliancewithbankingcovenantsand

agreeanappropriatestrategy,includingwaivers,partialrepaymentof

loanfacilitiesandadditionalfeespayable.

Failuretocomplywithbankingcovenantsor

conditionsofcurrentwaiverscouldresultinthe

Group’sdebtbecomingrepayableondemandand

furtherrestrictionsontheGroup’sliquidity.

TheCompanyisimplementingastrategytorepaytheoutstanding

borrowingsinatimelymanner,focusedonfurtherpropertysales.

Itwillbenecessarytorealiseaproportionoftheportfoliobefore

31December2024tomeettherequirementsoftheLenderandrepaythe

outstandingdebt.Saleswillbestructuredandexecutedwiththeintention

toachievebestvalueandtominimisedisruptiontotheunderlying

occupiersoftheportfolio.TheCompanyanticipatesongoingsupportof

theLenderasitcompletesthisrepaymentstrategy.

Therequirementtorepaytheexistingloan

facilitiesintheshorttermorondemandmay

resultintheCompanysellingassetsataprice

lowerthanthatwhichwouldotherwisebe

achievedinanordinarysaleoncompletionofany

plannedre-tenantingoftheassets.

TheLenderhasstateditsobjectiveforrepayment

oftheloanbalanceby31December2024.

SinceAEW’sappointmentalldisposalrouteshavebeenconsideredwhen

sellingassetstoreducetheoutstandingloanbalanceandprovideworking

capital.However,inconjunctionwithadvicefromthirdpartyagents,

giventhenatureofasignificantnumberofpropertieswithintheportfolio,

auctionhasbeenconsideredthemostsuitablemethodofdisposalto

date.Itisanticipatedthatwhilstpartsoftheportfoliomaybeidentified

forportfolioandindividualsales,somepropertieswillcontinuetobesold

viaauction.

AEWworkswiththirdpartyserviceprovidersatalocalleveltoensure

thetimelyandstructuredsaleofpropertiesandtomitigatesituations

wheretoomanypropertiesareofferedtothemarketinspecificlocations

atonetime.

Strategic report

Principal risks and uncertainties—continued

36 HomeREITplc | AnnualReport | Fortheyearended31August2022

Risk Mitigation

Portfolio concentration may significantly affect the

Company’s performance:

AlloftheGroup’sassetsareinvestedinUK

propertyandwithinasinglesector:residential.

DuringtheManagedWind-Down,thevalueofthe

portfoliowillbereducedasassetsarerealisedand

concentratedinfewerholdings,andthemixof

assetexposurewillbeaffectedaccordingly.

Assetmanagementinitiativeswillbefocusedonaddingvalueto

propertiesandpreparingthemforsaletomaximiseliquidity.In

addition,giventheCompany’soriginallystatedobjectiveofproviding

accommodationforthehomeless,therealisationprocesswillbe

carriedoutinawayintendedtominimiseimpactanddisruptionto

vulnerableoccupiers.

Itisanticipatedthatwhilstpartsoftheportfoliomaybeidentifiedfor

privatetreatyandportfoliosales,propertieswillcontinuetobesold

viaauction.AEWworkswiththirdpartyserviceproviderstoensurethe

timelyandstructuredsaleofpropertiesandtomitigatesituationswhere

toomanypropertiesareofferedtothemarketinspecificlocationsat

onetime.Giventhediversenatureoftheportfolio,intermsoflocation,

condition,occupationandgeography,certainassetsarelikelytobemore

sought-afterthanothersandpossiblyrealisedmorequicklyatmore

attractivepricesinthecurrentmarket.

Adecisiononthepreferredmethodofdisposalwillbedeterminedbya

numberoffactors,includingpropertycondition,location,tenanttype,

leaseterms,thenatureofinterestedpurchasersandmarketconditions.

Performance of the portfolio – property condition,

capital expenditure and non-recoverable

propertycosts:

Investorreturnswillbedependentuponthe

performanceoftheGroup’sportfolio.

Thereareincreasesinoperatingandother

expensesandcashneedsassociatedwithtenant

vacanciesandunforeseencapitalexpenditure

affectingproperties.

Thecomprehensivepostperiodendinspection

programmehasalsoledtoasignificantre‐

assessmentofthequalityandsuitabilityofthe

propertyassets.Manypropertiesareinneedof

extensiverenovationbeforetheycanbeoccupied

orreconfiguredtoprovideanappropriatenumber

ofroomstobesuitableforPRSorSupportedLiving.

UnderthestandardSPAcontracts,theGrouphad

limitedrecourseagainstthevendorifthevendordid

notcompletethecontractualobligationstoimprove

thepropertypost-acquisition.Furthermore,there

wereinsufficientretentionsavailabletofacilitatethe

completionofworks.

ThereisariskthattheGroupdoesnothave

sufficientliquiditytoundertakeallrequiredcapital

expendituretoimprovethepropertyconditionto

ensureallpropertiesaretothestandardrequiredfor

occupationbyPRSorsupportedliving/SocialUse.

Theconditionofthepropertiesimpactsthe

valuation,rentalincome,propertycostsand

thereforeearningsandtheNAVoftheGroup.

TheGroupmayincurvacantpropertycostson

leasessurrenderedbynon-performingtenants

includingutilitycosts,repairsandmaintenanceuntil

propertiescaneitherbebroughtuptostandardand

re-letorsoldtomitigatefurtherexpenses.

Aspartofitsstrategytorationalisethepropertyportfolio,AEWhad

undertakendisposalswithinitialfocusonthosepropertiesthatwere

inpoorcondition,werelargelyvacantandrequiredsignificantcapital

expenditureinordertobebroughtuptospecification.

AEWhasundertakenacomprehensiveinspectionprogrammeto

ascertainpropertycondition.Analysisoftheunderlyingconditionofthe

propertiesisparamounttodeterminesuitability,capitalexpenditure

requirementsandincomeandcapitalreturnprospectsforeachassetas

AEWworkstorationalisetheportfolio.

AEWhascommissionedcapitalexpenditurereportsonasampleof

propertiestodeterminethecapitalexpenditurerequirementoftheGroup

andundertakeacostbenefitanalysisonaproperty-by-propertybasis,

takingintoaccountfactorssuchaspropertylocation,localdemandand

qualityoperatingpartnersandtenants.

Capitalexpenditurerequirementsandpropertybudgetsareincludedin

businessplansandcashflowforecasts.AEWagreespropertybudgets

withappointedpropertymanagersandapprovesexpenditure.TheBoard

monitorscashflowandperformanceagainstbusinessplanswithregular

updatesprovidedbyAEW.

CapitalexpenditureispermittedundertheNewInvestmentPolicy

whereitisdeemednecessaryordesirablebyAEWinconnectionwiththe

ManagedWind-Down,primarilywheresuchexpenditureisnecessaryto

protectorenhanceanasset’srealisablevalue,orinordertocomplywith

statutoryobligations.

Strategic report

Principal risks and uncertainties—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 37

Risk Mitigation

Liquidity risk:

ThereisarisktheGroupwillhaveinsufficient

cashtomeetitsliabilitiesduetothecurrentlow

levelsofrentcollection,tenantliquidationand

thechangeinleasingmodelresultingintheGroup

beingresponsibleinsomeinstancesforrepairs

andmaintenanceandvacantpropertycosts.

Theimpactofbringingassetstomarketas

partofapublicwind-downstrategymayalso

resultinchangesinrentcollectionlevelsand

there-tenantingprocessduetooccupiersand

tenantsbeinguncertainoverwhotheirfuture

landlordwillbe.

TheCompanyisfurtherincurringhighcorporate

costsasaresultoftheissuesbeingdealtwith

bytheCompanyincludingsignificantlegal,audit

andprofessionalfees(includinginrespectofthe

financing),anddirectorandofficerinsurance.

Capitalexpenditureisalsopermittedunder

theNewInvestmentPolicywhereitisdeemed

necessaryordesirablebyAEWinconnectionwith

theManagedWind-Down,primarilywheresuch

expenditureisnecessarytoprotectorenhancean

asset’srealisablevalue,orinordertocomplywith

statutoryobligations.

TheGroup’sinvestmentsareilliquidandmay

bedifficulttorealiseataparticulartimewhich

couldputtheGroup’scashrequirementsunder

furtherstrain.

TheGrouphasbeenoperatingunderperiodic

debtcovenantwaiversfromandwiththesupport

ofScottishWidowsandtheDirectorsanticipate

theywillcontinuetosupporttheGroupuntilthe

debtisfullyrepaid.Failuretocomplywithbanking

covenantsorconditionsofcurrentwaiverscould

resultintheGroup’sdebtbecomingrepayable

ondemandandfurtherrestrictionsonthe

Group’sliquidity.

TheBoardmonitorsthecashpositionandseeksregularadviceonits

obligationandliabilities.TheGroupisreliantoncontinuedLendersupport

untilrepaymentoftheoutstandingdebt.

AEWmaintainsa13-weekcashflowforecastwhichisupdatedatleastbi-

weeklyinadditiontoan18-monthmediumtermcashflow.

TheBoardandAEWhasaprocedurefortheapprovalofsignificantcapex

andunbudgetedexpenses.

RegularmeetingsareheldbetweentheLender,theBoardandAEWto

discussandassesstheCompany’scompliancewithbankingcovenants

andconditionsofcurrentwaiverstoagreeappropriatestrategies,

includingwaiversandpartialrepaymentofloanfacilities.

TheCompanyhasannouncedastrategyofrepayingtheoutstanding

debtthroughadditionalpropertiessales.AEWisdevelopingitsdisposal

strategyforcontinuedauctionsalesandsalesbyprivatetreaty,individual

andportfoliosales.

Netproceedsfromrealisationswillfirstbeusedtorepayborrowings,

withexcesscashplacedonsterlingonlydepositsand/orheldascash

equivalentsecurities,othercashequivalents,cashfundsorbankcash

deposits,pendingitsreturntoshareholders.

Political and regulatory risk:

Changesinlawsorregulationsgoverningthe

Company’soperations,includingchangesto

homelessnesslegislation,mayadverselyaffect

theCompany’sbusiness.

Changeingovernmentfundingaroundhousingbenefit(forexample)is

consideredanunlikelyriskatthisstage,however,theGroupwillcontinue

tomonitoranypotentialchange.

Real Estate sector

Property market – residential including Social Use

and Supported Living:

Performancewillbesubjecttothecondition

ofpropertymarketsintheUKincludingsector

sentimentonresidentialincludingSocialUse

andSupportedLiving.Asignificantdownturnin

theunderlyingvalueoftheGroup’sinvestment

propertywouldimpactshareholderreturnsand

abilitytorepaytheoutstandingloans.

Factorsincludeinteraliageneraleconomic

climate,excesssupplyorfallindemandfor

propertiesandchangesinlawsorgovernment

regulations.

Postperiodend,AEWhasundertakenacomprehensiveinspection

programmeviathirdpartiestoassessthequalityandsuitabilityofthe

assets.AEW’sassessmentofeachpropertyincludingsuitability,capital

expenditurerequirementsandincomeandcapitalreturnprospectstakes

intoaccountfactorssuchaspropertylocation,localdemandandquality

operatingpartnersandtenants.

AEWreportsitsstrategyandprogressagainstbusinessplansforportfolio

rationalisationandre-tenantingtotheBoardonaregularbasis.

Strategic report

Principal risks and uncertainties—continued

38 HomeREITplc | AnnualReport | Fortheyearended31August2022

Risk Mitigation

Tenant default and liquidation:

Failurebytenantstocomplywiththeirrental

obligationsandtenantliquidationsaffects

theabilityoftheGrouptopaydividendsand

meetbankingcovenantsassociatedwith

itsborrowings.

Asat31August2022,17ofthe29tenantsare

ofweakcovenantstrengthrepresenting68.3%

ofpropertiesand66.6%ofannualcontracted

rentasatthattime.Onetenanthadentered

administrationasat31August2022andafurther

11tenantsenteredintovoluntaryadministration

postperiodend,representing53.9%ofproperties

and62.1%ofannualcontractedrentasat

31August2022.

Theimpactofbringingassetstomarketas

partofapublicwind-downstrategymayalso

resultinchangesinrentcollectionlevelsand

there-tenantingprocessduetooccupiersand

tenantsbeinguncertainoverwhotheirfuture

landlordwillbe.

AEWdeterminedthatthemajorityoftenantswerepoorlycapitalised

andlackedlongtermoperatingtrackrecords.Fortenantsconsidered

non-performingorunsuitable,AEWseekstonegotiatesurrenderof

theleasestotakebackcontroloftheunderlyingpropertiestoeither

letdirectlyasPRSorre-lettoahousingproviderforSupportedLiving.

Materialdecisionsinrespectofleasesurrendersandanywriteoffsof

arrearsareapprovedbyAEW’sInvestmentManagementCommitteeprior

toapprovalbytheBoard.

Whereleasesurrenderscannotbeagreedcommercially,AEWhas

takenactionagainstthetenantswhichcanincludestatutorydemands,

forfeitureandwindinguppetitions.Inthefewinstanceswherethe

CICisperformingwell,theleaseswillremaininplace,althoughterms

maybevaried.

AEWiscontinuingtoidentifyandassesspotentialprospectivetenants

andqualityprovidersofsocialhousingandsupportservicesforproperties

suitableforoccupation.InaccordancewithAEW’sprocesses,itwill

seektoundertakestringentcovenantanalysisandduediligenceonall

proposedtenants.

AEWprovidesregularupdatestotheBoardonitsstrategybytenantand

theprogressagainstbusinessplans.

Property Valuations:

Propertyvaluationisinherentlysubjectiveand

uncertain.Valuationsaresubjecttouncertainty

andmaynotreflectactualsalespricesrealised

bytheGroup.

Realisationswillvary,anditisanticipatedthat

therewillbebothpositiveandnegativevariance

fromsalespricestovaluationsduringthe

ManagedWind-Down.Thereasonsforsucha

varianceareconsiderationssuchaschanges

inthehousingmarket,changesincondition

oroccupationofthepropertysincevaluation,

methodofsale(portfolio,auction,privatetreaty),

tenant,rentpayment,leasestructureand

informationavailability.

TheBoardhasappointedanexperiencedindependentexternalvaluer,

JLL,withrelevantandrecentexperience.JLLconsidersthequalityand

thesuitabilityoftheassets,thecovenantstrengthofthetenantandthe

rentalvaluefortheexistinguseandLHArates.JLLusesacombination

oftheinvestmentapproachandMV-VP(46.3%oftheportfoliovalueas

at31August2022).Whereavaluationispreparedonaninvestmentbasis,

limitationsonthedurationoftheincomestreamsareappliedtoaccount

forthecovenantstrengthsofthetenants,andtherentlevelsdemanded

undertheleases.

AEWwillcontinuetoassesstheportfolioaspartoftheportfolio

rationalisation.Propertieswillbesoldthroughacombinationofauction,

portfolioandindividualsalesasAEWseekstomaximisevalue.

Theperformanceofkeyserviceprovidersisregularlyreviewed

bytheBoard.

Restoration of trading of shares:

ThelistingoftheShareswassuspendedon

3January2023duetotheCompanynotfiling

accountswithinfourmonthsofyearend.

ThereisariskthattheSharesarepermanently

delistedfromtheLondonStockExchange.

OncetheSharesarerelisted,thereistheriskof

significantsaleofSharesbyinvestorsmaycause

themarketpriceoftheSharestofall.

TheBoardanditsadvisersregularlyengagewiththeFCAand

CompaniesHouseinrelationtothecontinueddelaystothefilingofthe

Group’saccounts.

TheBoard,AEWandLiberumhavebeenactivelyengagingwith

shareholdersduringtheperiodofsuspensionincludingmonthlyupdates

andshareholderpresentations.InadvanceofrelistingoftheShares,

theChairandAEWwillengagewithshareholdersthroughaseries

ofmeetings.

Volatility of share price during the

ManagedWind-Down:

TheCompanymayexperiencevolatilityinits

shareprice,bothasafunctionofvolatilityinits

netassetvalueandareductioninshareliquidity

ascapitalisreturnedtoshareholders,whichmay

resultinacontinuedorpossiblywiderdiscountto

netassetvalue.

TheBoard,AEWandLiberumhavebeenactivelyengagingwith

shareholdersincludingmonthlyupdatesandshareholderpresentations.

TheCompanywillcontinuetoprovideregularupdatesduringthe

ManagedWind-Down,however,thelevelofdisclosureincludedwillbe

reviewedthroughouttheprocessinordertoprotecttheCompany’s

commercialinterestsandallowdisposalstobecompletedinamanner

thatpreservesshareholdervalue.

Strategic report

Principal risks and uncertainties—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 39

Risk Mitigation

Shareholders ability to continue to hold shares:

IftheCompanyceasestomaintainREITstatus

theCompany’sshareswillalsoceasetobe

“excludedsecurities”undertheFCA’sruleson

non-mainstreampooledinvestmentswhichmay

haveanimpactontheabilityofcertaininvestors

tocontinueholdingtheCompany’sshares.

AEWandtheCompany’sspecialisttaxadvisermonitorcompliancewith

theREITregimeandliaiseregularlywithHMRC.

TheCompanywillmakeappropriateannouncementsintheeventofthe

CompanyceasingtomaintainitsREITstatus.

Engagements with third party service providers

Reliance on the performance of AEW and other key

service providers:

TheCompanyhasnoemployeesandisreliant

upontheperformanceofAEWandotherthird

partyserviceproviders.FailurebyAEWand/or

anyserviceprovidertocarryoutitsobligationsto

theCompanyinaccordancewiththetermsofits

appointmentcouldhaveamateriallydetrimental

impactontheoperationoftheCompany.

ThefutureabilityoftheCompanytosuccessfully

pursueitsinvestmentobjectiveandinvestment

policymay,amongotherthings,dependonthe

abilityofAEWtoretainitsexistingstaffand/

ortorecruitindividualsofsimilarexperience

andcalibre.

Followingarigorousselectionprocess,theBoardappointedAEWas

PropertyAdviseron22May2023andasInvestmentManagerandAIFM

on21August2023followingshareholderapprovaloftheAmended

InvestmentPolicy.InordertoalignAEW’sinterestwiththoseof

shareholders,AEW’sfeeincludesperformanceelementsinrelationto

rentcollectionanddisposalsduringtheStabilisationPeriodsubjecttoan

overallcap.

AEW’sperformanceiscloselymonitoredbytheBoardwithregularreview

includingkeystaffandgeneralresourcing.

PerformanceofthekeyserviceprovidersismonitoredbytheBoard

throughitsManagementEngagementCommittee(“MEC”).TheMEC

performsaformalannualreviewoftheongoingperformanceofAEWand

otherkeyserviceprovidersandmakesrecommendationstotheBoard

abouttheircontinuingappointment.

TheBoardwillundertakearigorousselectionprocessforanykeyservice

providerappointments.

Replacementofkeyserviceproviderscould

disruptthebusiness,causingpotentialissuesand

delaysinreporting.

Withdueconsiderationtotheeventsthathaveoccurredandthefailureof

severalkeyserviceproviderstoraisematerialmattersorconcernswiththe

Board,forgoodgovernance,theBoardexpectedtotenderallkeyservices

providersexceptAEW,JLLandLiberum.TheBoardexpectedtoundertake

aphasedreplacementofkeyserviceprovidersinordertoensure

continuityofserviceandreducethepotentialimpactonthebusiness.

AEWcommencedtenderingofseveralkeyserviceproviders,however

duetotheManagedWind-Down,theBoardisconsideringwhetherthe

currentserviceprovidersshouldremaininplace.TheMECandtheBoard

willcontinuetomonitortheperformanceofkeyserviceprovidersand

determinewhethercontinuedengagementremainsappropriate.

Intensive Housing Managers (IHM) and property

managers Risk:

AspartoftheAmendedInvestmentPolicy,the

Grouphasappointedthirdpartyspecialists

includingIHMandpropertymanagers.Thiswill

resultinadditionalcosttotheGroup.

AEWagreesbudgetsandcontrolsaroundexpenditurewiththeIHM

andpropertymanagersinaccordancewithcontractualagreements.

AEWmonitorsexpenditureagainstbudgetsandprovidesregular

reportingtotheBoardonpropertiessubjecttoIHMandproperty

managementagreement.

Insomeinstances,propertymanagersused

bynon-performingtenantsmaybeappointed

bytheCompanyduetotheirknowledge

oftheunderlyingpropertiesandexisting

relationshipswithoccupiersinordertofacilitate

rentalcollection.

Wherepossible,AEWnegotiatescontractswithIHMandproperty

managersonaflexiblebasistoprovidestabilityandcontinuityofservice

untillongertermstrategiescanbeimplemented.

AEWmaynothavehadpreviousexperienceor

relationshipswiththeseserviceprovidersandthe

qualityoftheservicemaybeunknown.

AEWundertakesappointmentsinaccordancewithitssupplierselection

andmonitoringproceduresincludingundertakingduediligenceon

serviceproviders,negotiatingservicelevelagreementsandkey

performanceindicators.

Strategic report

Principal risks and uncertainties—continued

40 HomeREITplc | AnnualReport | Fortheyearended31August2022

Risk Mitigation

Business interruption:

Cyber-attacksonAEW’sand/orotherservice

providers’ITsystemscouldleadtodisruption,

reputationaldamage,regulatory(includingGDPR)

orfinanciallosstotheCompany.

TheCompany’skeyserviceprovidershavebusinesscontinuityplans

inplace.AEWandotherserviceproviders’staffarecapableofworking

remotelyforanextendedtimeperiod.AEW’sandotherserviceproviders’

ITsystemsareprotectedbyanti-virussoftwareandfirewallsthatare

updatedregularly.

Taxation

Compliance with REIT rules:

FailuretocomplywiththeREITrulesandother

regulationsmayhaveanegativeimpacton

theCompany.

TheBoardexpectsthattheCompanywill

continuetofulfiltherelevantconditionstoqualify

forUKREITstatusintheshortterm.However,

therequirementsformaintainingREITstatus

arecomplex.

AstheManagedWind-Downprogresses,the

Companycannotguaranteethatitwillmaintain

continuedcompliancewithallofsuchconditions,

particularlyinitslatterstageswhentheportfolio

hasbeenfullyrealised.Thebasisoftaxationofany

shareholder’sshareholdingintheCompanymay

differorchangemateriallyiftheCompanyfailsor

ceasestomaintainitsREITstatus.

AEWandtheCompany’sspecialisttaxadvisermonitorcompliancewith

theREITregimeandliaiseregularlywithHMRC.

Governance, regulatory compliance and litigation

FCA regulations and investigation:

FailuretocomplywithFCAregulationsand

adversefindingsfrompendinginvestigationsmay

haveamaterialadverseimpactontheCompany’s

profitability(becauseofpossiblefines),theNAV

andthepriceoftheShares.

AsaresultoftheFCAinvestigationintothe

Company,(becuaseofthepossiblefines),the

abilityoftheCompanytomakedistributions

toshareholdersmaybeconstrained,in

wholeorinpart.

TheBoardseeksregularadvicefromitsadvisersandhasconfirmedthe

Boardwillco-operatefullywiththeFCAinvestigation.

Risk of potential litigation from shareholders

oragroup action against the Group:

Asaresultofthepotentialshareholdergroup

litigationintotheCompanyandtheCompany’s

DirectorswhowereinofficeatIPO,the

abilityoftheCompanytomakedistributions

toshareholdersmaybeconstrained,in

wholeorinpart.

TheCompanyintendstodefenditselfvigorouslyinrespectofthe

threatenedlitigationandhasdeniedtheallegationsmadeagainstit.

TheBoardisregularlyengagingwithitsadvisersonpotentialexposure

tolitigation.

TheBoardhasappropriateD&OInsuranceinplace.

Strategic report

Principal risks and uncertainties—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 41

Risk Mitigation

Board – replacement, experience and succession:

AlloftheBoardmemberswhowereinofficeat

IPOhaveannouncedtheirintentiontostanddown

afterthepublicationoftheannualresultsfor

2022and2023.

ThenewDirectorsmaylackhistoricalknowledge

ofissuesencounteredbytheGroup.

SinceJanuary2024,theCompanyhasappointedanewIndependentNon-

ExecutiveChair,aSeniorIndependentNon-ExecutiveDirector(andMEC

chairdesignate)andaNon-ExecutiveDirectorwhowillbecomeauditchair

induecourse.

InassemblingthenewChairandDirectors,carefulconsiderationhasbeen

giventotheappropriateskills,experience,knowledge,culture,capacity

andindependenceoftheincomingBoardmembers.

PostresignationfromtheBoard,LynneFennahwillbecomeaconsultant

totheBoardoftheCompanytoprovidecontinuityandwilluseher

invaluableexperienceandknowledgeoftheCompanytosupportthe

BoardandtheCompany’sadvisers.

TheBoard,throughitsNominationCommittee,willreviewits

compositiononaregularbasisandwilldevelopasuccessionplanatthe

appropriatetime.

Health and Safety (H&S) risk:

TheGroupandtheBoardhaveresponsibilityfor

certainH&Smatters.Failuretohaveappropriate

H&Sproceduresandprocessesmayresultin

regulatoryfinesandreputationalrisk.

H&SisastandardpriorityagendaitemforBoardmeetings.TheBoard

hasreceivedasummaryofitsresponsibilitiesundervariousscenarios

giventhechangeinleasingmodelwhichnowincludesdirectleasing

tooccupiers.

AEWhasanestablishedH&SCommitteeandreportsregularlyon

H&SmatterstotheBoard.AEWalsonotifiestenantsregularlyoftheir

responsibilitiesandcommunicatesanynon-complianceissuesidentified

requestingevidenceofremediation.

PropertymanagersareobligatedtoprovideregularreportingonH&S

compliance.AEWwillundertakespotchecksofcompliance.

Strategic report

Principal risks and uncertainties—continued

42 HomeREITplc | AnnualReport | Fortheyearended31August2022

Strategic report

Going concern and viability statement

TheDirectors,atthetimeofapprovingthefinancial

statements,arerequiredtoconsiderwhetherthey

haveareasonableexpectationthattheCompany

andtheGrouphasadequateresourcestocontinuein

operationalexistencefortheforeseeablefutureand

donotconsidertheretobeanythreattotheirgoing

concernstatus.

AsdiscussedinNote26totheConsolidatedFinancial

Statements,shareholdersapprovedtheNewInvestment

Policyon16September2024fortheManagedWind-

Down.TheGroupwillnotmakeanyfurtherrealestate

acquisitionsandwillnotmakeanyfurtherinvestment.

Capitalexpenditurewillbepermittedwhereitis

deemednecessaryordesirabletoprotectorenhance

anasset’snetrealisablevalueorinordertocomplywith

statutoryobligations.

CashflowprojectionshavebeenpreparedbyAEWand

agreedwiththeBoardwhichconsider:

1. Theexpectedorderlydisposalofpropertiesthrough

acombinationofprivatetreatyandauctionsales.

TheBoardexpectsthatsubstantiallyallproperties

willbesoldnolaterthan30June2025.

2. Revenuewillcontinuetobecollectedonproperties

heldbytheGroup.

3. Expensesareforecasttocontinuetobeincurred

atthecurrentlevelforthoseservicesrequired

forthecontinuedoperationoftheGroup.Notice

periodshavebeenconsideredwherenecessary

andthemajorityofoperationsareexpectedto

haveconcludedby31December2025,whenthe

annualreportandaccountsfortheyearended

31August2025arerequiredtobefiled.

AsdiscussedinNote10totheConsolidatedFinancial

Statements,theGrouphasbeenoperatingunder

periodicdebtcovenantwaiversfromandwiththe

supportoftheLenderwiththelatestwaiverextending

to31October2024.TheLenderhasstatedthatit

expectsthatbothfacilitiesandtheirassociated

interestandDeferredFeestobefullypaidby

31December2024.Onthisbasis,theDirectorsbelieve

thattheLenderwillcontinuetosupporttheGroupuntil

thedebtisfullyrepaid.However,thereisnoguarantee

thattheLenderwillcontinuetoextenditssupport

beyondthedateofthelatestwaiverletter.

SincebeginningpropertysalesinAugust2023,the

averagediscountfromthe31August2022JLLvaluation

is11.4%and13.2%ifAugust2023throughNovember

2023salesareexcluded,asthisevidencewasused

byJLLaspartofthevaluationprocess(1.9%and

3.0%averagediscountfrom31August2023valuation

respectively).Thisdiscountoccursgenerallybecause

attheauctiondate:

1. TheGroupdidnotreceivefromAHRAorfromnon-

performingtenants,andthereforecannotproduce,

criticalinformationthatbuyersrequire,suchas

underlyingoccupancy,tenantandincomeinformation

andpropertycompliancecertificates;and

2. TheGroup’sadvisershaveexperiencedissues

withaccessingpropertiesbecauseoftenant

imposedlimitationsorduetopoormanagement

bythenon-performingtenants,whichnegatively

impactsmarketingincludingproducingfull

informationparticulars.

TheGrouphasbeensellingpropertiesthatareinpoor

conditioninordertominimiseoperatingliabilitiesand

risks.Inordertomaximisesalesproceedsfromfuture

sales,AEWisprioritisingsellingpropertieswhichthe

Groupcontrolsandholdscompleteinformationfor

marketing.However,consideringthepastshortfalltothe

valuationsandasacontingencytoensuretheCompany

canfullyrepaytheLenderandprovideadequateworking

capitaltofundoperations,theGroupisplanningon

sellingaminimumofafurther£25millionofproperty

intheperiodto31December2024.Theremaining

propertiesareexpectedtobesoldintheperiodto

30June2025.

TheCompanyhasreceivedapre-actionletterofclaim

whichassertsthattheCompanyprovidedinformation

toinvestorswhichwasfalse,untrueand/ormisleading

andasaresultinvestorssufferedlosses.TheDirectors

arenotcurrentlyabletoconcludewhetherorwhen

aformalclaimmaybeissuedandifaclaimisissued,

whatthequantumofsuchclaimmaybe.Further,on

12February2024,theCompanywasnotifiedbythe

FCAofitscommencementofaninvestigationintothe

Company,coveringtheperiodfrom22September2020

to3January2023.TheCompanyandtheDirectorsare

cooperatingwiththeFCAinitsinvestigation.However,

theyarenotabletoassessorquantifywhat,ifany,

actionmaybetaken.UntiltheDirectorshavebetter

visibilityintotheultimateexposureoftheseandany

othercontingentliabilities,theywillnotbeableto

satisfythemselvesastowhatifanyreservesofexcess

cashwillberequiredtosettlethesematters.Whenthe

Directorsareabletoestimatetherangeofexposure,

theCompanyintendstoreturnanyestimatedsurplus

capitaltoinvestors,whilstmaintainingaprudentlevel

ofcashtowinddowntheCompanyandGroupand

consideringanyothereventualities.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 43

Strategic report

Going concern and viability statement—continued

Asaresultof(i)uncertaintyoverthetimingofasset

sales,(ii)risksaroundcontinuedLendersupport,(iii)

thethreatenedlitigation,(iv)theFCAinvestigation

and(v)theDirectors’expectationforanorderlywind-

downoftheCompany’soperations,theDirectors

consideritappropriatetoadoptabasisofaccounting

otherthanasagoingconcerninpreparingthefinancial

statements.Nomaterialadjustmentstoaccounting

policiesorthevaluationbasishavearisenasaresultof

ceasingtoapplythegoingconcernbasis.

Approval of the Strategic Report

TheStrategicReportwasapprovedbytheBoardand

signedonitsbehalfby:

Michael O’Donnell

Chair

10October2024

44 HomeREITplc | AnnualReport | Fortheyearended31August2022

Governance

45 TheBoard

47 Directors’report

51 Corporategovernancestatement

56 ReportoftheAuditCommittee

67 ReportoftheManagementEngagementCommittee

69 ReportoftheNominationCommittee

72 Directors’remunerationreport

76 StatementofDirectors’responsibilities

77 IndependentAuditor’sreport

 HomeREITplc | AnnualReport | Fortheyearended31August2022 45

AlltheDirectorsarenon-executiveandindependent

ofAlvariumFM,AHRAandAEW.TheDirectorsofthe

Companywhowereintheofficeduringtheperiodand

uptothedateofsigningtheAnnualReportandfinancial

statementswere:

MichaelO’Donnell,ChairoftheBoardandthe

NominationCommittee(appointed18January2024)

MichaelO’DonnellisChairoftheBoardsincehis

appointmenton18January2024.HeisalsoaNon-

ExecutiveDirectorandChairoftheRemuneration

CommitteeofBigYellowGroupPLC,aFTSE250

self-storagecompany.Michaelhasover30yearsof

experience,15ofwhichhasbeendedicatedtoNon-

ExecutiveDirectorrolesatarangeofcompaniesacross

thehealthcare,realestate,residential,education

andbusinessservicessectorsincludingHelicalplc

(wherehealsochairedtheRemunerationCommittee),

BMIHealthcare,CygnetHealthcare,EslandCareand

DentalPartners.

Michaelhasextensiveexperienceincomplex

restructuringsituationsincludinginsolvencyprocesses

andhasheldseveralcreditorsideboardappointments.

PriortorolesasaNon-ExecutiveDirector,hespent

11yearsinprivateequityatLGVCapital(asubsidiary

ofLegal&General)andpriortothateightyearsin

corporatefinanceatMorganGrenfellandBZW.Michael

hasaBatchelorofCommercedegreefromUniversity

CollegeDublin.

Peter Cardwell

PeterCardwellservedasaSpecialAdviserintheUK

governmentfrom2016to2020.Heworkedforfour

Cabinetministersinfourdepartments:theNorthern

IrelandOffice;theHomeOffice;theMinistryof

Housing,Communities&LocalGovernment;andthe

MinistryofJustice.AttheMinistryofHousing,he

advisedHousingSecretaryRtHonJamesBrokenshire

MPonhomelessness.Roughsleepingdroppedby2%

andthen9%annuallyasaresultofthepoliciesonwhich

Peteradvised.Healsoundertookoutreachshiftswith

sectorcharitieswhilstadvisingonhomelessnessand

hadfrequentinteractionswithorganisationssuchas

Shelter,ThamesReachandCrisis.

AfterbeingeducatedinNorthernIreland,Peterstudied

atStHugh’sCollege,Oxford,beforewinningaFulbright

ScholarshiptoColumbiaSchoolofJournalism,New

York.NowPoliticalEditorandpresenteratTalkRadio,

hehasworkedfortheBBCinLondon,WashingtonDC,

NewYorkandBelfast,aswellasforSkyNews,Channel

5News,UTVandITV.

RodDay(appointed7June2024)

RodDayisanIndependentNon-ExecutiveDirector

oftheBoardandAuditCommitteeChairdesignate.

AqualifiedaccountantwithanMBAfromLondon

BusinessSchool,hehasover30yearsofbusiness

experiencehavingheldseniorrolesinstrategy

andfinanceforanumberofleadinginternational

organisations.Inanexecutivecapacityhiscareer

highlightsincludeworkingforIronMountainInc(2008-

2016),wherehelatterlyactedasGlobalCFOleading

strategicM&Aandwasinstrumentalinitsconversionto

aREIT;AOLEurope(2001-2008),whereheactedasCFO

inhisfinaltwoyearsatthebusiness,andatKingfisher

plcinvariousstrategyandbusinessplanningroles

(1994-2001).Healsoworkedforanumberofyearsat

OC&Cstrategyconsultants.

Since2017Rodhasundertakenaseriesofbusiness

advisoryandboardroles.HehasbeeninterimCFOand

Boardmemberatanumberofcompaniesincluding

RWSplc,aUKlistedtranslationcompany;Cobham

Group,theUK’slargestaerospaceanddefence

companywherehewasfinanceleadonvarious

divestitures;andVShips,aworldleadingshipping

suppliescompany.Hehasalsoactedasasenioradviser

toCerberusCapital.

Lynne Fennah

LynnewastheChairoftheCompanyandthe

NominationCommitteeuntil18January2024.She

joinedEmpiricStudentPropertyplcinJune2017andhad

heldthepositionofChiefFinancialandSustainability

OfficeruntilherretirementinMay2023.Duringher

tenureatEmpiric,sheoversawallfinancialandtaxation

mattersandledontheoperationaltransformation

ofthebusinessincludinganextensivein-sourcing

programme.LynnewasalsotheViceChairofthe

StudentAccommodationCommitteeoftheBritish

PropertyFederation.In2012,shejoinedPalmerCapital,

anFCAauthorisedrealestateinvestmentmanagement

company,asCFOwithresponsibilityforoverseeing

thecompany’sfinancialandtaxationmatters.Lynne

becameEuropeanCFOfortheTogaGroupin2008,

withresponsibilityforthedevelopmentofhotelsand

managementofcommercialpropertyinvestments.

LynnejoinedTheGoodwoodEstatebeingpromotedto

FinanceandITDirectorin2005,aboardpositionwith

responsibilityforthefinancesofallgroupcompanies

acrossaportfolioofprimarilyhospitalityfocused

operations.In1995,LynnejoinedAmericanExpressand

duringhertenureheldpositionsincorporateauditand

travelbusinessreporting,bothrolescoveringtheEMEA

region,andagloballyfocusedprocessre-engineering

projectrole.Afterobtainingadegreeinfinanceat

LiverpoolJohnMooresUniversity,LynnejoinedMoore

StephensandqualifiedasaCharteredAccountant,

whereshecoveredallaspectsofgeneralpracticewith

aparticularfocusonaudit.

Governance

The Board

46 HomeREITplc | AnnualReport | Fortheyearended31August2022

SimonMoore,ChairoftheManagement

Engagement Committee

SimonMoorewastheSeniorIndependentDirector

until2April2024.Hehasover30years’experience

intheUKfinancialsectorincludingatNatWestBank,

WilliamsdeBroë,Teather&GreenwoodandCollins

Stewart.HewasSeniorInvestmentManageratSeven

InvestmentManagementandHeadofResearchat

TilneyBestinvest.Simonhasbeenalong-standing

memberoftwoimportantcommitteesatthe

AssociationofInvestmentCompanies:theStatistics

CommitteeandthePropertyandInfrastructureForum

(hewasChairmanofthelatter).HehasbeenaDirector

ofAthelneyTrust(LSE:ATY)since2015.

HehasaBiochemistryBScfromImperialCollegeand

anMScinComputerModellingofMoleculesfrom

BirkbeckCollege.

PeterWilliams,SeniorIndependentDirector

(appointed2April2024)

PeterWilliamsistheSeniorIndependentNon-

ExecutiveDirectoroftheBoardandManagement

EngagementCommitteeChairdesignateofHome

REITplc.AqualifiedCharteredAccountant,hehas

over30yearsofBoardlevelexperienceachievedin

bothanexecutiveandnon-executivecapacity.Peter

iscurrentlyChairmanofACSClothing,thesustainable

fashionenabler,anon-executivedirectoratSGS

Group,theownerofshoppingandleisurecentresat

Lakeside,Watford,NottinghamandBraehead;andis

atrusteeofbothSomersetHouseinLondonandthe

ArchitecturalFund.

Duringhiscareerhehasbeeninvolvedinsignificant

corporateactivityinrelationtobuyingandselling

companies,IPOsandrestructuring.Peter’sexperience

incapitalreconstructionsincludethoseofJJB,Blacks,

EMIandJaegerworkingwithbothequityshareholders

anddebtproviders.Hehasledorplayedaleadingrole

infiveIPOsincludingSelfridges(towhichhewasChief

FinancialOfficerandsubsequentlyChiefExecutive),

Cineworld,boohoo,Domino’sinTurkey,andMister

Spex.Hisextensivenon-executiveexperienceincludes

BoardrolesatRightmove,Superdry,Cineworld,Gcap

Media,CapitalRadio,U+I,SophiaWebster,Sportech,

Silverstone,ErnoLaszloandMiintoA/S.

MarleneWood,ChairoftheAuditCommittee

MarleneWoodisacharteredaccountantwithabroad

rangeofexperienceinboththeprivateandpublic

sectors.Sheiscurrentlyanon-executivedirector

andchairoftheauditcommitteeofRMInfrastructure

IncomePLC.Shewasformerlyanon-executivedirector

andchairoftheauditcommitteeofGCPStudentLiving

plcandAtratoOnsiteEnergyplc.

Until2019,shewasDeputyChairandChairofthe

FinanceCommitteeoftheScottishFundingCouncil

forFurtherandHigherEducation.Shespent20

yearswiththeMillerGroup,amajorUKproperty

business,predominantlyasfinancedirectorfor

MillerDevelopments,thepropertydevelopmentand

investmentarm,andlatterlyasgroupaccountingand

treasurydirector.

Governance

The Board—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 47

TheDirectorspresenttheirreportfortheyearended

31August2022.InaccordancewiththeCompaniesAct

2006(the“Act”),theListingRulesandtheDisclosure

GuidanceandTransparencyRules,theCorporate

GovernanceStatement,Directors’Remuneration

Report,ReportsfromtheAuditCommittee,

NominationCommitteeandManagementEngagement

Committee,andtheStatementofDirectors’

Responsibilitiesshouldbereadinconjunctionwithone

another,andtheStrategicReport.Aspermittedby

legislation,someofthemattersnormallyincludedin

theDirectors’Reporthaveinsteadbeenincludedinthe

StrategicReport,astheBoardconsidersthemtobeof

strategicimportance.Theseincludethebelow:

• Descriptionofthebusinessmodelcanbefound

beginningonpage29.

• Likelyfuturedevelopmentsandoutlookare

containedwithintheChair’sStatementonpages

13and14.

• ImportanteventsaffectingtheGroupwhich

haveoccurredsincetheendofthefinancialyear

aresetoutonpages9to14andinNote26tothe

ConsolidatedFinancialStatements.

Directors

TheDirectorsinofficeatthedateofthisReport

areasshownonpages45and46.LynneFennah,

MarleneWood,PeterCardwellandSimonMoorewere

appointedtotheBoardon3September2020.Lynne

FennahsteppeddownasChairon18January2024

whenMichaelO’DonnellwasappointedasChair.Peter

Williamswasappointedon2April2024andRodDaywas

appointedon7June2024.

DetailsoftheDirectors’termsofappointmentcanbe

foundintheDirectors’RemunerationReport.

Corporate governance

TheCorporateGovernanceStatementonpage51

formspartofthisDirectors’Report.

Dividends

On15September2021,theCompanydeclareda

dividendof0.84penceperShareinrespectofthe

periodfrom1May2021to31August2021,which

waspaidon22October2021toshareholdersonthe

paidasaPID.

On27January2022,theCompanydeclaredadividend

of1.37penceperShareinrespectoftheperiodfrom

1September2021to30November2021,whichwaspaid

on25February2022toshareholdersontheregisteras

at4February2022.Thisdividendcomprised1.27pence

perShareasaPIDand0.10penceperShareasanon-

PIDdividend.

On5May2022,theCompanydeclaredadividendof

1.37penceperShareinrespectoftheperiodfrom

1December2021to28February2022,whichwaspaid

on10June2022toshareholdersontheregisterasat

13May2022.ThisdividendwaspaidasaPID.

On4August2022,theCompanydeclaredadividend

of1.38penceperShareinrespectoftheperiod

from1March2022to31May2022,whichwaspaidon

9September2022toshareholdersontheregisterasat

12August2022.ThisdividendwaspaidasaPID.

Postyearend,on12December2022,theCompany

declaredafurtherinterimdividendof1.38penceper

Shareinrespectoftheperiodfrom1June2022to

31August2022,whichwaspaidon20January2023to

shareholdersontheregisterasat23December2022.

ThisdividendwaspaidasaPID.

Therefore,theGroup’stotaldividendsinrespectofthe

yearended31August2022were5.50penceperShare.

Capital structure

IssueofShares

AProspectuswasissuedbytheGroupon

2September2021inrespectofanOpenOffer,Initial

Placing,IntermediariesOfferandOfferforSubscription

ofnewSharesinthecapitaloftheGroup,togetherwith

theimplementationofa12-monthPlacingProgramme

(together,the“ShareIssuanceProgramme”).

PursuanttotheCircularpublishedbytheCompany

on2September2021,attheGeneralMeetingheld

on20September2021,theshareholdersapproved

theresolutionsinrespectoftheShareIssuance

Programmeandthedis-applicationofpre-emption

rightswhenallottingthoseShares.

PursuanttotheauthoritiesgrantedundertheShare

IssuanceProgramme,theGroupissued:

• 321,100,917Sharesatanissuepriceof109pence

perShareon23September2021,withanaggregate

nominalvalueof£3,211,000,raisinggrossproceeds

of£350million.91,229,256newShareswereissued

pursuanttotheOpenOffer,206,083,058new

ShareswereissuedpursuanttotheInitialPlacing,

13,812,751newShareswereissuedpursuanttothe

OfferforSubscription,and9,975,852newShares

wereissuedpursuanttotheIntermediariesOffer.

TheShareswereissuedtoinstitutionalinvestors

andprofessionallyadvisedprivateinvestorsand

admittedtotradingonthePremiumSegment

oftheLondonStockExchange’sMainMarketon

27September2021.

Governance

Directors’ report

48 HomeREITplc | AnnualReport | Fortheyearended31August2022

• 228,899,083Sharesatanissuepriceof115penceper

Shareon27May2022,withanaggregatenominal

valueof£2,289,000,raisinggrossproceedsof£263

million.TheseShareswereallottedbywayofa

placingofnewShares.TheShareswereissuedto

institutionalinvestorsandprofessionallyadvised

privateinvestorsandadmittedtotradingonthe

PremiumSegmentoftheLondonStockExchange’s

MainMarketon31May2022.

TheaboveSharesissuancesweremadeatapriceofnot

lessthanthenetassetvalueperShareatthetimeof

issueplusanamounttocoverthecost.Theauthorities

grantedundertheShareIssuanceProgrammeexpired

on2September2022.

PurchaseofShares

AttheAGMheldon27January2022,theDirectors

weregrantedauthoritytopurchaseupto14.99%of

theGroup’sordinarySharecapitalinissueatthatdate

onwhichtheNoticeofAGMwaspublished,amounting

to84,194,540Shares.Thisauthorityexpiredatthe

conclusionofAGMoftheCompanyheldinFebruary

2023.SharesboughtbackbytheCompanymaybeheld

intreasury,fromwheretheycouldbereissuedator

abovetheprevailingnetassetvaluequicklyandcost

effectively.ThisprovidestheCompanywithadditional

flexibilityinthemanagementofitscapitalbase.The

CompanydidnotpurchaseanyofitsSharesduringthe

yearpursuanttothisauthority,nordidanynominee

orthird-partywiththeGroup’sassistanceacquireany

SharesonbehalfoftheCompany.NoShareswereheld

intreasuryduringtheyearorattheyearend.

Currentsharecapital

Asat31August2022,andatthedateofthisReport,the

Group’sissuedsharecapitalcomprised790,570,465

Shares,eachof1pnominalvalue.Atgeneralmeetings

oftheGroup,ordinaryshareholdersareentitledtoone

voteonashowofhandsand,onapoll,toonevotefor

everyShareheld.At31August2022,andatthedateof

thisReport,thetotalvotingrightsintheGroupwere

790,570,465.

Significantshareholders

Asat31August2022,theCompanyhadbeennotifiedof

thefollowingdisclosableinterestsinthesharecapital

oftheGroup:

Name

Numberof

%oftotal

votingrights

BlackRockInvestment

Management(UK)Limited 95,666,248 12.10

M&GInvestment

ManagementLimited 77,579,955 9.81

RathboneInvestment

ManagementLtd 37,229,497 4.71

JMFinn&Co 24,031,160 3.04

Since31August2022anduptothedateofthisReport,

theCompanyhasbeeninformedofthefollowing

notifiableshareholdingsinthesharecapitalof

theCompany:

Name NumberofShares

%oftotal

votingrights

M&GInvestment

ManagementLimited 124,703,853 15.77

BlackRockInvestment

Management(UK)Limited 75,916,498 9.60

LiontrustAsset

ManagementPLC 45,273,414 5.73

Sarasin&PartnersLLP 41,529,624 5.25

VanguardGroupInc 35,573,131 4.50

Shareholder rights

Thefollowinginformationisdisclosedinaccordance

withTheLargeandMediumsizedCompaniesand

Groups(AccountsandReports)Regulations2008

andDTR7.2.6oftheFCA’sDisclosureGuidanceand

TransparencyRules:

• theGroup’scapitalstructureandvotingrightsand

detailsofthesubstantialshareholdersintheGroup

aresetoutinthepreviouspageofthissection;

• anamendmenttotheCompany’sarticlesof

association(the“Articles”)andthegivingof

powerstoissueorbuybacktheCompany’sShares

requiresanappropriateresolutiontobepassed

byshareholders.Proposalstograntpowerstothe

BoardtoissueandbuybackShareswillbesetout

inthenoticeoftheGeneralMeetingatwhichthese

accountswillbelaidinfrontofshareholders;and

• therearenorestrictionsconcerningthetransfer

ofsecuritiesintheCompany;norestrictionson

votingrights;nospecialrightswithregardtocontrol

attachedtosecurities;noagreementsbetween

holdersofsecuritiesthatmayrestricttheirtransfer

orvotingrights,asknowntotheCompany;andno

agreementswhichtheGroupispartytothatmight

affectitscontrolfollowingasuccessfultakeoverbid.

Governance

Directors’ report—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 49

Requirements of the Listing Rules

ListingRule6.6.1requirestheCompanytoinclude

specifiedinformationinasingleidentifiablesectionof

theAnnualReportoracrossreferencetableindicating

wheretheinformationissetout.Theinformation

requiredunderListingRule6.6.1(6)inrelationto

allotmentsofSharesissetoutonpages47and48.The

Directorsconfirmthatnoadditionaldisclosuresare

requiredinrelationtoListingRule6.6.1.

Independentprofessionaladvice,insurance

and indemnity

Detailsregardingindependentprofessionaladvice,

insuranceandindemnityaresetoutintheCorporate

GovernanceStatementbeginningonpage51.

Energy and Carbon reporting

TheGroupisrequiredtodisclosetheannualquantity

ofemissionsaspertheLargeandMedium-sized

CompaniesandGroups(AccountsandReports)

Regulations2008,asamendedbyTheCompanies

Act2006(StrategicReportandDirectors’Reports)

Regulations2013,andTheCompanies(Directors’

Report)andLimitedLiabilityPartnerships(Energy

andCarbonReport)Regulations2018.TheGroup

howeverbelievesthatitdoesnothaveanyreportable

emissionsasthispredominantlyfallsunderthe

tenant’sresponsibilityaspartoftheirFRIleases,

whilsttheemissionsfromotherareassuchas

Groupofficesfallundertheresponsibilityofother

parties.Notwithstandingthat,theGroupintended

toundertakeanemissionsdatacollectionexercise

withitstenantstounderstandtheenergyintensity

ofthepropertiesandtoultimatelyagreeenergyuse

reductiontargetswiththetenants.Giventheissues

theGrouphasfaced,thishasnotbeenpursued

withtenants.

TheGroupisalsonotformallyrequiredtoreport

undertheTaskForceforClimate-RelatedFinancial

Disclosures.Thiswillbeconsideredforfuture

reportingperiods.

Management arrangements

AIFM

Duringtheyearunderreview,AlvariumFMwasthe

Company’sAIFM.AlvariumFMisregulatedinthe

conductofinvestmentbusinessbytheFCAandwas,

forthepurposesoftheAIFMDandtherulesoftheFCA,

a‘fullscope’UKalternativeinvestmentfundmanager

withaPart4ApermissionformanagingAIFs,suchas

theCompany.

TheCompanyandAlvariumFMhadenteredintothe

IMAunderwhichAlvariumFMhadagreedtoprovide

theCompanywithportfoliomanagementandrisk

managementservices.UndertheIMA,AlvariumFM

receivedafeeof£40,000perannum.Noperformance

feewaspayabletoAlvariumFM.

TheIMAcouldbeterminatedon12months’written

notice,suchnoticetoexpireonoratanytimeafter

thefifthanniversaryofthefirstadmissionofthe

Company’sSharestotheFCA’sOfficialListandtrading

ontheLondonStockExchange’smainmarket,which

becameeffectiveon12October2020.

On25May2023,theCompanyandAlvariumFMagreed

bywayofvariationagreement,asfurthervariedon

18July2023,thattheIMAwouldbevariedtoallowfor

terminationimmediatelyupontheCompanygiving

noticeinwritingtoAlvariumFM,providedsuchnotice

wasgivenbynotlaterthan31August2023,orupon

eitherpartygivingnotlessthansixmonths’noticein

writing.On21August2023,theCompanyterminated

theIMAontheappointmentofAEWastheInvestment

ManagerandAIFM.

InvestmentAdviser

AHRAwasappointedundertheIAAastheInvestment

Advisertoprovidecertainservicesinrelationto

theCompanyanditsportfolio,includingsourcing

investmentsforacquisitionbytheGroupanddue

diligenceinrelationtoproposedinvestments.

UnderthetermsoftheIAA,AHRAwasentitledtoafee

payablemonthlyasdetailedbelow:

Theinvestmentadvisoryfeewasanamountcalculated

inarrearsinrespectofeachmonth,ineachcasebased

uponthenetassetvalueoftheCompanyonthe

followingbasis:

a) One-twelfthof0.85%,percalendarmonthofnet

assetvalueuptoandincluding£500million;

b) One-twelfthof0.75%percalendarmonthofnet

assetvalueabove£500millionuptoandincluding

£750million;and

c) One-twelfthof0.65%percalendarmonthofnet

assetvalueabove£750million.

NoperformancefeewaspayabletoAHRA.Thefees

paidtoAHRAduringtheyearisdetailedinNote6tothe

ConsolidatedFinancialStatements.

TheIAAcouldbeterminatedon12months’written

notice,suchnoticetoexpireonoratanytimeafterthe

fifthanniversaryofthefirstadmissionoftheSharesto

theFCA’sOfficialListandtradingontheLondonStock

Exchange’smainmarket,whichbecameeffectiveon

12October2020.

On15March2023,theBoardagreedwithAHRAbyway

ofletterofagreementthattheCompanywasentitled

toterminatetheIAAonorbefore30June2023.On

30June2023,theIAAwasterminated.

Governance

Directors’ report—continued

50 HomeREITplc | AnnualReport | Fortheyearended31August2022

Otherserviceproviders

Detailsofthetermsofengagementbetweenthe

Companyanditsotherkeyserviceproviders,such

astheAdministrator,theCompanySecretary,the

DepositaryandtheRegistrar,aresetoutinthe

ProspectusissuedbytheGroupon2September2021.

JLLwasappointedindependentValuertotheGroupon

18July2023.Feespayableinrespectofvaluationsfor

theyearend31August2022were£900,000withinitial

inspectionfeesof£25,000.

Continuing appointment of the Investment Manager

TheBoardkeepstheperformanceoftheInvestment

Adviser(orInvestmentManager)undercontinual

review.TheManagementEngagementCommittee

(“MEC”),comprisingallDirectors,conductsanannual

reviewoftheInvestmentAdviser’s(orInvestment

Manager’s)performanceandmakesarecommendation

totheBoardaboutitscontinuingappointment.

TheinformationreportedtotheMECandtotheBoard

byAHRA,AlvariumFMandotherexternalparties

providedtheBoardwithcomfort,atthetime,that

AHRAhadexecutedtheGroup’sinvestmentstrategy

accordingtotheBoard’sexpectations.InJanuary2023,

theBoardinstructedA&Mtoconductaninvestigation

intoallegationsofwrongdoing.Duetoinformationthat

cametolightwhichwasincontradictiontoreporting

previouslyprovidedtotheBoardbyAHRAandAlvarium

FMduringtheperiodtogetherwithlowrentcollection

andfurtherevidenceofmaterialinformationbeing

withheldfromtheBoard,theBoardreviewedthe

continuedappointmentofAlvariumFMandAHRAand

on15March2023agreedwithAHRAbywayofletterof

agreementthattheCompanywasentitledtoterminate

theIAAonorbefore30June2023.On30June2023,

theIAAwasterminated.On25May2023,theCompany

andAlvariumFMagreedbywayofvariationagreement,

asfurthervariedon18July2023,thattheIMAwould

bevariedtoallowforterminationimmediatelyupon

theCompanygivingnoticeinwritingtoAlvarium

FM,providedsuchnoticewasgivenbynotlaterthan

31August2023,oruponeitherpartygivingnotless

thansixmonths’noticeinwriting.On21August2023,

theCompanyterminatedtheIMA.

Asdetailedabove,AEWwasappointedInvestment

ManagerandAIFMon21August2023.TheManagement

EngagementCommittee,comprisingallDirectors

atthetime,havereviewedtheperformanceofAEW

sinceappointmentandaccordingly,theDirectors

believethatthecontinuingappointmentofAEW,on

thetermsagreed,isinthebestinterestsoftheGroup

anditsshareholdersasawhole.Furtherdetailsareset

outintheReportfromtheManagementEngagement

Committeebeginningonpage67.

Financial risk management

InformationabouttheGroup’sfinancialrisk

managementobjectivesandpoliciesissetoutin

Note14totheConsolidatedFinancialStatements.

Auditor

TheDirectorsconfirmthat,sofarastheyareeach

aware,thereisnorelevantauditinformationofwhich

theCompany’sAuditorisunaware;andeachDirector

hastakenallthestepsthatoughttohavebeentaken

asaDirectortomakethemselvesawareofanyrelevant

auditinformationandtoestablishthattheCompany’s

Auditor,BDO,isawareofsuchinformation.

ByorderoftheBoard

Apex Fund and Corporate Services (UK) Limited

10October2024

Governance

Directors’ report—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 51

ThisCorporateGovernanceStatementformspartof

theDirectors’Report.

Introduction

InthisCorporateGovernancestatement,theCompany

reportsonitscompliancewiththeAICCode,setsout

howtheBoardanditsCommitteeshaveoperated

duringtheyearanddescribeshowtheBoardexercises

effectivestewardshipovertheCompany’sactivitiesin

theinterestsofshareholders.TheBoardisaccountable

toshareholdersforthegovernanceoftheCompany’s

affairsandiscommittedtomaintainingthehighest

standardofcorporategovernanceforthelong-term

successoftheCompany.

TheCompanyreviewsitsstandardsofgovernance

againsttheprinciplesandrecommendationsoftheAIC

Code,aspublishedin2019.TheBoardconsidersthat

reportingagainsttheprinciplesandrecommendations

oftheAICCodeprovidesbetterinformationto

shareholdersasitaddressesalltheprinciplessetout

intheUKCodeofCorporateGovernance(the“UK

Code”),aswellassettingoutadditionalprinciples

andrecommendationsonissuesthatareofspecific

relevancetoinvestmentcompaniesandisendorsedby

theFinancialReportingCouncil(“FRC”).Thetermsof

theFRC’sendorsementmeanthatAICmemberswho

reportagainsttheAICCodefullymeettheirobligations

undertheUKCodeandtherelateddisclosure

requirementscontainedintheListingRulesofthe

FCA.AcopyoftheAICCodecanbefoundatwww.

theaic.co.uk.AcopyoftheUKCodecanbeobtained

atwww.frc.org.uk.

Statement of compliance

PursuanttotheListingRulesoftheFCA,theCompany

isrequiredtoprovideshareholderswithastatementon

howthemainandsupportingprinciplessetoutinthe

AICCodehavebeenappliedandwhethertheCompany

hascompliedwiththeprovisionsoftheAICCode.The

Boardrecognisestheimportanceofastrongcorporate

governancecultureandhasestablishedaframework

forcorporategovernancewhichitconsiderstobe

appropriatetothebusinessoftheCompanyasaREIT

andtheCompanyasawhole.

TheUKCodeincludesprovisionsrelatingto:

• theroleofthechiefexecutive;

• executivedirectors’remuneration;and

• theneedforaninternalauditfunction.

TheBoardconsiderstheseprovisionsarenotrelevant

totheCompany,beinganexternallymanaged

investmentcompany.TheCompanyhasthereforenot

reportedfurtherinrespectoftheseprovisions.

TheBoardhasreviewedtheprinciplesand

recommendationsoftheAICCodeandconsiders

thatithascompliedthroughouttheyear,except

thattheChairoftheBoardisamemberoftheAudit

Committee,contrarytoProvision29oftheAICCode.

TheBoardbelievesitisappropriatefortheChairof

theCompanytobeamemberoftheAuditCommittee

asboththecurrentandpreviousChairoftheBoard

(MichaelO’Donnellsince18January2024andLynne

Fennahrespectively)haverecentandrelevantfinancial

experienceandprovideavaluablecontributiontothe

Committee’soperationsanditsinteractionwiththe

Board.WiththeDirectorsinofficeatIPOintending

tostepdownonpublicationofthe2023annual

reportandaccounts,thecurrentChair’sinvolvement

intheoperationsoftheCommitteewillprovide

essentialcontinuity.

Giventhematerialeventsthathaveoccurredsincethe

yearend,theBoardhasconsidereditscompliancewith

principlesandrecommendationsoftheAICCode.The

Boardconsidersthatitconsistentlymetthelevelof

oversightandgovernancethatwasrequiredbytheAIC

Code.TheBoardhassubstantialrealestate,financial,

commercialandsectorexperienceandhasestablished

appropriatecommittees(includingAuditCommittee

andManagementEngagementCommittee),which

met,andcontinuetomeet,onaregularbasis.As

wasspecificallydrawntotheattentionofinvestors

intheIPOprospectus,asanexternallymanaged

investmentcompany,theCompanydelegateskey

executivefunctionstothird-partyserviceproviders.

TheCompanyandtheBoardisreliantuponthe

performanceofthesethird-partyserviceproviders

andreliantupontheseserviceproviderstocarryout

theirobligationstotheCompanyinaccordancewith

thetermsoftheirappointment.Furthertoallegations

ofwrongdoinginNovemberandDecember2022,the

BoardinstructedA&Mtoinvestigateallegationsof

wrongdoinginearlyJanuary2023.Subsequently,as

detailedfurtheronpage57,materialinformationhas

cometolightwhichisincontradictiontothereporting

providedtotheBoardandBoardCommitteesduring

therelevantperiod.

TheBoardhasfurtherconsidereditsriskmanagement

framework,internalcontrolsystems,proceduresand

processesasaresultofthematerialeventsthathave

takenplacesincetheyearend.Furtherinformationis

providedbelowintheRiskManagementandInternal

ControlsectionandfurtherdetailontheCompany’s

governanceisprovidedinAppendix2.

Governance

Corporate governance statement

52 HomeREITplc | AnnualReport | Fortheyearended31August2022

The Board

UndertheleadershipoftheChair,theBoardis

collectivelyresponsiblefortheeffectivestewardship

oftheCompany’saffairsandthelong-termsuccess

oftheGroup,generatingvalueforshareholders

andcontributingtowidersociety.Itestablishesthe

purpose,valuesandstrategicaimsoftheCompanyand

satisfiesitselfthattheseanditsculturearealigned.

TheBoardensuresthatthenecessaryresourcesarein

placefortheCompanytomeetitsobjectivesandfulfil

itsobligationstoshareholderswithinaframeworkof

highstandardsofcorporategovernanceandeffective

internalcontrols.TheDirectorsarerequiredtoactwith

integrity,leadbyexampleandpromotethisculture

withintheCompany.

TheDirectorspossessawiderangeofbusinessand

financialexpertiserelevanttothedirectionofthe

Groupandconsiderthattheycommitsufficienttime

totheaffairsoftheGroup.AllDirectorsactinanon-

executivecapacity.

BriefbiographicaldetailsoftheDirectors,including

detailsoftheirsignificantcommitments,canbefound

onpages45to46.

Chair

LynneFennahwastheChairoftheCompanyduring

theyear.TheChairleadstheBoardandisresponsible

foritsoveralleffectivenessindirectingtheCompany.

TheChairdemonstratesobjectivejudgement,

promotesacultureofopennessanddebate,and

facilitateseffectivecontributionsbyallDirectors.In

liaisonwiththeCompanySecretary,theChairensures

thattheDirectorsreceiveaccurate,timelyandclear

informationtotheextentpossiblewiththelimitation

ontheaccuracyandcompletenessoftheinformation

providedbyAHRA.

Postperiodend,on18January2024,MichaelO’Donnell

wasappointedtotheBoardasanon-executiveDirector

andtheChairoftheCompany.LynneFennahand

MichaelO’DonnellwerebothindependentofAHRA,

AlvariumFMandAEW,respectively,atthetimeoftheir

appointmentsandaredeemedbytheirfellowBoard

memberstocontinuetobeindependentincharacter

andjudgementandtohavenoconflictingrelationships.

TheChairconsidershimselftohavesufficienttime

tocommittotheCompany’saffairs.Theroleand

responsibilitiesoftheChairoftheBoardareclearly

definedandsetoutinwriting,acopyofwhichis

availableontheCompany’swebsite.

SeniorIndependentDirector

SimonMoorewastheSeniorIndependentDirector

duringtheyear.TheSeniorIndependentDirector

providesasoundingboardfortheChairandserves

asanintermediaryfortheotherDirectorsand

shareholders.TheSeniorIndependentDirectoralso

providesachannelforanyshareholderconcerns

regardingtheChairandtakestheleadintheannual

evaluationoftheChairbytheotherDirectors.Therole

andresponsibilitiesoftheSeniorIndependentDirector

areclearlydefinedandsetoutinwriting,acopyof

whichisavailableontheCompany’swebsite.

Postperiodend,on2April2024,PeterWilliamswas

appointedasanon-executiveDirectorandtheSenior

IndependentDirectoroftheCompany.

BriefbiographicaldetailsoftheDirectors,including

detailsoftheirsignificantcommitments,canbefound

onpages45to46.

MattersreservedfortheBoard

TheCompany’sinvestmentpolicyandstrategyare

determinedbytheBoard.TheBoardisresponsible

forinvestmentdecisions,otherthantotheextent

delegatedtoAlvariumFMand/orAHRAduringtheir

periodofappointmentandAEWfrom21August2023,

andtheappointment,supervisionandmonitoring

oftheGroup’skeyserviceproviders,including

amongstothers,AlvariumFMand/orAHRAandAEW

asapplicable.TheBoardestablishestheCompany’s

borrowingpolicy,dividendpolicy,approvespublic

documentssuchastheannualandinterimreports

andfinancialstatements,andcorporategovernance

matters.Aformalscheduleofmattersreserved

fordecisionbytheBoardhasbeenadoptedandis

availableontheCompany’swebsite,withasummary

inAppendix2onpage152.

Independentprofessionaladvice,insurance

andindemnity

TheBoardhasformalisedarrangementsunderwhich

theDirectors,inthefurtheranceoftheirduties,may

seekindependentprofessionaladviceattheexpenseof

theCompany.TheCompanyalsomaintainedDirectors’

andOfficers’liabilityinsuranceduringtheyear.The

ArticlesprovidetheDirectorsoftheCompany,subject

totheprovisionsofUKlegislation,withanindemnity

inrespectofliabilitieswhichtheymaysustainorincur

inconnectionwiththeirappointment.Apartfrom

this,therearenoqualifyingthirdpartyindemnity

provisionsinforce.

OtherthantheirlettersofappointmentasDirectors,

noneoftheDirectorshasacontractofservicewith

theCompanynorhastherebeenanyothercontractor

arrangementbetweentheCompanyandanyDirector

atanytimeduringtheyear.

TheBoardhasagreedaprocedurefortheinduction

andtrainingofnewBoardappointeesandtraining

requirementsaredealtwithasrequired.

Governance

Corporate governance statement—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 53

Informationregardingtheannualevaluationofthe

Board,itsCommittees,theindividualDirectorsandthe

Chair;diversitypolicy;compositionoftheBoard;tenure

oftheDirectors;andtheDirectors’re-electionisset

outintheReportfromtheNominationCommitteeon

pages69to71.

Board Committees

Duringtheyear,theCompanyhadthreeCommittees

inoperation,namely,theAuditCommittee,the

ManagementEngagementCommitteeandthe

NominationCommittee.GiventhesizeoftheBoard,it

isnotconsideredappropriatetoestablishaseparate

remunerationcommittee.Thefunctionsthatwould

normallybecarriedoutbythiscommitteearedealtwith

bythefullBoard.

ThetermsofreferenceoftheCommitteesareavailable

ontheCompany’swebsite.

AuditCommittee

TheGrouphasestablishedanAuditCommittee

whichischairedbyMarleneWoodandconsistsofall

Directors.TheBoardconsidersthatthemembers

oftheAuditCommitteehaverecentandrelevant

financialexperienceandtheCommitteeasawhole

hascompetencerelevanttothesectorinwhichthe

Companyoperates.TheAuditCommitteeincludes

individualswithsubstantialexperienceofthefinancial

mattersoflistedcompaniesandthepropertysector.It

isconsideredappropriatefortheChairoftheCompany

tobeamemberoftheAuditCommittee,inviewofthe

DirectorsinofficeatIPOintendingtostepdownon

publicationofthe2023annualreport,hisinvolvement

intheoperationsoftheCommitteewillprovide

essentialoperationalcontinuitybetweenthecurrent

andtherevisedcompositionoftheAuditCommittee.

ThereportoftheAuditCommitteeissetouton

pages56to66.

ManagementEngagementCommittee

TheManagementEngagementCommitteecomprises

allDirectorsandwaschairedbySimonMooreduring

theyear.TheCommitteemetduringtheperiod

underreviewtoconsidertheperformanceofthe

AIFMandtheInvestmentAdviserundertheIMAand

theIAA,respectively.Inaddition,theManagement

EngagementCommitteereviewstheperformance,

termsofappointmentandfeespayabletotheother

keyserviceprovidersoftheCompany,andmakes

recommendationstotheBoardregardingtheir

continuingappointment.

ThereportoftheManagementEngagement

Committeeissetoutonpages67and68.

NominationCommittee

TheCompanyhasestablishedaNomination

Committee.Duringtheyearunderreview,thiswas

chairedbyLynneFennahandsubsequentlyMichael

O’Donnellsincehisappointmenton18January2024.

TheCommitteereviewstheBoard’ssuccessionplan

andidentifiesandnominatescandidatesfortheoffice

ofdirectoroftheCompany.Italsoreviewstheresults

oftheannualevaluationprocessoftheBoard,its

Committees,theDirectorsandtheChair,andmakes

recommendationstotheBoardinrespectofthe

election/re-electionoftheDirectors.

ThereportoftheNominationCommitteeisincludedon

pages69to71.

Meetings held during the year

TheCompanyhasfourscheduledboardmeetingsa

yearwithadditionalmeetingsarrangedasnecessary.

AteachBoardmeeting,theDirectorsfollowaformal

agendawhichiscirculatedinadvancebytheCompany

Secretary.AHRAorsinceitsappointmentAEW,the

AdministratorandtheCompanySecretaryregularly

providetheBoardwithfinancialinformation,including

anannualexpensesbudgetorbusinessplans,together

withbriefingnotesandpapersinrelationtochangesin

theCompany’seconomicandfinancialenvironment,

statutoryandregulatorychangesandcorporate

governancebestpractice.

ThenumberofscheduledBoard,AuditCommittee,

ManagementEngagementCommitteeandNomination

Committeemeetingsheldduringtheyearended

31August2022andtheattendanceoftheindividual

Directorsisshownbelow:

Board

Audit

Committee

Management

Engagement

Committee

Nomination

Committee

Number entitled to attend 9 3 2 2

LynneFennah 9 3 2 2

PeterCardwell 9 3 2 2

SimonMoore 9 3 2 2

MarleneWood 9 3 2 2

Governance

Corporate governance statement—continued

54 HomeREITplc | AnnualReport | Fortheyearended31August2022

Inadditiontotheabove,twoBoardmeetingswereheld

inrespectofthefundraisinginMay2022andtwoadhoc

Boardcommitteemeetingstodealwiththeapprovalof

documentationandadministrativemattersinrespect

oftheannualandinterimreports.

AnumberofadditionalBoardmeetingshavebeenheld

sincetheyearend.MichaelO’Donnell,RodDayand

PeterWilliamsarenotlistedintheabovetableasthey

wereappointedfollowingtheyearend.

ConflictsofInterest

ItistheresponsibilityofeachindividualDirectorto

avoidanunauthorisedconflictarising.Directorsmust

requestauthorisationfromtheBoardassoonasthey

becomeawareofthepossibilityofaninterestthat

conflicts,ormightpossiblyconflict,withtheinterests

oftheCompany(a“situationalconflict”).TheArticles

authorisetheBoardtoapprovesuchsituations,where

deemedappropriate.

TheBoardisresponsibleforconsideringDirectors’

requestsforauthorisationofconflictsandfordeciding

whetherornotthesituationalconflictshouldbe

authorised.Thefactorstobeconsideredwillinclude:

whetherthesituationalconflictcouldpreventthe

Directorfromproperlyperformingtheirduties;

whetherithas,orcouldhave,anyimpactonthe

Company;andwhetheritcouldberegardedaslikely

toaffectthejudgementand/oractionsoftheDirector

inquestion.WhentheBoardisdecidingwhetherto

authoriseasituationalconflict,onlyDirectorswho

havenointerestinthematterbeingconsidered

areabletotaketherelevantdecision,andintaking

thedecision,theDirectorsmustactinawaythey

consider,ingoodfaith,willbemostlikelytopromote

theCompany’ssuccess.TheBoardareabletoimpose

limitsorconditionswhengivingauthorisationifthey

thinkthisisappropriateinthecircumstances.The

Directorsmustalsocomplywiththestatutoryrules

requiringtheDirectorstodeclareanyinterestinan

actualorproposedtransactionorarrangementwith

theCompany.

TheCompanySecretarymaintainstheRegisterof

Directors’ConflictsofInterestswhichisreviewed

ateachBoardmeeting,toensurethatauthorised

conflictsremainappropriate.TheDirectorsadvise

theCompanySecretaryandtheBoardassoonasthey

becomeawareofanyconflictsofinterest.Directors

whohaveconflictsofinterestdonottakepartin

discussionswhichrelatetoanyoftheirconflicts.

Risk management and internal control review

TheDirectorsacknowledgethattheyhaveoverall

responsibilityfortheCompany’sriskmanagement

andinternalcontrolsystemsandforreviewingtheir

effectiveness.

Anongoingprocess,inaccordancewiththeFRC

GuidanceonRiskManagement,InternalControl

andRelatedFinancialandBusinessReporting,has

beenimplementedforidentifying,evaluatingand

managingtheprincipalandemergingrisksfacedbythe

CompanyandtheGroup.Thisprocesshasbeeninplace

throughouttheyearended31August2022andupto

thedatethefinancialstatementswereapprovedand

isregularlyreviewedbytheBoard,throughtheAudit

CommitteeifscheduledorataregularBoardmeeting.

Keyproceduresestablishedwithaviewtoproviding

effectivefinancialcontrolhavealsobeeninplacefor

theyearunderreviewanduptothedatethefinancial

statementswereapproved.

Theriskmanagementprocessandsystemsofinternal

controlaredesignedtomanageratherthaneliminate

theriskoffailuretoachievetheCompany’sinvestment

objective.Itshouldberecognisedthatsuchsystems

canonlyprovidereasonable,notabsolute,assurance

againstmaterialmisstatementorloss.

TheCompanyhascontractuallydelegatedthe

managementoftheinvestmentportfolio,the

registrationservices,administrationservicesandother

servicestothirdpartyserviceprovidersandreliance

isthereforeplacedontheinternalcontrolsofthose

serviceproviders.

Theinternalfinancialcontrolsystemsaimtoensure

themaintenanceofproperaccountingrecords,the

reliabilityofthefinancialinformationuponwhich

businessdecisionsaretaken,reportsarepublishedand

theassetsoftheCompanyaresafeguarded.

Thekeyproceduresincludereviewofmanagement

accounts,monitoringofperformanceoftheCompany

andAHRAorAEW(asapplicable)atquarterlyBoard

meetings,segregationoftheadministrativefunction

frominvestmentmanagement,maintenanceof

appropriateinsuranceandadherencetophysical

andcomputersecurityprocedures.Theinternal

controlsattheserviceprovidersarereviewedbythe

AuditCommittee.

TheBoardhasundertakenareviewoftheeffectiveness

oftheCompany’sriskmanagementandinternalcontrol

systemsastheyhaveoperatedovertheyearandupto

thedateoftheapprovaloftheAnnualReport.

Duetoinformationthatcametolightpostperiodend

whichwasincontradictiontoreportingpreviously

providedtotheBoardbyAHRAandAlvariumFM

duringtheperiod,togetherwithlowrentcollection

andfurtherevidenceofmaterialinformationbeing

withheldfromtheBoard,theBoardhasconsideredits

riskmanagementframework,internalcontrolsystems,

proceduresandprocesses.

Governance

Corporate governance statement—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 55

Asaresultofthatsignificantandmaterialinformation

thefollowingamendmentstotheriskmanagement

frameworkandinternalcontrolssystems

havebeenmade:

• Rigorousselectionprocessfortheappointment

ofanewInvestmentManagerandAIFM;

• InternalinspectionofpropertiesbyVibrant,JLLand

otherthirdparties;

• ProvisionofacontactaddressfortheChairon

theGroup’swebsiteandrequestforkeyservice

providerstoproviderelevantemployeescontact

detailsofChairtoraiseconcernswiththeGroup’s

whistleblowingpolicyupdatedaccordingly;

• Health&SafetyconsiderationwithAEWhaving

establishedaHealth&SafetyCommitteewhich

regularlyreportstotheBoard.Health&safety

isastandardpriorityitemontheBoardagenda’s

recognisingthenewleasingmodelsuchthatleases

arenolongerlimitedtoFRIleasesandtheGroup

havingleases(ASTs)withoccupiersduringthe

StabilisationPeriodandManagedWind-Down;

• TheBoardhasapprovedarevisedexpensepayment

policytoreflectthefinancialpositionoftheCompany

andtheStabilisationPeriod;and

• A13weekcashflowforecastismaintainedand

updatedregularlybyAEWastheCompanyseeks

tostabiliseitsfinancialposition.

Internal control assessment process

Robustriskassessmentsandreviewsofinternal

controlsareundertakenregularlyinthecontextof

theCompany’soverallinvestmentobjective.The

Board,throughtheAuditCommittee,hascategorised

riskmanagementcontrolsunderthefollowingkey

headings:investmentstrategyandoperations;real

estatesector;risksrelatingtoShares;engagements

withthirdpartyserviceproviders;taxation;accounting,

operationalandfinancialreporting;governanceand

regulatorycompliance;andemergingrisksincluding

climaterisk.Inarrivingatitsjudgementofwhat

riskstheCompanyfaces,theBoardhasconsidered

theCompany’soperationsinthelightofthe

followingfactors:

• thenatureandextentofriskswhichitregardsas

acceptablefortheGrouptobearwithinitsoverall

businessobjective;

• thethreatofsuchrisksbecomingreality;

• theCompany’sabilitytoreducetheincidenceand

impactofriskonitsperformance;and

• thecosttotheCompanyandbenefitsrelated

tothereviewofriskandassociatedcontrolsof

theCompany.

Ariskmatrixisinplaceagainstwhichtherisks

identifiedandthecontrolstomitigatethoseriskscan

bemonitored.Therisksareassessedonthebasisof

thelikelihoodofthemhappening,theimpactonthe

businessiftheyweretooccurandtheeffectiveness

ofthecontrolsinplacetomitigatethem.Thisrisk

AuditCommitteeandatothertimesasnecessary

bytheBoard.

Themajorityoftheday-to-daymanagementfunctions

oftheCompanyaresub-contracted,andtheDirectors

thereforeobtainregularassurancesandinformation

fromkeythirdpartyserviceprovidersregarding

theinternalsystemsandcontrolsoperatingintheir

organisations.Inaddition,eachofthethirdpartiesis

requestedtoprovideacopyofitsreportoninternal

controlseachyear,whereavailable,whichisreviewed

bytheAuditCommittee.

Relations with shareholders

DetailsregardingtheGroup’sengagementwith

itsshareholdersaresetoutwithintheStrategic

Reportonpage31.

Governance

Corporate governance statement—continued

56 HomeREITplc | AnnualReport | Fortheyearended31August2022

IpresentthereportoftheAuditCommittee(the

“Committee”forpurposesofthisReportoftheAudit

Committeeonly)fortheyearended31August2022.

Composition

ThecompositionoftheCommitteeissetoutinthe

CorporateGovernanceStatementonpage53.Details

ofhowitsperformanceevaluationhasbeenconducted

areincludedonpages69and70.

Meetings

TheCommitteemetthreetimesduringtheyearunder

review.TheDirectors’attendanceissetoutonpage53

intheCorporateGovernanceStatement.

Role of the Committee

TheprimaryresponsibilitiesoftheCommitteeare:

• monitoringtheintegrityofthefinancialstatements

oftheCompany,anyformalannouncements

relatingtotheCompany’sandtheGroup’sfinancial

performance,andreviewingsignificantfinancial

reportingjudgementscontainedtherein;

• advisingtheBoardonwhethertheAnnualReport

andAccounts,takenasawhole,arefair,balanced

andunderstandable,andprovidetheinformation

necessaryforshareholderstoassessthe

Company’spositionandperformance,business

modelandstrategy;

• considerreportsfromtheindependentvaluerofthe

Companytovalueitsinvestments;

• keepunderreviewtheeffectivenessofthe

Company’sinternalfinancialcontrolsandinternal

controlandriskmanagementsystems;

• reviewingandmonitoringtheexternalauditor’s

independenceandobjectivity;

• reviewingtheeffectivenessoftheexternalaudit

process,takingintoconsiderationrelevantUK

professionalandregulatoryrequirements;

• conductingthetenderprocessandmaking

recommendationstotheBoardaboutthe

appointment,re-appointmentandremovalofthe

externalauditor,andapprovingtheremuneration

andtermsofengagementoftheexternalauditor;

and

• developingandimplementingpolicyonthe

engagementoftheexternalauditortoprovide

non-auditservices,ensuringthereispriorapproval

ofnon-auditservices,consideringtheimpactthis

mayhaveonindependence,takingintoaccount

therelevantregulationsandethicalguidancein

thisregard,andreportingtotheBoardonany

improvementoractionrequired.

Activities during the year under review

Duringtheyearunderreview,theCommittee:

• conductedareviewoftheinternalcontrolsandrisk

managementsystemsoftheCompanyanditsthird

partyserviceproviders;

• conductedregularreviewsoftheCompany’s

riskregister;

• reviewedtheinterimandannualvaluationsofthe

underlyingpropertyassetsoftheCompanyand

recommendedthesetotheBoard.Indoingso,the

Committeemonitoredtheeffectivenessofthe

Company’svaluationpoliciesandmethods;

• reviewedtheCompany’sannualandhalf-yearly

consolidatedfinancialstatementsforthe

periodto31August2021and28February2022

respectivelyandrecommendedthesetotheBoard.

Inparticular,theCommitteeadvisedtheBoard

thattakenasawhole,theAnnualReportisfairand

balancedandprovidestheinformationnecessary

forshareholderstoassesstheCompany’s

performance,businessmodel,strategyandgoing

concernstatement;

• receivedanddiscussedwiththeAuditorits

reportontheresultsofthereviewofthehalf-

yearconsolidatedfinancialstatementsto

28February2022andtheperiodendauditto

31August2021;

• agreedtheauditplanwiththeAuditorinrespect

ofthereviewoftheHalf-YearReportforthe

periodended28February2022andthestatutory

auditoftheAnnualReportfortheyearended

31August2022,includingtheprincipalareasoffocus

beingmanagementoverrideofcontrols,revenue

recognitionandinvestmentpropertyvaluation;

• reviewedandagreedtheauditfeesforthestatutory

auditoftheCompanyanditssubsidiariesandforthe

interimreviewfor2022;

• discussedandconsideredtheAuditor’s

performance,objectivityandindependenceandthe

effectivenessoftheexternalaudit;and

• reviewedwhetheraninternalauditfunction

wouldbeofvalueandconcludedthatthiswould

provideminimaladdedcomfortatconsiderable

extracosttotheCompany.Theexistingsystem

ofmonitoringandreportingbythird-partyservice

providersremainsappropriate.TheCommittee

keepstheneedsforaninternalauditfunctionunder

periodicreview.

Governance

Report of the Audit Committee

 HomeREITplc | AnnualReport | Fortheyearended31August2022 57

Activities post the year end under review

Withconsiderationtothesignificantdelayinpublishing

theannualreport,theAuditCommitteehasdecided

todisclosetheactivitypostyearendtothedateofthe

approvaloftheseaccounts.

Atthe18November2022meeting,theCommittee

consideredthefollowingkeymatters:

• BDO’sauditreporttotheCommitteeandthedraft

auditopinionanddraftletterofrepresentation;

• ReviewoftheriskregisterpreparedbyAHRA;

• Reviewofthedraftannualreportandmattersfor

consideration;

• Reviewoftheannualvaluationsoftheunderlying

propertyassetsoftheCompanyandrecommended

thesetotheBoard.Thevaluationasat

31August2022wasinitiallyundertakenbyKnight

Frank,anaccreditedindependentexternalvaluer

withrelevantandrecentexperienceofvaluing

residentialpropertiesofthetypeinwhichtheGroup

invests.KnightFrankresignedon3May2023;

• Paymentofanadditionalinterimdividend;and

• Evaluationofeffectivenessoftheexternalauditand

re-appointmentofBDO.

Atthedateofthismeeting,BDO’sauditworkwas

substantiallycomplete,albeittherewereanumberof

outstandingitems.Nonetheless,howeverfinalaudit

completionwasexpectedfor28November2022.

Subsequenttothemeetingon18November2022,

itbecameapparentthatcertainoftheoutstanding

itemswerelinkedtotheissuesthathavesincebeen

uncoveredandaredetailedelsewhereinthisreport

andthatfurtherworkwasrequiredinrelationtothese

issues.Followingtheissuanceoftworeportsfrom

ViceroyResearchinNovember2022,BDOdetermined

itwasrequiredtoundertakeanenhancedsetofaudit

proceduresinrespectofthefinancialyearended

31August2022.InJanuary2023,theBoardinstructed

A&Mtoconductaninvestigationintoallegations

ofwrongdoing,includingmattersraisedinthe

ViceroyResearchReport.TheconclusionsofA&M’s

investigationaresetoutbelow.

Atthemeetingon25April2023(atwhichBDOwere

notinattendance),theCommitteeconsideredthe

riskregisterandanupdateoftheauditfortheperiod

ended31August2022.

KnightFrankresignedasexternalvalueron3May2023.

On5May2023,A&MdeliveredtotheCompanya

detailedreport.Withoutwaiverofprivilege,thekey

findingsofthisreportconcludedthat:

• arrangementswiththeGroup’scorporatetenants

andvendorsrelatingtothecostofrefurbishment

ofpropertieswerenotbroughttotheattentionof

theBoardbyAHRA,sothattheBoardwasunableto

considerwhetherareleaseofavendor’sliabilities

forrefurbishmentofpropertieswasappropriate.

Thesearrangementsincluded,arepresentativeof

AHRA,withouttheknowledgeortheauthorityof

theBoard,enteringintoasettlementagreement

withtheAggregatorsandtheCompanypaying

£0.7millionandpurportedlywaivingany

refurbishmentclaimsagainsttheAggregatorsin

relationto488propertieson8December2022;

• theBoardhadnotapprovedorbeenprovidedwith

informationregardingalternativearrangementsto

settleoutstandingrentarrears(asdiscussedinNote

5totheConsolidatedFinancialStatements);

• therewaslimitedevidenceofdetailedongoing

monitoringoftenantsbeingundertakenbyAHRA;

• AHRAprovidedinaccurateinformationabout

occupancyratestoTheGoodEconomy;

• certainconnectionsbetweentenantsexistedthat

werenotdisclosedtotheBoard;and

• thereexistedcertainundisclosedpotentialoutside

businessinterestsandundeclaredpotential

conflictsofinterestasbetweencertainpersons

associatedwithAHRAandthirdparties.

Withconsiderationofthefindingspostyearend,the

Boarddeterminedthatrevisedaccountingpolicies

wererequiredforacquisitionaccountingandrevenue

recognitiontoappropriatelyaccountforthesubstance

ofhistoricalacquisitionsandleasecontracts.The

Boardalsodetermineditwasnecessaryto:applythe

revisedaccountingpoliciesbacktoinceptionwith

reviewofallhistoricalacquisitionsandleasecontracts;

instructthirdpartiestoundertakeaninternal

inspectionprogrammetodeterminetheconditionof

theproperties;andappointJLLasindependentvaluer

toundertakevaluationsoftheentireportfolio,onthe

basisoffairvalueasat31August2022.Theapplication

ofrevisedaccountingpoliciesbacktoinceptionhas

resultedintherestatementofthe2021comparatives

intheaccounts.

Atthemeetingon29May2024theCommittee

consideredtheupdatedauditplanfortheperiodended

31August2022andthepreliminaryauditplanforthe

yearended31August2023.

Atthemeetingon30August2024theCommittee

consideredtheupdatedriskregisterfortheproposed

managedwinddown.Inrelationtotheyearended

31August2022theCommitteereviewedJLL’svaluation

reportandBDO’sdraftauditreporttotheCommittee.

TheGoingConcernpaperanddraftannualaccounts

werealsopresented.

Governance

Report of the Audit Committee—continued

58 HomeREITplc | AnnualReport | Fortheyearended31August2022

Financialstatementsandsignificant

accounting matters

TheCommitteehastakenintoaccountthemost

significantrisksandissues,bothoperationaland

financial,whicharelikelytoimpacttheCompany’s

financialstatements.Itconsideredthefollowing

keyissuesinrelationtotheCompany’sfinancial

statementsduringtheyearandpostyearend:

Valuationofinvestmentproperty

TheCommitteeconsidersthevaluationofinvestment

propertytobeasignificantareaofjudgmentwhich

couldmateriallyimpactthefinancialstatementsforthe

periodended31August2022.JLLhasbeenappointed

postperiodendastheindependentvaluertovaluethe

Group’spropertyportfolioinaccordancewiththeRICS

requirementsonabi-annualbasis.

TheGroup’sportfoliohasbeenindependently

retrospectivelyvaluedbyJLLinaccordancewith

theRICSValuationProfessionalStandards.Asat

31August2022,theGroup’sportfoliohadamarket

valueof£414.3millionrepresenting45.5%ofthe

historicalacquisitioncosts(includingpurchasecosts).

Thereductioninthepropertyvaluationisprincipallyas

aresultofare‐assessmentofthequalityoftheassets

andthecovenantstrengthofthetenants,severalof

whichhavegoneintoliquidationpostperiodend.JLL

haveretrospectivelydeterminedtheconditionof

thepropertiesthroughexternalinspectionof1,975

propertiesandinternalinspectionof195properties

supportedbythirdpartyconditionreportson

784properties.

Indeterminingthefairvalueas31August2022,JLLhas

usedacombinationoftheinvestmentapproach(61%

oftheproperties)andMV-VP(39%oftheproperties).

RefertoNote9totheConsolidatedFinancial

Statementsforfurtherdetail.

Whilstallpropertieswithintheportfolioweresubject

toalease,thesecurityoftheunexpiredtermfor

theseleasesdiffersacrosstheportfoliodepending

onthecovenantstrengthofthetenant.Fortenants

withaweakcovenantstrength,orwhereaproperty

wasdeemedunhabitableornotfitfor-purpose,JLL

disregardedtheleasesandvaluedthepropertiesonthe

basisofMV-VP.

Whereavaluationhascontinuedtobepreparedonan

investmentbasis,limitationsonthedurationofthe

incomestreamshavebeenappliedtoaccountforthe

covenantstrengthsofthetenants,andtherentlevels

demandedundertheleases.JLLcappedtheunexpired

leasetermatfiveyearsduetothelackofconfidencein

thosetenantsbeingabletofulfiltheirleaseobligations.

Furthermore,forthosepropertieswhicharesublettoa

tenantwithastrongcovenant,JLLignoredtheprimary

in-placeleaseandinsteadcapitalisedthesublease

passingrentforitsremainingterm(uptoeightyears).

Whereapropertyhasahighpassingrentincomparison

toJLL’sopinionofMV-VP,JLLcappedthefairvalueat

150%ofMV-VP.

The2021KnightFrankvaluationvaluedeachasset

ontheinvestmentapproach.Havingretrospectively

consideredthesubstanceofthetransactionsand

consideredthelevelofworksrequired,theDirectors

nowconsiderthatthesubstanceofsometransactions

wasthatofaforwardfundingarrangement.As

describedmorefullyinNote9totheConsolidated

FinancialStatements,theDirectorshavededucted

theestimateofprepaidSeller’sWorksfromthefair

valueoftheKnightFrankvaluation.Additionally,as

discussedinNotes3and4totheConsolidatedFinancial

Statements,theDirectorsalsoconsiderthatthe

substanceofenteringintosimultaneousacquisition

andleasingtransactionsresultedintheindirect

paymentofleaseinducementsandtheaccounting

shouldbecorrectedaccordingly.Theseamounts

havealsobeendeductedfromthevalueoftheKnight

Frankvaluation,includingadjustmentforassociated

amortisation.TheDirectorshavealsoconsidered

whetherthe31August2021KnightFrankvaluation

requiredadditionaladjustmentsandconcludedthatno

furtheradjustmentswererequired.

TheCommitteereviewedthedetailedvaluationreport

fromJLLandtheassumptionsunderlyingtheproperty

valuationsandconcludedthatthevaluationatthe

Company’syear-endisappropriate.

Significantaccountingjudgementsandestimates

Thejudgements,estimatesandassociated

assumptionsthathavehadamaterialimpactinthe

presentationofassetsandliabilitiesintheseaccounts

havebeenmadeinrelationtotheacquisitionof

investmentproperty(includingSeller’sWorks,lease

inducementpaymentsandretentions),valuationsof

investmentpropertyandrentalrevenuerecognition.

ThesearedetailedinNote3totheConsolidated

FinancialStatements.

Governance

Report of the Audit Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 59

Limitationsofscope

BDOwereunabletoexpressanopiniononthefinancial

statementsasaresultofcertainlimitationsinscope

relatingtoaninabilitytoobtainsufficientaudit

evidenceinrelationtothematterssetoutbelow.The

Directorsconsiderthattheywereunabletoprovide

auditevidencetoBDOprincipallydueto:

• AHRA’sfailuretoobtain,maintainandretain

adequateandaccurateaccountingrecords;

• AHRA’sfailuretosufficientlyhandoverallapplicable

materialtoAEWontransition;

• AHRA’sfailuretofollowproceduresaroundthe

declarationofandapprovalforenteringintorelated

partytransactions;and

• AHRA’sactingonbehalfofandwithouttheapproval

oftheDirectorsinenteringintocontractsand

transactionswhichrequiredBoardapproval.

Inaddition,becauseoftheterminationofAHRA,BDO

werenotabletomakeinquiriesoftheAHRAemployees

whoparticipatedintheday-to-dayoperationsand

thosewhowereexpectedtofollowtheinternalcontrol

structureestablishedatinception.

Thisabsenceofcompleteaccountingrecordshasled

totheBoardmakingestimatesinsignificantareas.The

areaswheretheDirectorshavehadtomakeestimates

andassumptionsarediscussedindetailinNote3tothe

ConsolidatedFinancialStatements.BDO’slimitations

ofscopeprimarilyresultfromthefollowingareas:

1. AHRAproposedpropertiesbeacquiredby

theGroupmanyofwhichrequiredsignificant

improvementstobecompletedbythevendor.

AcquisitionsofthisnaturerequiredBoardapproval.

WithouttheknowledgeorapprovaloftheBoard,the

SPAsrelatedtotheseacquisitionsdidnotcontain

customaryprotectionsfortheGrouptoensure

thatthevendorscompletedtheworkwithinthe

agreedtimeframe,suchasagreeingthescopeand

costofworkstobecompletedandwithholding

adequatelevelsofacquisitionfundsuntiltheworks

werecompletedandanaccompanyingcertificateof

practicalcompletionwasreceivedandverified.

2. Theconditionofthepropertieswasunknownby

theDirectorsatthebalancesheetdateasaresult

oftheinadequaterecordsthatweremaintainedas

describedin1aboveandthelackofmonitoringby

AHRAontheprogresstowardcompletionofSeller’s

Works.Toremedythesituation,theDirectors

engagedVibrantandotherstoinspectasmany

propertiesaspossiblesothatJLLhadappropriate

informationtosupportthepropertycondition

assumptionunderpinningitsvaluation.Because

VibrantwasnotengageduntilAugust2023andthe

programmecontinueduntilMay2024,theresults

couldonlybeusedasaproxyfortheconditionasat

31August2022.

3. TheDirectorshaveretrospectivelyestimated

that7.7%ofthepropertieswereconsideredto

beunhabitableatacquisition.Thisimpactedthe

classificationoftheleaseinducementandthe

recognitionofrevenue.

4. AsdisclosedinNotes3,5and11totheConsolidated

FinancialStatements,cashwasreceivedinseveral

non-traditionalmannersandtheapplicationof

thereceiptswasatthedirectionofAHRAand

notaccompaniedbyinformationtosupportthe

applicationoffundsreceivedtospecificinvoices.

ThissectiondetailshowtheDirectorsspecifically

consideredeachlimitationofscopewhichrelatedto

boththeGroupandtheCompany,asapplicable:

Governance

Report of the Audit Committee—continued

60 HomeREITplc | AnnualReport | Fortheyearended31August2022

Financial

Statements

Area

Accounting

Area Limitation How Considered

Investment

Property

Additions

duringtheperiod

Whereapropertywasacquiredwitha

commitmentforvendortocomplete

Seller’sWorks,aportionofthepurchase

priceshouldhavebeenaccountedforas

aprepayment.Therewereinsufficient

recordsastotheagreedvalueofSeller’s

Worksattheacquisitiondate.

Asnotedabove,AHRAeitherdidnotobtain

andmaintainadequatepropertycondition

informationasattheacquisitiondateordid

notpassthoserecordstoAEWinorderto

beabletoassessthevalueofSeller’sWorks

attheacquisitiondate.Themethodology

followedtoestimatethevalueofSeller’s

WorkshasbeendetailedinNote3tothe

ConsolidatedFinancialStatements.

Leaseincentiveor

leaseinducement

forunhabitable

properties

TheDirectorshadtomakeassumptions

astotheconditionofthepropertyat

acquisitionbasedonavailablerecords.

Further,theDirectorsreviewedthe

substanceoftheagreementsentered

intowithtenantsandvendorsandare

nowoftheopinionthataportionofthe

purchasepricerepresentingoneyearof

rentshouldhavebeenestablishedasa

leaseincentiveoraleaseinducementfor

unhabitableproperties,dependingon

whetherthepropertywasconsidered

habitableatacquisition.Basedupon

incompleterecords,thereisalimitationof

scopeovertheconditionoftheproperty

atacquisition.BecausetheGroupwas

notapartytoanyagreementbetween

thetenantandthevendorthereisalsoa

limitationofscopeastothelengthofany

tenantincentiveprovidedbythevendor.

TheDirectorsconsiderthatthelease

agreementandSPAshouldbeaccounted

forasasinglecontract.TheDirectors

thereforeconsiderthatthepayment

fromthevendortothetenantshould

beaccountedforasaseparatelease

inducementasset.

Whereanacquiredpropertywas

retrospectivelydeemedtobeunhabitable,

theleasedidnotmeetthecriteriafor

revenuerecognitionandtheleaseincentive

shouldhavebeenclassifiedasalease

inducementforunhabitableproperties.

Theassumptionsaroundthisandthe

classificationastowhetherthatpayment

isatenantreceivableoraleaseincentive

aredescribedinNote3totheConsolidated

FinancialStatements.

Costcapitalisationat

theacquisitiondate

Thereisuncertaintyastothewhether

therewereanycommissionspaidby

vendorsatacquisitionwithoutthe

knowledgeoftheBoard,andifpaid

whethertheyincludedanyamountstokey

management.Ifcommissionswerepaid

torelatedparties,theymaynothavemet

thecriteriaforcapitalisationasacquisition

costswhichwouldimpactthevalueof

investmentpropertyandtherevaluation

movementinanyperiod.

TheDirectorshavenotbeenabletoprove

whetheranyofthepurchasepricewas

usedbythevendortopaycommissions

andifsowhethertheywerepaidtokey

employeesofrelatedparties.Accordingly,

theGrouprecordedtheentireamountpaid

tothevendortotransacttheacquisition

withallocationstoSeller’sWorksandlease

incentivesasdescribedabove.

Fairvalueat

31August2022

Thereislackofevidencetosupportthe

actualconditionofeachpropertyandthe

financialconditionofeachtenantasat

31August2022.

Inordertoretrospectivelyassessthe

propertyconditionasat31August2022,the

DirectorsengagedVibrantandotherthird

partiestoperformpropertyinspections

fromAugust2023throughtoMay2024.

Theresultsfromtheinspectionprogramme

undertakenwereusedasaproxyforthe

conditionasat31August2022.JLLused

theseupdatedconditionassumptionsand

theirownconclusionsontenantfinancial

conditiontosupporttheirconclusionon

propertyvalues.

Governance

Report of the Audit Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 61

Financial

Statements

Area

Accounting

Area Limitation How Considered

Trade

and other

receivables

Leaseinducement

forunhabitable

properties

Thereislackofauditevidenceto

supporttheconditionofthepropertyat

acquisitionleadingtouncertaintyasto

whetheramountsshouldbeclassifiedas

aleaseincentive(includedininvestment

property)oraleaseinducementfor

unhabitableproperties(includedintrade

andotherreceivables).

AsoutlinedinNote3totheConsolidated

FinancialStatementsjudgementswere

madewithregardtorentalrevenue

recognitionbasedonwhetherproperties

weredeemedtobeinhabitablecondition

whichimpactedtheclassificationofthe

leaseinducement.

Tenantreceivables

inaccordancewith

leaseagreements

Cashwasreceivedinseveralnon-

traditionalwaysduringtheperiod

fromSeptember2021toOctober

2022whichwerenotaccompaniedby

remittancestatements.

Notes3,5and11totheConsolidated

FinancialStatements,describethe

assumptionsmadebyDirectorssupporting

theaccountingtreatment.

Leaseincentiveor

tenantreceivable

Sufficientappropriateauditevidencedid

notalwaysexisttosupportthecondition

ofthepropertyonacquisitionwhichisthe

keydeterminingfactorastowhetherthe

incentiveprovidedbythevendortothe

tenantisclassifiedasaleaseincentiveora

leaseinducementreceivable.

AsoutlinedinNote3totheConsolidated

FinancialStatementsjudgementswere

madewithregardtorentalrevenue

recognitionbasedonwhenproperties

weredeemedtobeinhabitablecondition.

Therecordingofaleaseincentiveorlease

inducementforunhabitableproperties

followedthisdetermination.

Prepaid

Seller’sWorks

Asnotedabove,therewasalackofaudit

evidencetosupportthevalueofSeller’s

Worksattheacquisitiondate.

Theassumptionsunderpinningthe

valuationofprepaidSeller’sWorkshave

beensetoutinNote3totheConsolidated

FinancialStatements.

Restricted

Cash

Retentionsheld

bysolicitors

MostSPAsrequiredthataretentionbe

helduntilvendorcompletionofSeller’s

Worksandreleaseduponthereceipt

ofacertificateofpracticalcompletion.

However,someretentionswerefound

tohavebeenreleasedwithoutany

supportingevidenceofcompletion.

Becauseofthelackofsupportingevidence,

asoutlinedinNote3totheConsolidated

FinancialStatementstheDirectorshave

hadtorecordthereleaseofretentionson

acashbasis.

CashheldinEscrow

forPropertyRepairs

Evidenceofanescrowaccountfunded

byavendorandusedbytenantsfor

propertyrepairswasdiscovered.Other

arrangementscouldhaveexisted.

Sincethetransactionsoccurredwithout

BoardknowledgetheDirectorscannot

statethatothersimilararrangementsdid

notoccur,buthaverecordedthereceipt

ofcashandthedistributiontotenants

whereidentified.

Rental Income

Amountsinvoiced

inaccordancewith

leaseagreements

Thereisalackofevidencetosupport

theconditionofthepropertyon

acquisitionandasaresulttheDirectors

havehadtomakeassumptionsasto

therentcommencementdatewhich

impactstherecognitionofrevenueand

therecognitionandimpairmentofthe

associatedleaseincentive.

AsoutlinedinNote3totheConsolidated

FinancialStatementsjudgementswere

madewithregardtotheconditionof

thepropertyandtheappropriaterental

revenuerecognitionstartdatebasedon

whenpropertiesweredeemedtobeina

habitablecondition.

Straightline

rentadjustment

Becauseoftheuncertaintyovertherent

commencementdate,thereislimitation

ofscopeovertherecognitionofstraight-

linerentalrevenue.

AsoutlinedinNote3totheConsolidated

FinancialStatementsjudgementswere

madewithregardtorentalrevenue

recognitionbasedonwhenpropertieswere

deemedtobeinhabitablecondition.

Governance

Report of the Audit Committee—continued

62 HomeREITplc | AnnualReport | Fortheyearended31August2022

Financial

Statements

Area

Accounting

Area Limitation How Considered

Administrative

expenses

Commissions Asnotedabove,thereisuncertaintyasto

whetheranycommissionswerepaidby

vendorsandifsowhetheranywerepaid

torelatedparties.Iftheydid,theymay

nothavemetthecriteriaforcapitalisation

asadditionsandthereforeshouldhave

beenexpensed.

BecausetheDirectorshavenotbeenable

toconcludeastowhetheranycommissions

werepaidbyvendorsonproperty

acquisitions,andifso,whethertheywere

paidtorelatedparties,theDirectorshave

recordedacquisitionsbaseduponamounts

paidtovendorslessamountsrelatedto

leaseincentivesandSeller’sWorks.

Write-off of

Seller’s Works

not initiated or

completed

Becauseoftheuncertaintyinvaluing

prepaidSeller’sWorks,asnotedabove,

thereisalimitationofscopeonthevalue

andtimingoftheexpenserecognised

whentheworkswerenotcompletedand

theprepaidbalancewassubsequently

writtenoff.

RefertoNote3totheConsolidated

FinancialStatementsforjudgmentsand

estimatesinrelationtotheestimateofthe

valueofSeller’sWorksatacquisition.

Provision

for expected

credit losses

of trade

receivables

Asnotedaboveintradeandother

receivables,therewasinsufficient

evidencetosupporttheageingoftrade

receivables.

RefertoNote3totheConsolidated

FinancialStatementsforjudgmentsin

relationtothevalueoftenantreceivables

andtheestimatessupportingthe

provisionforcreditlossesrecognised

intheConsolidatedStatementof

ComprehensiveIncome.

Changes in

fair value of

investment

property

Costof

investment

properties

Becausethepropertyconditionwasnot

certain,whichimpactsthevaluationof

investmentpropertyatthebalancesheet

date,andtheestimatesofthevalueof

Seller’sWorks,thereisalimitationof

scopeastothecostrecognisedforthe

propertyatacquisitionandthevalueof

investmentpropertyatthebalancesheet

datewhichimpactstherecognitionof

valuemovementofinvestmentproperty

intheperiod.

RefertoNote3totheConsolidated

FinancialStatementsforjudgementsand

estimatesinrelationtotherecognition

ofthecostandsubsequentvaluation

ofinvestmentpropertyatthebalance

sheetdateincludingtheestimateof

amountsallocatedtoSeller’sWorksatthe

acquisitiondate.

Related Party

Transactions

Thereisuncertaintyastothe

completenessofrelatedparty

transactionswithkeymanagementand

associateddisclosures.

Asnotedabove,theDirectorshave

disclosedallknownrelatedparty

transactionstowhichtheGroupor

Companywereaparty,includingall

transactionswitheveryDirector.

Fair value

of bank

borrowings

Disclosure BDOcouldnotconcludeastowhether

themethodologyemployedbythe

Company’sthird-partyexpertwas

appropriate.Inthetimeframegiven,

BDOcouldnotconcludewhetheritwas

appropriatetovaluetheoutstanding

borrowingsusinganythingotherthan

theincomeapproachandspecifically

theweightingof50/50%oftheincome

approachofvaluationandpar.

TheDirectorsengagedathirdpartyto

estimatethefairvalueoftheborrowings

andthemethodologyisdisclosedinNote10

totheConsolidatedFinancialStatements.

Becausetheloanissecuredwithadequate

collateral,thevaluationconsideredthat

thefairvalueshouldweighttheincome

approachandparat50%/50%.

Governance

Report of the Audit Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 63

ThissectiondetailshowtheDirectorsspecificallyconsideredeachlimitationofscopeastheyrelatedonlytothe

CompanyFinancialStatements:

Financial

Statements

Area

Accounting

Area Limitation How Considered

Investment in

subsidiaries

Thevalueoftheinvestmentin

subsidiariesisdependentuponthe

valuationoftheassetsandliabilitiesof

eachsubsidiary.Forthereasonssetout

above,BDOcouldnotobtainsatisfactory

evidencetosupportthecarryingvalueof

theinvestmentinsubsidiariesbalance.

Themethodologytoestimatethevalue

ofthenetassetsofeachsubsidiaryand

theconclusiontoimpairtheinvestment

balancebeforetheamountsduefrom

subsidiariesisasdetailedinNotes2and3

totheCompanyFinancialStatements.

Amounts

due from

subsidiaries

Thevalueofamountsduefrom

subsidiariesisdependentuponthe

valuationoftheassetsandliabilitiesof

eachcounterpartysubsidiary.Forthe

reasonssetoutabove,BDOcouldnot

obtainsatisfactoryevidencetosupport

theexpectedcreditlossesonamounts

duefromsubsidiaries.

Themethodologytoestimatethevalue

ofthenetassetsofeachsubsidiaryand

theconclusiontoimpairtheinvestment

balancebeforetheamountduefrom

subsidiariesisasdetailedinNotes2and3

totheCompanyFinancialStatements.

Thecommentsabovealsoapplytoopeningbalancesandeachassociatedfootnoteandthe2021valuationis

addressedonpage58.Thecommentsabovefurtherrelatetobalancespresentedintheconsolidatedstatement

ofcashflowstotheextentthatthoseamountsarederivedfromchangesintheconsolidatedstatementof

financialposition.

Goingconcernandviabilitystatement

TheDirectors,atthetimeofapprovingthefinancial

statements,arerequiredtoconsiderwhetherthey

haveareasonableexpectationthattheCompany

andtheGrouphasadequateresourcestocontinuein

operationalexistencefortheforeseeablefutureand

donotconsidertheretobeanythreattotheirgoing

concernstatus.

AsdiscussedinNote26totheConsolidatedFinancial

Statements,theshareholdersapprovedtheNew

InvestmentPolicyon16September2024forthe

ManagedWind-Down.TheGroupwillnotmakeany

furtherrealestateacquisitionsandwillnotmake

anyfurtherinvestment.Capitalexpenditurewillbe

permittedwhereitisdeemednecessaryordesirableto

protectorenhanceanasset’snetrealisablevalueorin

ordertocomplywithstatutoryobligations.

CashflowprojectionshavebeenpreparedbyAEWand

agreedwiththeBoardwhichconsider:

1. Theexpectedorderlydisposalofpropertiesthrough

acombinationofprivatetreatyandauctionsales.

TheBoardexpectsthatsubstantiallyallproperties

willbesoldnolaterthan30June2025.

2. Revenuewillcontinuetobecollectedonproperties

heldbytheGroup.

3. Expensesareforecasttocontinuetobeincurred

atthecurrentlevelforthoseservicesrequired

forthecontinuedoperationoftheGroup.Notice

periodshavebeenconsideredwherenecessary

andthemajorityofoperationsareexpectedto

haveconcludedby31December2025,whenthe

annualreportandaccountsfortheyearended

31August2025arerequiredtobefiled.

AsdiscussedinNote10totheConsolidatedFinancial

Statements,theGrouphasbeenoperatingunder

periodicdebtcovenantwaiversfromandwiththe

supportofScottishWidowswiththelatestwaiver

extendingto31October2024.TheLenderhasstated

thatitexpectsthatbothfacilitiesandtheirassociated

interestandDeferredFeestobefullypaidby

31December2024.Onthisbasis,theDirectorsbelieve

thattheLenderwillcontinuetosupporttheGroupuntil

thedebtisfullyrepaid.However,thereisnoguarantee

thattheLenderwillcontinuetoextenditssupport

beyondthedateofthelatestwaiverletter.

SincebeginningpropertysalesinAugust2023,the

averagediscountfromthe31August2022JLLvaluation

is11.4%and13.2%ifAugust2023throughNovember

2023salesareexcluded,asthisevidencewasused

byJLLaspartofthevaluationprocess(1.9%and

3.0%averagediscountfrom31August2023valuation

respectively).Thisdiscountoccursgenerallybecause

attheauctiondate:

Governance

Report of the Audit Committee—continued

64 HomeREITplc | AnnualReport | Fortheyearended31August2022

1. TheGrouphadnotreceivedfromAHRAorfrom

thenon-performingtenants,andtherefore

cannotproducecriticalinformationthatbuyers

requiresuchasunderlyingoccupancy,tenantand

incomeinformationandpropertycompliance

certificates,and

2. TheGroup’sadvisershaveexperiencedissueswith

accessingpropertiesbecauseoftenantimposed

limitationsorduetopoormanagementbynon-

performingtenants,whichnegativelyimpacts

marketingincludingproducingfullinformation

particulars.

TheGrouphasbeensellingpropertiesthatareinpoor

conditioninordertominimiseoperatingliabilitiesand

risks.Inordertomaximisesalesproceedsfromfuture

sales,AEWisprioritisingsellingpropertieswhichthe

Groupcontrolsandholdscompleteinformationfor

marketing.However,consideringthepastshortfall

tothevaluationsandasacontingencytoensurethe

CompanycanfullyrepaytheLenderandprovide

adequateworkingcapitaltofundoperations,the

Groupintendstosellaminimumofafurther£25million

ofpropertyintheperiodto31December2024.The

remainingpropertieswillbesoldintheperiodto

30June2025.

TheCompanyhasreceivedapre-actionletterofclaim

whichassertsthattheCompanyprovidedinformation

toinvestorswhichwasfalse,untrueand/ormisleading

andasaresultinvestorssufferedlosses.TheDirectors

arenotcurrentlyabletoconcludewhetherorwhen

aformalclaimmaybeissuedandifaclaimisissued,

whatthequantumofsuchclaimmaybe.Further,on

12February2024,theCompanywasnotifiedbythe

FCAofitscommencementofaninvestigationintothe

Company,coveringtheperiodfrom22September2020

to3January2023.TheCompanyandDirectorsareco-

operatingwiththeFCAinitsinvestigation.However,

theyarenotabletoassessorquantifywhatifany

actionmaybetaken.UntiltheDirectorshavebetter

visibilityintotheultimateexposureoftheseandany

othercontingentliabilities,theywillnotbeableto

satisfythemselvesastowhat,ifany,reservesofexcess

cashwillberequiredtosettlethesematters.Whenthe

Directorsareabletoestimatetherangeofexposure,

theCompanyintendstoreturnanyestimatedsurplus

capitaltoinvestors,whilstmaintainingaprudentlevel

ofcashtowinddowntheCompanyandGroupand

consideringanyothereventualities.

Asaresultof(i)uncertaintyoverthetimingofasset

sales,(ii)risksaroundcontinuedLendersupport,(iii)

thethreatenedlitigation,(iv)theFCAinvestigation

and(v)theDirectors’expectationforanorderlywind-

downoftheCompany’soperations,theDirectors

consideritappropriatetoadoptabasisofaccounting

otherthanasagoingconcerninpreparingthefinancial

statements.Nomaterialadjustmentstoaccounting

policiesorthevaluationbasishavearisenasaresultof

ceasingtoapplythegoingconcernbasis.

Internal controls

TheCommitteecarefullyconsiderstheinternalcontrol

systemsbymonitoringtheservicesandcontrolsofits

third-partyserviceproviders.Itreviewedand,where

appropriate,updatedtheriskmatrixduringtheyear

underreview.Thisisdoneonabi-annualbasisormore

frequentlyifrequired.TheCommitteereceivedareport

oninternalcontrolsduringtheperiodunderreview

fromAHRAandtheCompany’sotherkeyservice

providersandnosignificantmattersofconcernwere

identifiedatthetime.TheBoardcontinuestoregularly

reviewandupdatetheriskmatrixwithAEW.TheBoard

hasconsideredtheinternalcontrolsandriskmatrixand

determinedthatthesewereappropriatebasedonthe

informationreportedtotheBoardandallCommittees

atthetime.Theriskregisterhasbeensubstantially

amendedpostperiodendduetotheincreasedrisk

andtypeofriskstheCompanyisnowexposedto

andtoreflecttheactivitiesoftheGroupduringthe

StabilisationPeriodandtheManagedWind-Down.

Auditor’s remuneration

FeespaidtotheGroup’sIndependentAuditorincludethefollowing:

Governance

Report of the Audit Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 65

Serviceprovided

Yearended

31August2022

£’000’s

Periodended

31August2021

£’000’s

FeespayablefortheauditoftheCompany’sannualaccounts 2,164 182

FeespayableinrespectofthereviewoftheInterimReport 44 31

Feesinrespectofreportingaccountantservicesandinterimaudit,

recogniseddirectlyinequityasshareissuecostsinFY22andFY21

– 221

FeesinrespectoftheauditoftheGroup’sinitialaccounts – 43

FeespayablefortheauditoftheCompany’ssubsidiaries 72 12

FurtherdetailsoftheAuditor’sremunerationaresetoutinNote6totheConsolidatedFinancialStatements.

Non-audit services provided by the Auditor

TheCommitteehasanon-auditservicespolicyin

place.Thesupplyofnon-auditservicesprovidedby

theAuditorisconsideredonacase-by-casebasisand

mayonlybeprovidedtotheCompanyifapproved

bytheCommittee,theprovisionofsuchservicesis

atareasonableandcompetitivecostanddoesnot

constituteaconflictofinterestorpotentialconflict

ofinterestwhichwouldpreventtheAuditorfrom

remainingobjectiveandindependent.BDOwaspaid

feesinrespectofthefollowingnon-auditservices

intheyear:

Non-auditserviceprovided

Yearended

31August2022

£’000’s

Periodended

31August2021

£’000’s

AuditofInitialAccounts – 43

ReviewofInterimReport 44 31

ReportingaccountantservicesregardingtheAdmissionto

theLondonStockExchange(recordedasshareissuancecosts

directtoequity) – 92

InterimauditprocedurestosupporttheadditionalShareissuance

(initiallyrecordedasaprepaymentandreclassifiedtoshareissuance

costsdirecttoequityinFY22) – 129

TheindependenceoftheAuditorwasconsidered

priortotheprovisionoftheseservices.TheAudit

Committeebelievesthattheprovisionoftheabove

servicesdoesnotaffecttheindependenceofBDOLLP

astheCompany’sexternalAuditor.

Effectivenessoftheexternalaudit

TheCommitteereviewstheeffectivenessofthe

externalauditprocessonanannualbasis.Duringthe

year,theCommitteemetkeymembersofthesenior

auditteamatBDOaspartoftheannualreporting

process.TheChairoftheCommitteeliaisesregularly

withtheleadauditpartnertodiscussanyissuesarising

fromtheauditaswellasitscosteffectiveness.In

fact,theChairoftheCommitteemetwiththelead

partner,priortotheexpectedfinalisationoftheaudit

oftheAnnualReportandAccountsfortheyearended

31August2022,on18November2022,withoutAHRA

beingpresent,todiscusshowtheexternalauditwas

carriedout,thefindingsfromsuchauditandwhether

anyissueshadarisenfromtheAuditor’sinteraction

withtheCompany’svariousserviceproviders.

Theauditwasstillinprogressatthispointwithsome

openitems,butnomaterialmatterswereraisedat

thisstagealbeittherewereanumberofoutstanding

itemsasnotedabove.Followingpublicationofthe

ViceroyResearchReport,BDOundertookenhanced

auditprocedures.

TheChairoftheCommitteehasthroughoutthe

interveningperiodfromNovember2022liaised

regularlywiththeleadauditpartnertoagreearevised

auditplanfortheyearend31August2022andto

discussanyissuesarisingfromtheaudit.TheChairof

theCommitteealsometwiththeleadpartner,prior

tothefinalisationoftheauditoftheAnnualReport

andAccountsfortheyearended31August2022

withoutAEWbeingpresent,todiscusshowthe

externalauditwascarriedout,thefindingsfromsuch

auditandwhetheranyissueshadarisenfromthe

Auditor’sinteractionwiththeCompany’svarious

serviceproviders.

Followingitsreviewpriortotheapprovalofthese

accounts,theCommitteehaschallengedtheAuditor

andconcludedthattheAuditorhasdemonstrateda

goodunderstandingofthestructureandoperations

Governance

Report of the Audit Committee—continued

66 HomeREITplc | AnnualReport | Fortheyearended31August2022

oftheCompanyandhadidentifiedandfocusedonthe

areasofsignificantfinancialreportingrisk.Theexternal

auditprocesswasconsideredtohavebeeneffective.

Independence and objectivity of the Auditor

BDOwasselectedastheCompany’sexternalAuditor

atthetimeoftheCompany’slaunchin2020following

aformaltenderprocessandreviewoftheAuditor’s

credentials.ThecontinuingappointmentoftheAuditor

isreviewedannuallybytheCommittee,whichgives

considerationtotheAuditor’sfeesandindependence,

alongwiththemattersraisedduringeachaudit.

TheCommitteehasconsideredtheindependence

andobjectivityoftheAuditorandhasconducteda

reviewofnon-auditserviceswhichtheAuditorhas

providedduringtheyearunderreview.TheCommittee

receivesanannualassurancefromtheAuditorthatits

independenceisnotcompromisedbytheprovisionof

suchnon-auditservices.TheCommitteeissatisfied

thattheAuditor’sobjectivityandindependenceis

notimpairedbytheperformanceofthesenon-audit

servicesandthattheAuditorhasfulfilleditsobligations

totheCompanyanditsshareholders.

Re-appointment of the Auditor

BDOwereappointedonIPOasexternalauditorin2020

afteracompetitiveprocess.Inconsiderationofthe

performanceofBDO,theservicesprovidedduring

theyearandareviewofBDO’sindependenceand

objectivity,theAuditCommitteehasrecommended

totheBoardthere-appointmentfor2023and2024.

Fair,balancedandunderstandable

financialstatements

TheCommitteehasconcludedthattheAnnualReport

fortheyearended31August2022,takenasawhole,

isfair,balancedandunderstandableandprovidesthe

informationnecessaryforshareholderstoassessthe

Company’sbusinessmodel,strategyandperformance.

TheCommitteehasreporteditsconclusionstothe

Board.Itreachedthisconclusionthroughaprocessof

reviewofthedraftfinancialstatementsandenquiries

tothevariouspartiesinvolvedintheproductionofthe

AnnualReport.

Marlene Wood

ChairoftheAuditCommittee

10October2024

Governance

Report of the Audit Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 67

IpresentthereportoftheManagementEngagement

Committee(the“Committee”forpurposesofthis

ReportoftheManagementEngagementCommittee

only)fortheyearended31August2022.

Composition

ThecompositionoftheCommitteeissetoutinthe

CorporateGovernanceStatementonpage53.Details

ofhowitsperformanceevaluationhasbeenconducted

areincludedonpages69and70.

Meetings

TheCommitteemettwotimesduringtheyearunder

reviewandthreetimespostyearend.TheDirectors’

attendanceissetoutonpage53intheCorporate

GovernanceStatement.

Role of the Management Engagement Committee

ThekeyresponsibilitiesoftheCommitteeare:

• monitoringandannuallyevaluatingAlvariumFM

andAHRAinvestmentperformanceandtheir

compliancewiththetermsoftheIMAandtheIAA,

respectively;

• reviewing,atleastannually,theperformance

ofAlvariumFMandAHRAandconsideringtheir

continuedappointmentonthetermssetoutintheir

respectiveagreementswiththeCompany;

• reviewingthelevelandmethodofremuneration,

thebasisofperformancefees(ifany)andthe

noticeperiodofAlvariumFMandAHRAtoensure

thattheseremaininthebestinterestsofthe

shareholders;

• ensuringthatprocesseshavebeenputinplace

toreviewtheCompany’sriskmanagementand

internalcontrolsystemsdesignedtosafeguard

shareholders’investmentandtheGroup’sassets;

and

• monitoringandevaluatingtheperformanceof

theotherkeyserviceprovidersoftheCompany

toensuretheircontinuedcompetitivenessand

effectiveness.

Activities during the year under review

Followingitsreviewduringtheyear,theCommittee,

relyinguponinformationreportedtoitandtheBoard

byAlvariumFM,AHRAandotherexternalparties,

tookcomfortatthetimethatAHRAhadinvested

availablefundsduringtheyear,inlinewiththeGroup’s

OriginalInvestmentPolicytobuildadiverseportfolio

ofhigh-qualityassets,lettotenantswithexpertise

insupportingvulnerablehomelesspeople,that

shouldhaveprovidedgrowingandsecurereturnsto

theCompany’sshareholdersaswellaspromoting

independentlivingskillsforthoseinneed.

TheCompanyannouncedon10March2022thatJamie

Beale,partofAHRA’smanagementteamwasleaving

AHRAshortlythereafter.Postyearend,theCompany

announcedon1November2022thatGarethJones,

co-fundmanager,wouldstepbackfromtherolewhilst

hetookaperiodofleaveforhealthreasons.Further,

JamesSnapewasappointedasChiefFinancialOfficer

andAlexBakerwaspromotedtoco-fundmanager

alongsideCharlotteFletcher.TheCommitteeheld

severalfollow-ondiscussionswithAHRAregardingits

successionplanning,proposedmanagementchanges,

andthesupportAHRAreceivesfromseniorAlvarium

InvestmentsLimited(nowAlTiAssetManagement

Holdings2Limited)employees.

TheDirectorsweresatisfied,atthetime,thatthe

collectiveskillsetofAHRA’steamcontainedall

thenecessaryskillsandexperiencetobestserve

theinterestsoftheshareholdersinperformingits

delegatedresponsibilities.

Asawhole,theCommitteewassatisfied,atthetime,

thatAHRAandAlvariumFMhadthesuitableskillsand

experiencetomanagetheGroup’sinvestmentsandto

supportitstenants,andconsideredthatthecontinuing

appointmentofAHRAandAlvariumFMwasinthebest

interestsofshareholdersasawhole.

TheperformanceoftheCompany’sserviceproviders

iscloselymonitoredbytheBoard,throughthe

Committee.TheCommittee’sreviewofthekey

serviceproviderscomprisedopenandclosed-ended

questionsandincludedareviewofthequalityoftheir

servicesandfeestoensuretheyremainedeffective

andcompetitive.Thisprocessalsoincludedreviewing

eachserviceprovider’spoliciesandproceduresto

ensurethattheyhadadequatecontrolsandprocedures

inplace.Inaddition,duringtheyearunderreview,

theCommitteeestablishedtheprocessofholding

individualin-personreviewmeetings,tobeconducted

bytheDirectors,witheachoftheCompany’smain

serviceprovidersonanannualbasis.Severalreview

meetingswereheldduringtheyearandaformalscoring

systemhadbeenadoptedbytheDirectorsinrespectof

theperformanceofeachserviceprovider.

Followingacomprehensivereviewduringtheyear,

theCommitteehadconcludedthattheperformance

ofalltheCompany’skeyserviceprovidershadbeen

satisfactoryandrecommendedtheircontinuing

appointmentonthecurrentterms.

Governance

Report of the Management Engagement Committee

68 HomeREITplc | AnnualReport | Fortheyearended31August2022

Activities post the year under review

TheCommittee,on25April2023,notedthekeyevents

inrespectoftheCompany’sserviceprovidersthathad

occurredsinceNovember2022asfollows:

• AHRAbeingsoldbyitsparentAlvariumRELimited

(nowAlTiRELimited)on30December2022tothe

managementteamofAHRAfundedbywayofa

promissorynote.

• InJanuary2023,theappointmentofA&Mto

conductaninvestigationintoallegationsof

wrongdoing.On5May2023,A&Mdeliveredto

theCompanyadetailedreport.Withoutwaiverof

privilege,thekeyfindingsofthisreportwere:

– arrangementswiththeGroup’scorporate

tenantsandvendorsrelatingtothecostof

refurbishmentofpropertieswerenotbroughtto

theattentionoftheBoardbyAHRA,sothatthe

Boardwasunabletoconsiderwhetherarelease

ofavendor’sliabilitiesforrefurbishmentof

propertieswasappropriate.Thesearrangements

includedarepresentativeofAHRA,withoutthe

knowledgeandauthorityoftheBoard,entering

intoasettlementagreementon8December2022

betweentheCompanyandtheAggregators

wherebytheCompanywouldpay£0.7million

andpurportedlywaiveanyrefurbishmentclaims

againsttheAggregatorsinrelationto488

propertiesheldbytheGroup.

– theBoardhadnotapproved,orbeenprovided

withinformationregardingalternative

arrangementstosettleoutstandingrentarrears;

– therewaslimitedevidenceofdetailedongoing

monitoringoftenantsbeingundertakenby

AHRA;

– AHRAprovidedinaccurateinformationabout

occupancyratestoTheGoodEconomy;

– certainconnectionsbetweentenantsexisted

thatwerenotdisclosedtotheBoard;and

– undisclosedpotentialoutsidebusinessinterests

andundeclaredpotentialconflictsofinterest

betweencertainpersonsassociatedwithAHRA

andthirdparties.

• Duetoinformationthatcametolightwhichwas

incontradictiontoreportingpreviouslyprovided

totheBoardbyAHRAandAlvariumFMduringthe

period,togetherwithlowrentcollectionandfurther

evidenceofmaterialinformationbeingwithheld

fromtheBoard,on15March2023,theBoardagreed

withAHRAbywayofletterofagreementthatthe

CompanywasentitledtoterminatetheIAAonor

before30June2023.On30June2023,theIAAwas

terminated.On25May2023,theCompanyand

AlvariumFMagreedbywayofvariationagreement,

asfurthervariedon18July2023,thattheIMAwould

bevariedtoallowforterminationimmediatelyupon

theCompanygivingnoticeinwritingtoAlvarium

FM,providedsuchnoticewasgivenbynotlater

than31August2023,oruponeitherpartygiving

notlessthansixmonths’noticeinwriting.On

21August2023,theCompanyterminatedtheIMA.

• FollowingtheCompanyannouncementon

15March2023thattheCompanywasinitiating

aprocesstoconsidercandidatesasInvestment

Adviser,theCommitteeshortlistedthree

candidatesandselectedAEWasitspreferred

candidate.

AEWwasinitiallyappointedon22May2023asProperty

AdvisertotheCompanyandwasappointedon

21August2023astheInvestmentManagerandAIFM

oftheCompany.TheCommitteeissatisfiedthatAEW

hasthesuitableskillsandexperiencetomanagethe

Group’sinvestmentsinaccordanceinitiallywiththe

AmendedInvestmentPolicyandnowwiththenew

InvestmentPolicyandconsideredthatthecontinuing

appointmentofAEWisinthebestinterestsof

shareholdersasawhole.

TheChairisindependentofAEW.

TheCommitteealsonotedtheappointmentofJLLas

theindependentvaluertotheGroupon18July2023.

JLLwereappointedtoundertakethevaluationasat

31August2022,28February2023andsubsequent

valuationpoints.

Withdueconsiderationoftheeventsthathave

occurredpostperiodendandthefailureofseveralkey

serviceproviderstoraisematerialmattersorconcerns

withtheBoard,theCommitteedeterminedforgood

governanceallkeyservicesshouldbetenderedexcept

therecentappointmentofAEW,JLLandtheBroker.

Anyreplacementofkeyserviceprovidersrequires

significantplanningtoensurecontinuityofserviceand

efficiencyofhandoverduringaphasedreplacement

programme.AEWcommencedtenderingofseveralkey

serviceproviders,howeverduetotheManagedWind-

Down,theBoardisconsideringwhetherthecurrent

serviceprovidersshouldremaininplace.TheMECand

theBoardwillcontinuetomonitortheperformance

ofkeyserviceprovidersanddeterminewhether

continuedengagementremainsappropriate.

Simon Moore

ChairoftheManagementEngagementCommittee

10October2024

Governance

Report of the Management Engagement Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 69

IpresentthereportoftheNominationCommittee

(the“Committee”forpurposesofthisReportofthe

NominationCommitteeonly)fortheyearended

31August2022.

Composition

ThecompositionoftheCommitteeissetoutinthe

CorporateGovernanceStatementonpage53.Details

ofhowitsperformanceevaluationhasbeenconducted

areincludedonthisandthenextpage.

Meetings

TherehavebeentwomeetingsoftheCommittee

duringtheyear.TheDirectors’attendanceatthese

meetingsissetoutintheCorporateGovernance

Statementonpage53.

Role of the Nomination Committee

TheprimaryresponsibilitiesoftheCommitteeare:

• reviewingthestructure,sizeandcomposition

oftheBoard;

• ensuringplansareinplacefororderlysuccession

totheBoardandensuringthatsuchplanspromote

diversityofgender,socialandethnicbackgrounds,

cognitiveandpersonalstrengths;

• reviewinglengthofserviceofeachDirectorand

assessingifthisimpactsontheirindependence;

• consideringtheuseofopenadvertisingand/oran

externalsearchconsultancyforeachappointment;

• consideringjobspecificationsandwhetherthe

candidateshavethenecessaryskillsandtime

availabletodevotetotheCompany;

• arrangingforanynewDirectorstobeprovidedwith

trainingandinduction;

• makingrecommendationstotheBoardregarding

theCompany’spolicyonthetenureoftheChairof

theBoard;

• makingrecommendationstotheBoardregarding

theCompany’spolicyondiversityandinclusion;and

• performingaformalandrigorousevaluationof

theBoard,itsCommittees,theChairoftheBoard

andindividualDirectorsonatleastanannualbasis,

including,ifappropriate,consideringengagementof

anexternalevaluatortofacilitatetheevaluation.

Activities

Duringtheyear,theCommittee:

• revieweditstermsofreferenceandconsidered

whethertheseremainedappropriate;

• consideredtheresultsoftheevaluationofthe

Board,itsCommittees,theindividualDirectorsand

theChair;

• aspartoftheevaluationprocess,consideredthe

Board’scompositionwithreferencetothemixof

skills,diversity,knowledgeandexperience,andhow

thesealignedwiththeGroup’sstrategicobjectives

andtheopportunitiesandchallengesfacedbyit;

• agreedthepolicyregardingthetenureoftheBoard

members;

• reviewedthesignificantcommitmentsofthe

Directorsandthetimededicatedbythemtothe

affairsoftheCompany;

• maderecommendationstotheBoardregardingthe

Directors’annualre-electionbyshareholdersatthe

AGM;and

• discussedthesuccessionplansfortheBoardto

ensureitsprogressiverefreshing.

Performance evaluation

Aformalannualperformanceevaluationprocess

isundertakenfortheBoard,theCommittees,the

individualDirectorsandtheChair.TheDirectors

areawarethattheycontinuallyneedtomonitorand

improveBoardperformanceandrecognisethatthiscan

beachievedthroughregularBoardevaluation,which

providesavaluablefeedbackmechanismforimproving

Boardeffectiveness.

TheDirectorshaveundertakenaninternalperformance

evaluationbywayofcompletingwrittenquestionnaires,

ledbytheformerChairduringtheperiod,Lynne

Fennah,specificallydesignedtoassessthestrengths

andindependenceoftheBoardandtheperformanceof

itsCommittees,theChairandtheindividualDirectors.

Thequestionnairesarealsointendedtoanalysethe

focusofBoardmeetingsandassesswhethertheyare

appropriate,orifanyadditionalinformationmaybe

requiredtofacilitateBoarddiscussions.Anytraining

needsidentifiedaspartoftheevaluationprocessare

alsoconsideredbytheBoard.Theevaluationofthe

ChairwascarriedoutbytheotherDirectorsofthe

Company,ledbytheSeniorIndependentDirector.

TheresultsoftheBoardevaluationprocesswere

reviewedanddiscussedbytheCommittee.The

Committee’sdeliberationsconcludedthatasawhole

theBoardfunctionseffectivelyandthecurrent

Committeestructureremainsappropriate.Theformer

Chairduringtheperiod,LynneFennah,ledtheBoard

effectivelyandpromotedacultureofopennessand

debate,andfacilitatedconstructiveBoardrelationsand

theeffectivecontributionofallDirectors.Inliaisonwith

theCompanySecretary,sheensuredthattheDirectors

receivedaccurate,timelyandclearinformationtothe

extentpossiblewiththelimitationontheaccuracyand

completenessoftheinformationprovidedbyAHRA;

andalloftheDirectorsinofficeatthetimemadean

effectivecontributionandhadtherequisiteskillsand

Governance

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70 HomeREITplc | AnnualReport | Fortheyearended31August2022

experiencetocontinuetoprovideableleadershipand

directionfortheGroup.AllDirectorswereconsidered

tobeindependentofAHRAinbothcharacter

andjudgement.

Certainareasofimprovementwereidentifiedatthe

time.Theseareasandrecommendationsofnextsteps

asagreedatthetimeareoutlinedbelow:

Keyarea Recommendations

Board

composition

WiththeGroup’sgrowthsinceIPO

anditsadmissiontotheFTSE250,

theCommitteeidentifiedaneedto

appointanadditionalBoardmember.

TheGroupwouldengageaspecialist

externalexecutivesearchagencyto

identifyanindependentnon-executive

Directorforappointmentin2023.

Board

training

Beginningin2023,theDirectors

received,andwouldcontinueto

receive,individualtrainingplansand

wouldrecordaformaltraininglog.The

Groupexpectedtoleverageitskey

serviceprovidersforperiodictraining

sessions,andaformalinductionfor

newDirectorappointmentswould

beundertaken.

ESG

Committee

FormaltermsofreferenceoftheESG

Committeewouldbeapprovedand

uploadedtotheGroup’swebsitein

2023.TheDirectorswouldreceiveESG

trainingandwouldbenefitfromAHRA’s

recentlyappointedHeadofESG.

Strategy

day

In2023,theGroupwouldholda

StrategyDaywithAHRAandotherkey

serviceproviders.Theeffectsoffuture

potentialmacroeconomicevents,

enhancingstakeholdercommunication

andtheGroup’sESGobjectiveswere

possibleareasfordiscussion.

Duetotheverysignificantchallengesexperiencedby

theCompany,theBoarddidnotprogressthestrategy

dayortheESGcommittee.Newboardappointments

aredetailedbelow.

InaccordancewiththeAICCode,beingaFTSE

250constituent,theGroupisrequiredtohavean

externallyfacilitatedBoardevaluationatleastevery

threeyears.Itwasintendedthatin2023,anexternal

agencywouldbeengagedtoconductthisprocess,

however,duetounexpectedeventsthathavearisen

andthesubsequentchangeinBoardpersonnelthis

processhasbeenruninternallyin2024andtheuseof

anexternalagencywasnotdeemedtobethebestuse

ofshareholderresourcesatthistime.

Appointment of Directors

Followingtheyearend,aformal,phasedsuccession

processwasinitiatedbytheCompanyinSeptember

2023,withtheaimthatthemajorityoftheDirectorsin

officeatIPOwillhavedepartedatoraroundthepoint

ofrestorationoftradingintheCompany’ssharesand

thattheBoardwilltransitionentirelywithin12months,

allowingaperiodofhandover.Accordingly,Michael

O’DonnellwasappointedastheChairoftheCompany

witheffectfrom18January2024andPeterWilliams

astheSeniorIndependentDirectorfrom2April2024.

RodDaywasappointedasIndependentNon-Executive

Directoron7June2024.InassemblingthenewBoard,

carefulconsiderationwasgiventotheappropriate

skills,experience,knowledge,culture,capacityand

independenceoftheincomingBoardmembers.The

CommitteeworkedalongsidetheBoardinthisprocess

andmaderecommendationstotheBoardregardingthe

appointmentofthenewDirectors.

FidelioPartners,anindependentexternalexecutive

searchagencywithnoconnectiontotheCompany

oritsDirectors,wasengagedbytheCompanyforthe

purposesofidentifyingpotentialcandidatesfrom

adiverserangeofexperience,skills,backgrounds,

andethnicities.

Election and Re-election of Directors

MichaelO’Donnell,althoughonlyappointedon

18January2024,retiredandstoodforre-election

asrequiredundertheArticles,attheAGMon

29February2024.PeterWilliamsandRodDayare

expectedtostandforre-electionattheGeneral

Meetingtoapprovethe2023accounts.

Governance

Report of the Nomination Committee—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 71

Board diversity

TheBoard’sdiversitypolicyisbasedonitsbelief

thattheBoardshouldhaveadiverserangeof

experience,skillsandbackgrounds.Whenmaking

recommendationsfornewappointmentstotheBoard

andplanningforBoardsuccession,theCommitteewill

takeintoconsiderationtherecommendationsofthe

AICCode,theParkerReviewandotherguidanceon

boardroomdiversityandinclusion.

Asat31August2022,theBoardcomprisedtwofemale

andtwomaleDirectors.AllDirectorsaremembersof

eachoftheBoardCommittees,therefore,thegender

representationsetoutbelowisthesameforthe

BoardanditsvariousCommittees.TheCommitteeis

mindfuloftherecommendationsoftheParkerReview

tohaveatleastonedirectorfromanethnicminority

backgroundontheBoardbyDecember2024.

Numberof

Boardmembers

Percentageof

theBoard(%)

Numberof

seniorpositions

ontheBoard

(SIDandChair)

Men 2 50 1

Women 2 50 1

Duetounexpectedeventsthathavearisenand

thesubsequentchangeinBoardpersonnelfurther

appointmentsareunlikelytobemade.

Tenure and succession planning

TheCompanyhasnoemployees,andAEWisexternal

totheCompany,thereforetheBoard’soversight

ofsuccessionplanningisrestrictedtotheBoard

level.TheBoardwill,fromtimetotimeandwhere

appropriate,discussthesuccessionplansofAEW

throughitsManagementEngagementCommittee.

TheBoard’ssuccessionplanisguidedbyitspolicy

ontenure.TheBoardhasagreedonalimitofnine

yearsonthetenureoftheDirectors,inlinewiththe

recommendationsoftheAICCode.Itbelievesthatthe

tenureshouldbalancetheneedtoprovideandmaintain

continuity,knowledge,experienceandindependence,

againsttheneedtoperiodicallyrefreshtheBoard

composition,inordertomaintainanappropriatemixof

therequiredskills,experience,knowledgeandlengthof

service.TheCompanyensuresthatitssuccessionplan

isbasedonmeritandobjectivecriteriaandpromotes

diversityofgender,socialandethnicbackgrounds,

cognitiveandpersonalstrengths.

TheCommitteemayuseopenadvertisingand/orthe

servicesofexternaladviserstofacilitatethesearchfor

diversecandidatesforanewdirectorrole.Therewere

noappointmentstotheBoardduringFY22.Following

theyearend,asannouncedon4September2023,the

BoardinitiatedaformalandphasedBoardsuccession

process,withthreenewdirectorssubsequently

appointedanditremainstheintentionoftheDirectors

inofficeatIPOtostanddownonpublicationofthe2023

annualreport.

Michael O’Donnell

ChairoftheNominationCommittee

10October2024

Governance

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72 HomeREITplc | AnnualReport | Fortheyearended31August2022

Governance

Directors’ remuneration report

Annual report on Directors’ remuneration

TheDirectors’RemunerationReportfortheyearended

31August2022issetoutbelow.

Statement from the Chair of the Board

AstheBoardconsistsentirelyofindependentnon-

executivedirectors,itisnotconsideredappropriate

fortheCompanytoestablishaseparateremuneration

committeeandtheremunerationoftheDirectors

isthereforedealtwithbytheBoardasawhole.No

Directorisresponsiblefordeterminingtheirown,

individualremuneration.

Duringtheyearended31August2022,thefees

werepaidattherateof£50,000fortheChairofthe

Boardand£36,000fortheotherDirectors,withan

additionalpaymentof£5,000totheChairoftheAudit

Committee.TheDirectors’feesarefixedwithno

variableelement.Followingreview,itwasdecidedthat

thecurrentlevelsofremunerationfortheDirectors

remainedappropriateandnochangeswereproposed

forthefinancialyearended31August2023.

ThefeespayabletotheDirectorswillbereviewedonan

annualbasis,asdetailedintheDirectors’Remuneration

Policyonpage74.

TheCompanyisrequiredtoobtainformalapproval

fromshareholdersoftheDirectors’Remuneration

Policyonceeverythreeyearsandinanyyearifthere

areanychangesproposedtothepolicy.Shareholders

arerequestedtoapprovetheDirectors’Remuneration

Reportonanannualbasis.ThevoteontheDirectors’

RemunerationPolicyissubjecttoabindingvote,while

thevoteontheDirectors’RemunerationReportisan

advisoryvote.

TheDirectors’RemunerationPolicywasapproved

byshareholdersattheAGMheldon27January2022.

Nosignificantchangesareproposedtothewayin

whichthiscurrent,approvedDirectors’Remuneration

Policywillbeimplementedduringthecourseofthe

nextfinancialyear.Anordinaryresolutionwillbeput

toshareholdersatthegeneralmeetingtoapprovethe

2022accountstobeheldassoonaspossiblefollowing

thepublicationofthe2022and2023AnnualReports

andAccounts,toreceiveandapprovetheDirectors’

RemunerationReport.

Performance of the Company

Thefollowinggraphcompares,sinceIPOanduptothe

dateofthisreport,thetotalshareholderreturnofthe

Group’sSharesrelativetoareturnonahypothetical

holdingoverthesameperiodintheFTSEEPRA/

NAREITUKIndexandtheFTSEAllShareIndex.These

indiceshavebeenchosenbytheBoardasthemost

appropriatetocomparetheGroup’sperformance.

Totalshareholderreturnisthemeasureofreturns

providedbyaGrouptoshareholdersreflecting

sharepricemovementsandassumingreinvestment

ofdividends.

AUG

MAY AUGJAN

AUGMAYJAN

AUG MAYJAN

Home REIT FTSE ALL SHARE FTSE EPRA/NAREIT UK

100

120

140

 HomeREITplc | AnnualReport | Fortheyearended31August2022 73

Directors’ remuneration (audited)

Fees Expenses Total

Forthe

yearended

31August2022

Forthe

periodended

31August2021

Forthe

yearended

31August2022

Forthe

periodended

31August2021

Forthe

yearended

31August2022

Forthe

periodended

31August2021

Percentage

changeinfees*

Lynne Fennah (Chair) 50,000 44,551 – – 50,000 44,551 0

Peter Cardwell 36,000 32,077 – – 36,000 32,077 0

Simon Moore 36,000 32,077 – – 36,000 32,077 0

Marlene Wood (Chair of

the Audit Committee)

41,000 36,532 870 168 41,870 36,700 0

163,000 145,237 870 168 163,870 145,405 0

* Thepriorperiodwasshorterthan12months,beingfromtheGroup’sIPOon12October2020to31August2021.Onayear-on-yearbasis,therehasbeennochangetotheDirectors’feeslevels.

Therearenovariableelementsintheremuneration

payabletotheDirectors.Noneoftheabovefeeswas

paidtothirdparties.

Relative importance of spend on pay

Thefollowingtablesetsout:

• theremunerationpaidtotheDirectors;

• thedistributionsmadetoshareholdersbywayof

dividends;and

• theinvestmentadvisoryfeesincurredbytheGroup.

Yearended

31August2022

£’000

Periodended

31August2021

£’000

Change

Directors’ fees 163 145 12.4

Investment

Adviser’s fee 5,322 1,828 191.1

Dividends 28,320 3,993 609.2

Note:theitemslistedinthetableaboveareasrequiredbytheLargeandMedium-sized

CompaniesandGroups(AccountsandReports)(Amendment)Regulations2013,withthe

exceptionoftheinvestmentadvisoryfee,whichhasbeenincludedbecausetheDirectors

believeitwillhelpshareholders’understandingoftherelativeimportanceofthespendon

pay.Director’sfeesexcludeassociatedemploymenttaxes,whichareincludedinDirector’s

feesinNote6totheConsolidatedFinancialStatements..

Directors’ shareholdings (audited)

ThereisnorequirementundertheArticles,or

thetermsoftheirappointment,forDirectorsto

holdSharesintheGroup.TheDirectorshadthe

followingshareholdingsintheGroupallofwhichare

beneficiallyowned.

Directors 31August2022 31August2021

Lynne Fennah 55,000 50,000

Peter Cardwell 10,000 10,000

Simon Moore 56,000 36,000

Marlene Wood 30,000 20,000

Therehavebeennochangestotheseinterests

between31August2022andthedateofsigning

thisReport.NoneoftheDirectorsoranypersons

connectedwiththemhadamaterialinterestin

theCompany’stransactions,arrangements,or

agreementsduringtheyear.

Voting at AGM

TheDirectors’RemunerationReportfortheperiodended31August2021andtheDirectors’RemunerationPolicy

wereapprovedbyshareholdersattheAGMheldon27January2022.Thevotescastbypollwereasfollows::

Directors’ Remuneration Report Directors’ Remuneration Policy

Numberofvotes %ofvotescast Numberofvotes %ofvotescast

For 398,376,681 99.98 397,650,222 99.80

Against 60,825 0.02 787,284 0.20

Total votes cast 398,437,506 100.00 398,437,506 100.00

Number of votes withheld 35,024 35,024

Governance

Director’s remuneration report—continued

74 HomeREITplc | AnnualReport | Fortheyearended31August2022

Governance

Director’s remuneration report—continued

Directors’ remuneration policy

Introduction

TheDirectors’RemunerationPolicyisputtoa

shareholders’voteeverythreeyearsandinanyyear

ifthereistobeachangeinthepolicy.Aresolution

toapprovethisRemunerationPolicywasapproved

attheCompany’sAGMheldon27January2022.The

resolutionwaspassed,andtheRemunerationPolicy

provisionssetoutbelowwillapplyuntiltheyarenext

puttoshareholdersforrenewalofthatapproval.Inthe

eventofanyproposedmaterialvariationtothepolicy,

shareholderapprovalwillbesoughtfortheproposed

newpolicypriortoitsimplementation.

Policy

Fees

TheDirectors’feesaredeterminedwithinthelimitsset

outintheArticlesandtheyarenoteligibleforbonuses,

pensionbenefits,sharebenefits,shareoptions,long-

termincentiveschemesorotherbenefits.

TheDirectors’feesarepaidatfixedannualratesanddo

nothaveanyvariableorperformancerelatedelements.

TheBoardmaydeterminethatadditionalremuneration

maybepaid,fromtimetotime,toanyoneormore

DirectorsintheeventsuchDirectororDirectorsare

requestedbytheBoardtoperformextraorspecial

servicesonbehalfoftheCompany.

Thenon-executiveDirectorsshallbeentitledtofees

atsuchratesasdeterminedbytheBoardsubjecttothe

maximumaggregatefeelimitof£500,000setoutin

theArticles.

TheDirectorsshallalsobeentitledtobereimbursed

forallexpensesincurredinperformanceoftheir

duties.Theseexpensesareunlikelytobeof

asignificantamount.Feesarepayablefromthedate

ofappointmentasaDirectoroftheGroupandcease

ondateofterminationofappointment.

TheBoardwillnotpayanyincentivefeestoanyperson

toencouragethemtobecomeadirectorofthe

Group.TheBoardmay,however,payfeestoexternal

agenciestoassisttheBoardinthesearchandselection

ofDirectors.

Current and future policy

Component Director Purposeofreward Operation

Annual fee ChairofBoard Feesforservicesaschairofaplc DeterminedbytheBoard

Annual fee OtherDirectors Feesforservicesasnon-executive

directorsofaplc

DeterminedbytheBoard

Additional fee ChairofAuditCommittee Foradditionalresponsibilitiesand

timecommitment

DeterminedbytheBoard

Expenses AllDirectors Reimbursementofexpensesincurred

intheperformanceofduties

Submissionofappropriate

supportingdocumentation

NoDirectorisinvolvedinsettingtheirown

remunerationandtheCompany’sconflictofinterest

policyandprocedures(seepage54)applytotheBoard

whenundertakingtheirduties.

Statementofconsiderationofconditionselsewhere

intheCompany

TheCompanyhasnoemployees.Therefore,the

processofconsultingwithemployeesonthesetting

oftheremunerationpolicyisnotapplicable.

Review

TheDirectors’remunerationwillbereviewedonan

annualbasisbytheBoardandanychangesaresubject

toapprovalbytheBoard.

TheremunerationpayabletotheDirectorswill

takeintoaccountanumberoffactors,interalia,the

experienceoftheDirectors,thecomplexityofthe

Companyandprevailingmarketratesfortherealestate

investmenttrustsector.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 75

Directors’servicecontracts

TheDirectorsdonothaveservicecontractswith

theCompany.

TheDirectorsarenotentitledtocompensationon

lossofoffice.TheDirectorshaveappointmentletters

whichdonotprovideforanyspecificterm.However,

inaccordancewiththeAICCode,theyaresubjectto

annualre-election.

Statementofconsiderationofshareholders’views

TheCompanyiscommittedtoengaginginongoing

shareholderdialogueandtakesanactiveinterestin

votingoutcomes.Iftherearesubstantialvotesagainst

resolutionsinrelationtoDirectors’remuneration,

theGroupwillseekthereasonsforanysuchvoteand

willdetailanyresultingactionsinthenextDirectors’

remunerationreport.

Approval

TheDirectors’RemunerationReportwasapprovedby

theBoardandsignedonitsbehalfby:

Michael O’Donnell Chair

10October2024

Governance

Directors’ remuneration report—continued

76 HomeREITplc | AnnualReport | Fortheyearended31August2022

TheDirectorsareresponsibleforpreparingtheAnnual

Reportandthefinancialstatementsinaccordancewith

applicablelawandregulations.

CompanylawrequirestheDirectorstoprepare

financialstatementsforeachfinancialyear.Under

thatlaw,theyarerequiredtopreparetheGroup

financialstatementsinaccordancewithUKadopted

internationalaccountingstandardsandhaveelected

topreparetheCompanyfinancialstatementsin

accordancewithUnitedKingdomGenerallyAccepted

AccountingPractice(UnitedKingdomAccounting

Standards,comprisingFRS101“ReducedDisclosure

Framework”,andapplicablelaw).

Undercompanylaw,theDirectorsmustnotapprove

thefinancialstatementsunlesstheyaresatisfiedthat

theygiveatrueandfairviewofthestateofaffairsof

theGroupandtheCompanyandoftheprofitorloss

oftheGroupandtheCompanyforthatperiod.

Inpreparingthesefinancialstatements,theDirectors

arerequiredto:

• selectsuitableaccountingpoliciesandthenapply

themconsistently;

• makejudgementsandaccountingestimatesthat

arereasonableandprudent;

• statewhetherapplicableUK-adoptedinternational

accountingstandardshavebeenfollowedforthe

GroupfinancialstatementsandUnitedKingdom

AccountingStandards,comprisingFRS101,

havebeenfollowedfortheCompanyfinancial

statements,subjecttoanymaterialdepartures

disclosedandexplainedinthefinancialstatements;

and

• preparethefinancialstatementsonthegoing

concernbasisunlessitisinappropriatetopresume

thattheGroupandtheCompanywillcontinuein

business.

TheDirectorsareresponsibleforkeepingadequate

accountingrecordsthataresufficienttoshowand

explaintheGroup’sandCompany’stransactionsand

disclosewithreasonableaccuracyatanytimethe

financialpositionoftheGroupandtheCompanyand

enablethemtoensurethatthefinancialstatements

complywiththeCompaniesAct2006.Theyarealso

responsibleforsafeguardingtheassetsoftheGroup

andtheCompanyandhencefortakingreasonable

stepsforthepreventionanddetectionoffraudand

otherirregularities.

Website publication

TheDirectorsareresponsibleforensuringtheAnnual

Reportandthefinancialstatementsaremadeavailable

onawebsite.Financialstatementsarepublishedon

theGroup’swebsiteinaccordancewithlegislationin

theUnitedKingdomgoverningthepreparationand

disseminationoffinancialstatements,whichmayvary

fromlegislationinotherjurisdictions.Themaintenance

andintegrityoftheGroup’swebsitehasbeendelegated

toAEW,buttheDirectors’responsibilityextends

totheongoingintegrityofthefinancialstatements

containedtherein.

Directors’responsibilitiespursuanttoDTR4

TheDirectors,tothebestoftheirknowledge,

confirmthat:

• theGroupfinancialstatements,whichhave

beenpreparedinaccordancewithUKadopted

internationalaccountingstandards,giveatrueand

fairviewoftheassets,liabilities,financialposition

andprofitoftheGroup;

• theCompanyfinancialstatements,whichhave

beenpreparedinaccordancewithUnitedKingdom

AccountingStandards,comprisingFRS101,give

atrueandfairviewoftheassets,liabilitiesand

financialpositionoftheCompany;and

• theAnnualReportincludesafairreviewofthe

developmentandperformanceofthebusinessand

thefinancialpositionoftheGroupandtheCompany,

togetherwithadescriptionoftheprincipalrisksand

uncertaintiesthattheyface.

TheDirectorsconsiderthattheAnnualReport

andfinancialstatements,takenasawhole,are

fair,balancedandunderstandableandprovidethe

informationnecessaryforshareholderstoassessthe

Group’sandCompany’spositionandperformance,

businessmodelandstrategy.

Approval

ThisDirectors’responsibilitiesstatementwas

approvedbytheBoardandsignedonitsbehalfby:

Michael O’Donnell

Chair

10October2024

Governance

Statement of Directors’ responsibilities

 HomeREITplc | AnnualReport | Fortheyearended31August2022 77

Governance

Independent auditor’s report to the members of Home REIT plc

Disclaimer of Opinion

Wedonotexpressanopinionontheaccompanying

financialstatementsoftheGroupandCompany.

Becauseofthesignificanceofthemattersdescribedin

theBasisfordisclaimerofopinionsectionofourreport,

wehavenotbeenabletoobtainsufficientappropriate

auditevidencetoprovideabasisforanauditopinionon

thesefinancialstatements.

Wewereengagedtoauditthefinancialstatementsof

HomeREITPlc(the“Company”)anditssubsidiaries

(together,the“Group”)fortheyearended

31August2022whichcomprisetheConsolidated

StatementofComprehensiveIncome,Consolidated

andCompanyStatementsofFinancialPosition,the

ConsolidatedandCompanyStatementsofChanges

inShareholders’Equity,theConsolidatedStatement

ofCashFlowsandnotestothefinancialstatements,

includingasummaryofsignificantaccountingpolicies

(the“ConsolidatedFinancialStatements”).Thefinancial

reportingframeworkthathasbeenappliedinthe

preparationoftheConsolidatedFinancialStatements

isapplicablelawandUK-adoptedinternational

accountingstandards.Thefinancialreporting

frameworkthathasbeenappliedinthepreparationof

theCompanyfinancialstatements,isapplicablelaw

andUnitedKingdomAccountingStandards,including

FinancialReportingStandard101ReducedDisclosure

Framework(UnitedKingdomGenerallyAccepted

AccountingPractice).

Basis for disclaimer of opinion

AsdetailedinNote26totheConsolidatedFinancial

Statements,therehavebeenanumberofpostbalance

sheeteventswhichhavemateriallyimpactedthe

AnnualReport.

WeacknowledgethattheDirectorshaveattemptedto

obtaintheinformationthatweconsiderednecessary

forauditpurposes.However,insomecasesthe

Directorshavenotbeenabletoobtaintheinformation

andasaconsequence,theDirectorshavehadto

makeanumberofassumptionsinordertoprepare

thesefinancialstatementsasdetailedinNote3tothe

ConsolidatedFinancialStatements.Duringthecourse

ofouraudit,wesoughttoobtainsufﬁcientappropriate

auditevidenceinrespectofanumberofpervasive

and/ormaterialareasoftheﬁnancialstatements

andrelatednotestothefinancialstatementsbutfor

thereasonsoutlinedbelow,thisinformationhasnot

beenprovided.

Wehavethereforenotbeenabletoobtainsufﬁcient

appropriateauditevidencetoformthebasisforan

auditopinionontheConsolidatedandCompany

FinancialStatements.Wespeciﬁcallydrawattention

tothelackofsufﬁcientappropriateauditevidencein

thefollowingpervasiveand/ormaterialareaswhich

applytoboththeConsolidatedandCompanyFinancial

Statementsassetoutbelow:

• Investment properties are included at a value in

theGroupof:£414.3m(2021:£320.9m),Company:

£3.4m(2021:£8.8m)

AsdetailedinNote3totheConsolidatedFinancial

Statements,theDirectorshave,giventhelackof

appropriaterecordsavailabletothem,hadtomake

assumptionsastothecreditqualityofthetenantand

thephysicalconditionoftheinvestmentproperties

asat31August2022.JonesLangLaSalleLimited

(“JLL”),theGroup’sindependentexternalinvestment

propertyvaluer,usedtheseassumptionsdetermined

bytheDirectorswhenmakingtheirownassessment

ofthevaluationoftheinvestmentpropertiesasat

31August2022.Theseconditionsimposealimitation

inthescopeofourauditworkaswehavebeenunable

toobtainsufficientappropriateauditevidenceas

tothephysicalconditionofthepropertiesatthe

balancesheetdate;

• InvestmentpropertycostintheGroupof£918.4m

(2021:£312.8m),Company:£8.8m(2021:£9.0m)

AsdetailedinNote3totheConsolidatedFinancial

Statements,theGrouppurchasedanumber

ofinvestmentpropertieswheresignificant

refurbishmentworkwasrequiredtobecompleted

bythevendorbeforetheinvestmentproperties

wereinaconditionwheretheywerefitfortheir

intendedusebytheGroup’stenants.TheDirectors

concludedthatanelementofthepurchaseprice

shouldhaveinitiallybeenclassifiedasaprepayment

andthentransferredtothecostoftheinvestment

propertyasthoseworkswerecompleted.Asa

resultofthelackofadequateaccountingrecords

andinformationavailabletotheDirectors,the

Directorshavemadeanumberofassumptions

astotheelementofthepurchasecostallocated

toprepaymentsasat31August2021and

31August2022;

TheDirectorsalsoreviewedthesubstanceoftherental

agreementsinplaceinrespectoftheperiodended

31August2021andtheyearended31August2022.We

havebeeninformedbytheDirectorsthattheyarenot

awareofanycontractualagreementsbetweenthe

vendor,tenantortheCompanyhowever,asdetailedin

Note3totheConsolidatedFinancialStatements,the

Directorsarenowoftheopinionthatthesubstance

oftheagreementsenteredintobytheGroupwiththe

vendorsoftheinvestmentpropertiesandthetenants

wassuchthattheGroupgaveindirectinducements

toitstenantswhichshouldhavebeenrecordedas

anassetseparatefrominvestmentproperty.Where

propertieswerenotfitfortheirintendeduseasatthe

dateofacquisitionbytheGroup(ieforunhabitable

properties),thedirectorshaverecognisedalease

78 HomeREITplc | AnnualReport | Fortheyearended31August2022

inducementreceivableforunhabitableproperties

atthedateofacquisition.PreviouslytheGrouphad

treatedsucharrangementsinaccordancewiththe

legalformoftheleaseandassuchtheseamountshad

previouslybeenaccountedforasrentalincomebythe

GroupandincludedintheConsolidatedStatementof

ComprehensiveIncome.

Inmakingitsassessmentoftheleasereceivablefor

unhabitableproperties,theDirectorshavehadtomake

assumptionsoverboththeconditionoftheproperty

asatthedateofacquisitionandalsothelengthofthe

periodthattheinducementwasprovidedover.The

assessmentofwhatconstitutesleaseinducement

receivablesforunhabitableproperties,prepaidSeller’s

Worksandleaseincentiveshasaknock-oneffecton

thedeterminationofcostofinvestmentproperties

astheinitialcashflowsareallocatedtoeachelement

asrelevant.

Asaresultoftheseassumptionsandthelackof

accountingrecordsandinformationavailabletothe

Directors,thereisalimitationinthescopeofourwork

overtheacquisitioncostofinvestmentproperties.

Furtherdetailsregardingtheabovemattersaresetout

inNote3totheConsolidatedFinancialStatements.

Theindependentinvestigationcarriedoutbythe

Directors(the“Investigation”)identifiedpotential

relatedpartytransactionsofindividualsviewedas

formingpartofkeymanagementwhichhadnotbeen

disclosedtotheDirectorsnortousasauditors.We

havebeenunabletoascertainwhetherornotthese

potentialrelatedpartytransactionsoccurredandif

theydidwhethertheywerecarriedoutonanarms-

lengthbasis.Asaresultofthis,theDirectorshavenot

beenabletoprovideuswiththeevidencetodetermine

whetheranelementofthepurchasepriceshould

havebeenexpensedasitdidnotmeetthecriteria

forcapitalisationinaccordancewiththerelevant

accountingstandards.Furtherdetailsonrelatedparty

transactionsaresetoutinNote19totheConsolidated

FinancialStatementsandNote16totheCompany

FinancialStatements.

• TradeandotherreceivablesintheGroupof£16.1m

(2021£3.1m),Company(excludinginter-company

receivables:£0.2m(2021:£0.2m)

Assetoutintheinvestmentpropertycostsection

above,theDirectorshavemadeassumptions

withregardstotheaccountingfortheacquisition

ofinvestmentpropertieswhichresultedinthe

establishmentofaleaseinducementforunhabitable

properties(seeNote3totheConsolidated

FinancialStatements).Asaresultofthelackof

accountingrecordsavailabletousasdetailedinthe

investmentpropertycostpointsnotedabove,there

isinsufficientauditevidenceastotheexistenceof

tradereceivables,leaseinducementreceivables

forunhabitablepropertiesandrentnotrecognised

becausepropertieswereunhabitableandtherefore

alimitationinthescopeofourwork.

Furthermore,assetoutintheinvestmentproperty

costsectionabove,theDirectorshavemade

assumptionswithregardstotheaccountingfor

theacquisitionofinvestmentpropertieswhereby

anelementofthepurchasepricewasreclassified

asprepaidseller’sworks(seeNote3tothe

ConsolidatedFinancialStatements).Asaresultof

thelackofaccountingrecordsavailabletousas

detailedintheinvestmentpropertycostpoints

notedabove,thereisinsufficientauditevidenceas

totheamountrecognisedonacquisitionandthe

timingforwriteoffoftheseworksandthereforea

limitationinthescopeofourwork.

Additionally,thereisinsufficientauditevidence

availabletosupporttheageingoftradereceivables

duetolackofevidencetosupporttheallocationof

cashreceivedtoindividualtradereceivablebalances

suchthatthereisuncertaintyastowhatinvoices

remainoutstanding,andconsequently,thereis

thereforeafurtherlimitationofscopeoverthe

Directors’assessmentoftherecoverabilityoftrade

andotherreceivables;

• RestrictedcashintheGroupof£101.8m(2021:

£39.9m),Company:£nil(2021:£0.4m)

AsdetailedinNote3totheConsolidatedFinancial

Statements,incertaincircumstances,aretentionfor

aportionoftheSeller’sWorkswasdeductedfrom

thecashpaidtothevendorasprotectionagainstthe

vendornotcompletingtheSeller’sWorks.Wehave

beeninformedbytheDirectorsthatthereleaseof

theretentiondidnotalwaysfollowthereceiptofa

certificateofpracticalcompletionandasaresult

wererecordedonacashbasis.Asaresult,thereisa

limitationinthescopeofourworkregardingwhether

retentionsreleasedduringtheperiodhavebeen

appropriatelyaccountedforandwhethertheyhave

beenrecordedinthecorrectperiod.

Furthermore,asdetailedinNote12tothe

ConsolidatedFinancialStatements,on18June2021

theCompanyenteredintoanescrowagreement

withatenantwherebyanaffiliateofKarlaAsset

ManagementLimitedprovided£0.75mtoanescrow

accountinthenameofHomeREITPLCwithsuch

fundstobeusedasapprovedbytwoAHRAfund

managers.WehavebeeninformedbytheDirectors

thattheseindividualswereactingwithoutthe

knowledgeorauthorityoftheDirectors.Wehave

beeninformedbytheDirectorsthattheyare

notawareofanyothersimilarescrowaccounts

existing,howeverasaresultofthelackofadequate

Governance

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 HomeREITplc | AnnualReport | Fortheyearended31August2022 79

accountingrecordsandinformationavailableto

theDirectors,weareunabletoconcludewhether

othersimilararrangementsexistandassuch,there

isalimitationinthescopeofourworkregardingthe

completenessofcashandcashequivalents.

• TotalincomeintheGroupof£7.0m(2021:£11.0m),

Company:£0.3m(2021:£1.1m)

TheDirectorshavehadtomakeanumberof

assumptionsduetothelackofcontractual

obligationsandevidenceasdetailedinNote3of

theConsolidatedFinancialStatements.Duetothe

assumptionsmadebytheDirectorsovertherent

commencementdateandthelackofauditevidence

tosupporttheseassumptions,wehavebeenunable

toobtainsufficientappropriateauditevidencein

respectof:

– theclassificationofcashreceivedbetween

rentalincomeandleaseinducementreceivables

forunhabitablepropertiesfortheyearended

31August2022andforthecomparativesforthe

periodended31August2021;

– thecompletenessandaccuracyofthestraight-

linerentadjustmenttorentalincomefortheyear

ended31August2022andthecomparativesfor

theperiodended31August2021;and

– theassociatedimpairmentofthelease

inducementreceivableandstraight-line

rentadjustment.

• General and administrative expenses in the

Groupof£9.9m(2021:£3.3m),Company:£8.7m

(2021:£3.1m)

Asnotedabove,theDirectorshavehadtomake

anumberofassumptionsduetothelackof

contractualobligationsandevidenceasdetailedin

Note3oftheConsolidatedFinancialStatements.As

aresultofpotentialcommissionspaidonacquisition

oftheinvestmentpropertiesthathavebeen

capitalisedasadditionstothecostofinvestment

propertiesintheStatementofFinancialPosition,but

whichpotentiallyshouldhavebeenexpensedinthe

ConsolidatedStatementofComprehensiveIncome,

wehavebeenunabletoobtainsufficientappropriate

auditevidenceoverthecompletenessandaccuracy

ofexpensesfortheyearended31August2022.

• Provision for expected credit losses of trade

receivablesintheGroupof£1.9m(2021:£nil),

Company:£nil(2021:£nil)

Assetoutinthetradeandotherreceivablessection

above,thereisinsufficientauditevidenceavailable

tosupporttheageingoftradereceivablesand

consequently,thereisthereforeafurtherlimitation

ofscopeovertheDirectors’assessmentofthe

recoverabilityoftradeandotherreceivables.

• Write-offofSeller’sWorksnotinitiatedor

completedintheGroupof£11.9m(2021:£3.7m),

Company:£nil,(2021:£0.4m)

AsdetailedinNote3totheConsolidatedFinancial

Statements,theDirectorshavehadtomake

anumberofassumptionsduetothelackof

contractualobligationsandevidence.Duetothe

assumptionsmadebytheDirectorsandthelack

ofauditevidencetosupporttheseassumptionsin

relationtotheunwindoftheprepaidSeller’sWorks,

wehavebeenunabletoobtainsufficientappropriate

auditevidenceoverthecompletenessandaccuracy

ofthewrite-offofSeller’sWorksnotinitiatedor

completedduringtheyearended31August2022.

• Change in fair value of investment property in

theGroupof(£452.9m)(2021:£14.0m),Company:

£5.1m,(2021:£0.4m)

Asaresultofthelimitationsdetailedabovewith

regardstoinvestmentpropertyvaluationsandthe

historicalpurchasecostofinvestmentproperties,

wehavebeenunabletoobtainsufficientappropriate

auditevidenceoverthecompletenessandaccuracy

ofthemovementinthefairvalueofinvestment

propertyincludedintheConsolidatedStatement

ofComprehensiveIncomefortheyearended

31August2022andtheperiodended31August2021.

• Related party disclosures

TheInvestigationidentifiedpotentialrelatedparty

transactionswithindividualsviewedasformingpart

ofkeymanagementwhichhadnotbeendisclosed

totheDirectorsnortousasauditors.Thisleadstoa

limitationofscopeastowhetherkeymanagement

disclosuresarecompleteandaccurate.Thekey

reasonsgivingrisetotheselimitationsareasfollows:

– thereisanabsenceofappropriateprocessesand

recordsintheyeartocaptureallrelatedparties

andtransactionsthatmayhavetakenplacewith

thoseparties;

– thefindingsfromtheInvestigationare

inconclusiveintermsofestablishingwhetheror

notrelatedpartytransactionsexist;and

– followingtheterminationoftherelationshipwith

AHRAon30June2023,wewerethenlimitedasto

enquiriesthatcouldbemadeofindividualswho

werepresentthroughouttheyearbeingaudited.

Shouldtherebefurtherrelationshipswhichby

theirnaturewouldbedisclosedasrelatedparties

and/oridentifiedaskeymembersofAHRA,then

transactionsmadewiththoserelatedpartiesmay

havebeenmadeoutsideofnormalcommercialterms

andwhichmayresultinrevisionsbeingrequiredto

therecordinganddisclosureofsuchtransactions.

Wehavethereforebeenunabletoconcludethat

Governance

Independent auditor’s report to the members of Home REIT plc—continued

80 HomeREITplc | AnnualReport | Fortheyearended31August2022

theGroupandCompanyfinancialstatements

arefreefrommaterialmisstatementarisingfrom

theomissionofrelatedpartytransactionsbeing

fullydisclosedandweareunabletodetermine

whetherthedisclosuresinrespectofrelatedparty

transactionswithkeymembersofAHRAinthe

ConsolidatedFinancialStatementsandCompany

FinancialStatementsarecompleteandaccurate.

Inaddition,andwithoutfurthermodifyingour

opinion,anumberofothermattershighlightedby

theInvestigationhavebeenincludedwithintheKey

AuditMatterssectionofthisreportbelow.

• Consolidated Statement of Cash Flows

Asaresultofthelimitationsoutlinedabove,we

wereunabletoobtainsufficientappropriate

auditevidenceovercertainitemsdisclosedinthe

ConsolidatedStatementofCashFlowsandthe

associatedNotestotheConsolidatedFinancial

Statements.

• Openingbalancesasat1September2021

Inrespectofthematterssetoutabove,wehave

alsonotbeenabletoobtainsufﬁcientappropriate

auditevidenceinrespectofopeningbalancesasat

1September2021andthecorrespondingfigures

fortheperiodended31August2021inallcases.In

particular,inrespectofthe31August2021valuation

wehavenotbeenabletodeterminetheimpact,if

any,themattersidentifiedinNote3andNote9to

theConsolidatedFinancialStatementswouldhave

ontheinputsthatwereprovidedbytheDirectors

tothepreviousindependentvaluerforusein

determiningthevalueoftheinvestmentproperties

asat31August2021.

• Borrowings (disclosure only)

Wewereunabletoobtainsufficientauditevidence

tosupportthedisclosuresregardingthefair

valueofborrowingsasdisclosedinNote10tothe

ConsolidatedFinancialStatements.

• Notestothefinancialstatements

Asaresultofthelimitationsoutlinedabove,we

wereunabletoobtainsufficientappropriateaudit

evidenceinrespectoftheNotestothefinancial

statements.

Inaddition,inrespectoftheCompanyfinancial

statementswehavebeenunabletoobtainsufficient

appropriateauditevidenceinrespectofthecarrying

valueandassociatedimpairmentchargeregardingthe

Company’sinvestmentinsubsidiaryundertakings.

Thecarryingvalueoftheinvestmentinsubsidiary

undertakingsof£nil(2021-£10.4m)isbasedonthe

valueoftheassetsandliabilitiesofthesubsidiary

undertakings.Forthereasonsdetailedabovewehave

beenunabletoobtainsufficientappropriateaudit

evidenceregardingthoseassetsandliabilitiesdetailed

abovetosupportthecarryingvalueoftheinvestment

insubsidiaries.Forthesamereasonwehavebeen

unabletoobtainsufficientappropriateauditevidence

regardingtheexpectedcreditlossovertheamounts

duefromsubsidiariesof£329.5m(2021-£211.8m)and

theageingthereof.

Asaresultofthematterssetoutabove,wewere

alsounabletodeterminewhetheranyadjustments

mighthavebeenfoundnecessaryinrespectofthe

relevantelementsmakingupthefinancialstatements

oftheGroupand/orCompany.Thepossibleeffects

ofanyundetectedmisstatementsinrespectofthese

matters,ifany,couldbepervasiveand/ormaterialto

theﬁnancialstatements.Wehavenotbeenableto

obtainsufﬁcientappropriateauditevidencethrough

theperformanceofadditionalprocedures.

Notwithstandingthedisclaimerofopinion,ouraudit

reportisconsistentwiththefinalreportpresentedto

theAuditCommittee.

Emphasisofmatter–financialstatementsprepared

on a basis other than going concern

WedrawyourattentiontoNote1totheConsolidated

FinancialStatementswhichexplainthatasaresultof(i)

theuncertaintyoverthetimingofassetsales;(ii)risks

aroundcontinuedlendersupport;(iii)thethreatened

litigation;(iv)theFCAInvestigation;and(v)theorderly

wind-downoftheGroup’sandCompany’soperations,

theDirectorsconsiderittobeappropriatetoadopt

abasisofaccountingotherthangoingconcernin

preparingtheConsolidatedFinancialStatementsand

CompanyFinancialStatements.Accordingly,these

financialstatementshavebeenpreparedonabasis

otherthangoingconcernasdescribedinNote1tothe

ConsolidatedFinancialStatements.Ouropinionisnot

modifiedinrespectofthismatter.

Key audit matters

Keyauditmattersarethosemattersthat,inour

professionaljudgement,wereofmostsigniﬁcancein

ourauditoftheﬁnancialstatementsofthecurrent

periodandincludethemostsigniﬁcantassessed

risksofmaterialmisstatement(whetherornotdue

tofraud)thatweidentiﬁed,includingthosewhichhad

thegreatesteffecton:theoverallauditstrategy,the

allocationofresourcesintheaudit,anddirectingthe

effortsoftheengagementteam.Thismatterwas

addressedinthecontextofourauditoftheﬁnancial

statementsasawhole,andinformingouropinion

thereon,andwedonotprovideaseparateopinion

onthismatter.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 81

InadditiontothemattersincludedintheBasisfordisclaimerofopinionsectionabove,someofwhichweare

requiredbyISAs(UK)toalsoincludeaskeyauditmattersbelow,wedeterminedthemattersdescribedbelowtobe

keyauditmatterstobecommunicatedinourreport.Thisisnotacompletelistofallrisksidentifiedbyouraudit.

Key audit matter How the scope of our audit addressed the

keyauditmatter

Investment

property valuations

RefertoNotes2to3

totheConsolidated

FinancialStatements

andNotes2to3tothe

CompanyFinancial

Statementsin

relationtosignificant

judgements,

estimatesand

accountingpolicies.

RefertoNote9tothe

ConsolidatedFinancial

Statementsinrelation

toinvestment

properties.

Thevaluationofinvestment

propertyrequiressignificant

judgementandestimation

bytheDirectorsand

theindependentvaluer

appointedbytheCompany

andisthereforeconsidered

akeyauditmatterduetothe

subjectivenatureofcertain

assumptionsinherentin

eachvaluation.

Wherethevaluerhasdeemed

apropertytobeunhabitable

orthetenanttobeofvery

poorcovenantstrength,

theyhaveassumedthat

ahypotheticalpurchaser

followingduediligencewould

havedisregardedthelease

andvaluedthemonthebasis

ofMarketValue–Vacant

Possession(“MV-VP”).In

thisscenariovaluationsare

basedoncomparablemarket

transactionsconsidering

primarilycapitalvalues.

Wherethevaluerhasdeemed

apropertytobeinareasonable

condition,capableofbeneficial

occupationandlettoatenant

whoislikelytomeettheir

obligationsintheshortterm,

thevaluershaveadoptedan

investmentapproach.Inthis

scenariothevaluermakes

assumptionsastoyield,

thelengthofcapitalisation

periodandtheMV-VPvalue

onreversionattheendofthe

capitalisationperiod.

Giventhepassageoftimebetweentheappointment

ofJLLasindependentpropertyvaluersinAugust

2023andtheyear-end,ourapproachtoauditingthe

August2022valuationswastoauditthevaluationsas

atAugust2023performedbyJLLandtothenperform

rollbackproceduresusinghousepriceindicesdatato

developexpectationsoftheAugust2022valuations.

Theproceduresoutlinedbelowweretherefore

performedinrespectoftheAugust2023valuations

tofacilitatethisapproach.

Experienceoftheindependentpropertyvaluerand

relevanceofitswork

• Weobtainedthevaluationreportpreparedbythe

independentpropertyvaluer,JLL,anddiscussedthe

basisofthevaluationswiththem.Wedetermined

whetherthebasisofthevaluationswasinaccordance

withtherequirementsofaccountingstandards.

• WeassessedJLL’sexperience,qualifications,

competency,independenceandbasisofthe

valuation.

• Weobtainedacopyoftheengagementletterwith

JLLandreviewedforanylimitationsinscopeorfor

evidenceofmanagementbias.

Dataprovidedtotheindependentvaluer(“JLL”)

• WecheckedtheunderlyingdataprovidedtoJLL

bytheDirectors.Thisdataincludedinputssuchas

currentrentandleaseterm,andweagreedasample

totheexecutedleaseagreementsaspartofour

auditwork.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

82 HomeREITplc | AnnualReport | Fortheyearended31August2022

Key audit matter How the scope of our audit addressed the

keyauditmatter

Investment

property valuations

continued

Anyinputinaccuracies(such

asthephysicalconditionof

properties)orunreasonable

basesusedinthevaluation

judgements(suchasinrespect

ofvacantvalueandyield

profileapplied)couldresultin

amaterialmisstatementof

theConsolidatedStatement

ofComprehensiveIncomeand

theConsolidatedStatementof

FinancialPosition.

Thelackofaccurate

informationregarding,and

adequatemonitoringof,the

conditionandoccupancyof

thepropertiescombinedwith

theappointmentofanew

independentvaluerafterthe

balancesheetdate,hasled

totheindependentvaluers

havingtomakeassumptions

regardingthephysical

conditionofpropertiesatthe

balancesheetdate.

Thereisalsoariskoffraudin

relationtothevaluationof

thepropertyportfoliowhere

theDirectorsmayinfluence

thesignificantjudgements

andestimatesinrespectof

propertyvaluationsinorderto

managemarketexpectations.

• JLLinspectedasampleofpropertiesinternallyand

externallybutreliedontheDirectors’assessment

ofthephysicalconditionofthepropertiesacross

theportfolio.TheDirectorsengagedtheirown

expert,VibrantEnergySolutionsLtd(“Vibrant”),to

reviewtheinternalandexternalphysicalcondition

ofcertainoftheGroup’sproperties(seeNote9to

theConsolidatedFinancialStatementsonpages

117to120).TheinspectionsbyVibranttookplace

betweenAugust2023andMay2024.Weassessed

theexperience,qualifications,competencyand

independenceoftheDirectors’expert,Vibrant.In

addition,weobservedVibrantperformingasite

inspectiontoenableustoassesstheprocessaspart

ofourevaluationoftheirwork.Weconsideredthe

levelofcoveragethattheDirectorsachievedthrough

theirprogrammeofinspectionsandtestedasample

ofdataprovidedtoJLLtotheinspectionreportto

testtheaccuracyofdata,suchastheconditionofthe

propertyandthenumberofbedrooms.

Assumptionsandestimatesusedbytheindependent

propertyvaluer(“JLL”)–MV-VPbasis

• Weobtainedthecomparablemarketevidence

usedbyJLLtoformthebasisoftheirvaluations

forasampleofproperties.Withtheassistanceof

ourin-houseRICSqualifiedvaluationexperts,we

performedourownmarketresearchofsoldproperty

pricesusingavailableindependentindustrydata,

reportsandcomparabletransactionsinthemarket,

aswellastheGroup’spostyear-endauctionsalesto

considerwhetherthereisanycontradictorymarket

evidence.Weconsideredwhethertheindependent

expectationssetbytheauditteamcorroboratedor

contradictedinformationpresentedbyJLL.Where

contradictoryevidencewasidentified,wechallenged

JLLonthesemattersandobtainedsupporting

explanationsanddocumentationforthevariances.

• Forasampleofresidentialinvestmentassets,

inadditiontotheproceduresperformedabove,

weenquiredofJLLastohowthegrossyieldand

conditionadjustmentsweredeterminedandobtained

corroboratingevidence.Wealsoconsideredwhether

anycontradictoryevidenceexisted.

• Inrespectofthesampleselected,wediscussedthe

assumptionsusedandthevaluationmovementinthe

periodwithbothAEWandJLL.Wherethevaluation

wasoutsideofourexpectedrange,wechallenged

JLLonspecificassumptionsandcorroboratedtheir

explanationswhererelevant,includingagreeingto

thirdpartyevidence.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 83

Key audit matter How the scope of our audit addressed the

keyauditmatter

Investment

property valuations

continued

Assumptionsandestimatesusedbytheindependent

propertyvaluerJLL–investmentapproach

• Weobtainedthediscountedcashflow(“DCF”)

model,preparedbyAEWonbehalfoftheDirectors,

whichhadbeenproducedtomirrorJLL’smodel.We

comparedthevaluationpertheDirectors’model

toJLL’svaluationsandinvestigatedanydifference

greaterthan10%eitherindividuallyorinaggregate.

Wedeterminedthatathresholdof10%was

appropriatebasedonRICSguidancewhichstates

thatthepermittedmarginoferrorwhencarryingout

avaluationofpropertybasedoncaselawreferstoa

marginoferrorbetween10%and15%dependingon

thefacts.

• Forallpropertieswetestedthekeyinputsintothe

model.

• Forasampleofproperties,weperformedthe

proceduressetoutaboveinrelationtoMV-VP

properties(asMV-VPwasusedastheexitvaluewithin

themodel).

• Withassistancefromourin-houseRICSqualified

valuationexperts,weconsideredtherelationship

betweenMV-VPvalueandfairvalue.

• Wediscussedtheassumptionsusedwithboth

AEWandJLL.Wherethevaluationwasoutsideof

ourexpectedrange,wechallengedJLLonspecific

assumptionsandcorroboratedtheirexplanations

whererelevant,includingagreeingtothirdparty

evidence.

Forallpropertiesselectedfordetailedtesting,we

obtainedtheJLLvaluationpackandinspectionform.

WeperformedaGoogleimagessearchandcompared

thistotheJLLpackasafirststeptocorroboratethe

physicalstateofthepropertyandchallengedJLL

wheredifferenceswerenoted.Inaddition,asnoted

above,theDirectorsengagedVibranttoreviewthe

internalandexternalphysicalconditionofcertainof

theGroup’sproperties(seeNote9totheConsolidated

FinancialStatementsonpages117to120).Inaddition,

weattendedasampleofsiteinspectionswithVibrantto

observetheDirectors’expertaspartofourevaluation

ofcompetencyandtheirworkassessingtheinternaland

externalphysicalconditionofinvestmentproperties.

Wealsoobtainedprevioussalesdataforeachproperty

sampledandwhererecentsaleshistorywasavailable,we

comparedthistotheJLLvaluationandchallengedJLL

wheredifferencesarose.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

84 HomeREITplc | AnnualReport | Fortheyearended31August2022

Key audit matter How the scope of our audit addressed the

keyauditmatter

Investment

property valuations

continued

FromdiscussionswithJLL,weascertainedthatJLLhad

analysedpostyear-endsalesdataforassetssoldfrom

theGroup’sportfolio.

Wecomparedthesalespricesachievedforproperties

soldpostyear-endtotheAugust2023JLLvaluation.

Wherethedifferencewasoutsideofourexpectedrange,

wediscussedthiswithJLLandchallengedtheyear-end

valuationaccordingly.

Forallpropertiesweconsideredtheadequacy

ofthedisclosureswithregardstoinvestment

propertyvaluations.

WechallengedtheDirectorsandJLLtoconsiderthe

impactoftheresultsofthefinalinspectionprogramme

onthevaluationoftheGroup’sproperties.

KeyObservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionsectionabove.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 85

Key audit matter How the scope of our audit addressed the

keyauditmatter

Property acquisition

cost,Seller’s

Works and lease

inducements

RefertoNotes2to3

totheConsolidated

FinancialStatements

andNotes2to3tothe

CompanyFinancial

Statementsin

relationtosignificant

judgements,

estimatesand

accountingpolicies.

RefertoNote9to

theConsolidated

FinancialStatements

inrelationtoallocation

ofpurchaseprice

betweenproperty

acquisitioncost,

Seller’sWorksand

leaseinducements.

AsdetailedinNote3to

theConsolidatedFinancial

Statements,theGroup

purchasedanumberof

propertieswheresignificant

refurbishmentworkwas

requiredtobecompleted

bythevendorbeforethe

propertieswereinastate

wheretheywerefitfortheir

intendedusebytheGroup’s

tenants.Theseproperties

wereletonfullyrepairing

leaseswherebyitwasthe

responsibilityofthetenant

tomaintaintheupkeepof

thepropertiesinastate

fitforuse.TheGrouphad

historicallyaccountedforthese

acquisitionsinaccordance

withthelegalformofthelease

andpurchaseagreements.

Significantjudgementwas

requiredwhenconsidering

thesubstanceofthese

transactionsandwhetheror

nottheaccountingforsuch

transactionsshouldfollowthe

legalformorthesubstance.

TheDirectors,inlightofthe

informationnowknown,

reconsideredthehistorical

accountingandconcluded

thattheaccountingtreatment

shouldmoreappropriately

reflectthesubstanceofthe

transactionnotthelegal

form.Thishasledtoaprior

periodadjustment,assetout

inNote4totheConsolidated

FinancialStatements,which

affectsthefollowingfinancial

statementareas:

• Investmentproperties

• Tradeandotherreceivables

• Prepayments

• Rentalincome

• Movementinfairvalueof

theinvestmentproperty

valuations

WechallengedtheDirectorsastotheappropriateness

ofthehistoricaccountingforthesetransactions.We

obtainedtheDirectors’originalpaperontheaccounting

forthetransactions.WeassessedtheDirectors’

competenceandindependencewithregardstotheir

assessmentofthehistoricalaccountingforsuch

transactionsandasaresultweadvisedtheDirectorsto

appointanexperttoassistthemwiththeaccountingfor

suchtransactions.

Weassessedthecompetenceandindependenceofthe

Directors’expert.Weobtainedtherevisedpaperonthe

accountingfortheacquisitionofinvestmentproperties

andchallengedtheconclusions.

Weconsideredtheadequacyofthedisclosuresmade

regardingtheestimatesandjudgementsandtheprior

periodadjustment.

KeyObservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionsectionabove.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

86 HomeREITplc | AnnualReport | Fortheyearended31August2022

Key audit matter How the scope of our audit addressed the

keyauditmatter

Revenue recognition

RefertoNotes2to3

totheConsolidated

FinancialStatements

andNotes2to3tothe

CompanyFinancial

Statementsin

relationtosignificant

judgements,estimates

andaccountingpolicies.

RefertoNote5tothe

ConsolidatedFinancial

Statementsinrelation

toRentalIncome.

Asaresultofthelackof

accountingrecordsand

informationavailabletothe

Directors(seepages106to

109),anumberofjudgements

andmanualadjustmentshave

beenmadebytheDirectors

torevenueincluding:

• Whetherapropertywas

habitableonacquisitionand

thusabletogeneraterental

income.

• Therentcommencement

date(whichmaybe

differenttothelease

commencementdate).

• Whetherleaseinducements

hadbeengrantedto

tenants.

WechallengedtheDirectorswithregardstothe

assumptionsmade,theirbasisandsoughtevidence.

Duetothelackoftheexistenceofcontractual

obligationsand/orevidenceofsuchcontractual

obligationstherewasalimitationoverourwork.

WeobtainedtheDirectors’schedulewithregardsto

thephysicalstatusofinvestmentproperties.Given

thelackofcontemporaneousevidencewithregards

totheconditionofinvestmentpropertiesatthe

acquisitiondate,wewereunabletoconcludeasto

thereasonablenessoftheDirectors’assumptions

appliedincalculatingrentalincomewithregardtothe

habitabilityoftheproperty,thelengthandthestartdate

ofthelease.

WemadeenquiriesoftheDirectorsastodetailsofany

leaseinducementsenteredinto.Wereviewedasample

ofleasesforevidenceofleaseinducements.Wemade

enquiriesoftheGroup’slawyersfordetailsofany

amendmentstoleasesduringtheperiodandpostyear-end

thattheyhadbeenpartyto.Weconsideredstatements

madeinthepublicdomainbytheCompany,astothe

existenceofleaseinducements.Wereadandconsidered

theresultsoftheforensicinvestigationundertakenby

theDirectors’expertforevidenceofleaseinducements

enteredinto.Giventhelackofcontractualobligationsand

auditevidenceavailable,wewereunabletoconcludeas

tothevalueandaccountingoftheleaseinducements.We

obtainedalistingofjournalspostedtorevenueoutsideof

thetransactionalrevenueentriesandattemptedtoobtain

supportingexplanation/documentationasapplicable

toensureappropriate.Giventhelimitationsdetailedin

theBasisfordisclaimerofopinion,wewereunableto

corroboratejournalstosupportingdocumentation.

Wesetexpectationsfortherentalincomeinvoiced

intheperiodbasedonthetenancyschedulesasat

31August2021and31August2022.

Wecomparedourexpectationsforthetotalrental

incomeintheperiod,beforethemanualadjustments

notedabove,tothatincludedintheConsolidated

FinancialStatementsandinvestigatedanydifferences

aboveapre-determinedthreshold.

Weobtainedthetenancyscheduleandagreedasample

ofamountstosupportingleasedocumentation.Asa

resultofthelimitationsaroundtheallocationofcash

receipts,wewereunabletoagreewhethertheallocation

ofcashreceiptshadbeenappropriatelyallocatedto

specificinvoicesandtenants.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 87

Key audit matter How the scope of our audit addressed the

keyauditmatter

Revenue recognition

continued

Wetestedasampleofrentalincomefornewleasesinthe

periodtotheunderlyingleaseagreement.

KeyObservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionsectionabove.

Management

override of controls

TheGroupmadeadjustments

followingtheInvestigation,

thefindingsfromouraudit

andinformationthathas

subsequentlycometolight

forpotentialmisstatements

thattheDirectorsarenow

awareofrelatingtoinvestment

properties,tradeandother

receivables,prepayments,

revenue,administrative

expensesandfairvalue

movementontherevaluation

ofinvestmentpropertiesboth

inrespectoftheperiodended

31August2021andtheyear

ended31August2022.

Thereisariskthatcontrols

whichallowedfortheseitems

toremainuncorrectedin

theConsolidatedFinancial

Statementsdidnotoperate

effectively,wereinsufficient

ornotinplaceandasaresult

couldpersistinsimilaror

otherareas.

Inaddition,thereisevidence

fromtheInvestigation,and

ourauditwork,thatcertain

controlsinplaceappeartohave

beenoverriddenduringand

subsequenttotheyearended

31August2022.

Asaresultoftheabove,

thereisariskthatcontrols

maynothaveprevented

ordetectedandcorrected

materialmisstatementson

atimelybasismorebroadly

intheConsolidatedFinancial

Statementsfortheyearended

31August2022.

Weinvolvedourforensicspecialistsinourresponseto,

andourauditof,thefindingsoftheInvestigation.

Weevaluatedthetermsofengagement,competence

andindependenceoftheGroup’sappointedforensic

investigators.

Wecriticallyassessedthedetailedfindingsandusing

ourforensicspecialistsconsiderediftheapproachtaken

wasreasonableandchallengedtheDirectorswherewe

consideredanyadditionalprocedureswerenecessary.

Wealsoconsideredthenatureofthefindingsand

undertookadditionalproceduresandtestingtosatisfy

ourselveswhereweconsidereditwasnecessary.

Basedonthepriorperiodandcurrentyear

misstatementsidentifiednowthatfurtherinformation

hascometolight,aswellastheresultsofthe

Investigation,wereassessedourplannedauditapproach,

revisingourriskassessmentinrespectofcertainareasof

theConsolidatedFinancialStatementsandconsequently

revisingandextendingourauditproceduresinthose

areaswhereerrorshadbeenidentifiedorwherematters

hadbeenraisedthroughtheInvestigation.Wealso

revisitedandloweredourfinancialstatementandspecific

materialityusedintestingasappropriate.

InlightoffindingsfromtheInvestigationweconsidered

theworkperformedinrespectofITsystemsandIT

generalcontrolsanddeterminedthatITgeneralcontrols

wereeffectivesolelyforthepurposesofourworkon

informationprovidedbytheentityfromtheITsystems.

OtherthanrelianceonITgeneralcontrolsforthesole

aspectofourauditasnoted,weplacednorelianceonany

otherinternalcontrolsforourauditandourfinalaudit

approachwasentirelysubstantiveinnaturewiththe

Directors’explanationsbeingassessedagainstavailable

evidencethatwasconsideredtobereliable.

Anextendedanalysiswasalsoperformedoverjournal

entrieswithhigherriskcriteria,whichweagreedbackto

supportingevidencewherepossible.Wewerehowever

unabletocorroboratealljournalsweselectedfortesting

tosupportingevidenceduetothelimitationsinthe

scopeofourworkasoutlinedintheBasisofdisclaimerof

opinionsectionabove.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

88 HomeREITplc | AnnualReport | Fortheyearended31August2022

Key audit matter How the scope of our audit addressed the

keyauditmatter

Management

override of controls

continued

Further,weextendedthescopeofourworkthroughout

theaudit,deepeningourenquiries,andapplying

additionalchallenge,iterationandscepticisminallareas.

Wesoughtalternativerepresentationsandrequired

additionalprocedurestobeperformedtosupportthose

representationswhereinourjudgement,thesewere

consideredtobenecessary.

WeconsideredthemanagementfeestructureforAEW

andwhetherornotthisprovidedanincentivetooverride

controlsandmanipulateresults.

Keyobservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionsectionabove.

Tenant receivables

RefertoNote11to

theConsolidated

FinancialStatements

TheGrouphasexperienced

asignificantdownturninrent

collectionssinceNovember

2022andanumberoftenants

areinfinancialdistressorhave

goneintoadministration.

Assuch,thereisariskthat

tenantreceivablesasat

31August2022maynotbe

recoverable.

AsdetailedintheBasisfordisclaimerofopinionsection

above,ourworkonthisareawassubjecttomultiple

limitations.Assuch,wewerenotabletoperformany

procedurestotesttherecoverabilityofindividualtenant

receivablesaswewereunabletoobtainsufficient

appropriateauditevidenceovertheageingprofileof

thetenantreceivablesasreceiptsfromtenantsdid

notincluderemittancestatements,andassuchthe

basisforallocationofcashtoindividualdebtorswas

thereforeunclear.

WeevaluatedandassessedtheDirectors’IFRS9

expectedcreditlossaccountingpolicychoiceadopted

andapplicationthereof.

KeyObservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionparagraphabove.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 89

Key audit matter How the scope of our audit addressed the

keyauditmatter

Related party

transactions

RefertoNote19to

theConsolidated

FinancialStatements

Theallegationsmadeinthe

ViceroyResearchReportin

November2022includeda

claimthattheGroupmayhave

paidinflatedacquisitionprices

foritsproperties.

Furthermore,theInvestigation

hasidentifiedpotential

relatedpartytransactionsnot

previouslydisclosedtothe

Directorsortousasauditors.

Asaresultofthechangein

InvestmentAdviserasdetailed

inNote26totheConsolidated

FinancialStatements,the

Directorsdonothaveaccess

toallaccountingrecordsand

information,includingaccess

torelevantindividuals.

Asaresultoftheabove,there

isariskthatnotallrelated

partytransactionshave

beenidentified,correctly

accountedforandarenot

appropriatelydisclosed.

Withoutawaiverofprivilege,wewereprovidedwith

acopyofthereportbyAlvarez&MarsalDisputesand

InvestigationsLLPdated3May2023whichdetailedthe

conclusionsoftheInvestigation.

Wecriticallyassessedthedetailedfindingsandusingour

forensicspecialistsconsiderediftheapproachtakenwas

reasonableandwhetheranyadditionalprocedureswere

considerednecessary.Wealsoconsideredthenature

ofthefindingsandundertookadditionalprocedures

andtestingtosatisfyourselveswhereweconsideredit

wasnecessary.

Weevaluatedthecontrolsinplacesurroundingrelated

partytransactions.

Weobtainedalistingofanyknownrelatedpartiesand

anyknowntransactionsthathaveoccurredintheyear

andagreedthesetosupportingdocumentation.We

ensuredthattheseareappropriatelydisclosedinthe

AnnualReport.

Weconsideredwhetherthedisclosuresmadeinthe

AnnualReportappropriatelyaddressthevarious

allegationsmadeagainsttheGroupregardingrelated

partytransactions.

KeyObservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionparagraphabove.

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Key audit matter How the scope of our audit addressed the

keyauditmatter

Annual Report

preparation

and disclosures

Giventhepressuresthe

Groupisfacing,thereisarisk

thattheDirectorscouldtry

topresentamorepositive

pictureoftheGroupinorder

toreduceshareholdertension.

Assuch,thereisariskthat

theAnnualReport(including

theotherinformation)

wouldnotbefair,balanced

andunderstandableorthat

informationmaybeincorrect

orincorrectlypresented.

WeagreedtheFinancialStatements(includingeach

oftheprimarystatementsandaccompanyingnotes),

presentationanddisclosurestotheunderlying

accountingrecordsandcheckedthearithmeticaccuracy

oftheFinancialStatements.

Weperformedauditprocedurestoensurethatthe

overallpresentationoftheConsolidatedFinancial

StatementsisinaccordancewithUK-adopted

InternationalAccountingStandardsandapplicablelaws

inrespectoftheConsolidatedFinancialStatements,and

inaccordancewithUKGAAPinrespectoftheCompany

FinancialStatements.

Weevaluatedandassessedthedisclosuresmadearound

thevariousassumptions,judgementsandestimates

madebytheDirectors,includingbutnotlimitedto:

• Rentcommencementdate

• Leaseterm

• Valueofrentcover

• Conditionofproperties

• Qualityoftenantsandvaluationoftenantreceivables

• Habitabilityofproperties

• ThevalueandstatusofSeller’sWorks

Weconsideredwhetheranappropriatelevelofdisclosure

hasbeenmadeaddressingthevariousallegations

againsttheGroupandthattheAnnualReportisfair,

balancedandunderstandable.

Inadditiontotheabove,wechallengedtheDirectors

astotheappropriatenessforinclusionofalternative

performancemeasuresintheAnnualReport.

KeyObservations

OurobservationsandfindingsaresetoutintheBasisfor

disclaimerofopinionsectionabove,andourconclusion

onwhethertheDirectors’statementonfair,balanced

andunderstandableismateriallyconsistentwiththe

FinancialStatementsorourknowledgeobtainedduring

theaudit,notwithstandingourdisclaimerofanopinion

ontheﬁnancialstatements,issetoutintheOther

Informationsectionbelow.

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Other information

Corporategovernancestatement

TheListingRulesrequireustoreviewtheDirectors’statementinrelationtogoingconcern,longer-termviability

andthatpartoftheCorporateGovernanceStatementrelatingtotheCompany’scompliancewiththeprovisions

oftheUKCorporateGovernanceCodespecifiedforourreview.

Inlinewithourdisclaimerofopinionontheﬁnancialstatements,inthelightoftheknowledgeandunderstanding

oftheGroupandCompanyanditsenvironmentobtainedinthecourseoftheauditperformedsubjecttothe

pervasivelimitationdescribedabove,basedontheworkundertakenaspartofourauditandhavingconsidered

theongoingFCAinvestigationandpotentiallitigationagainsttheCompanyandtheDirectors,weareunable

toconcludeonwhethereachofthefollowingelementsoftheCorporateGovernanceStatementismaterially

consistentwiththeFinancialStatements.

Going concern and

longer-term viability

• InrelationtotheCompany’sreportingonhowithasappliedtheUKCorporate

GovernanceCode,otherthantheemphasisofmatter–FinancialStatements

preparedonabasisotherthangoingconcernincludedabove,wehavenothing

elsethatismaterialtoaddordrawattentiontoinrelationtothestatementonthe

Directors’assessmentofthelonger-termviabilityoftheCompanyandwhetherthe

Directorsconsidereditappropriatetoadoptthebasisofaccountingotherthangoing

concern;and

• TheDirectors’explanationastotheirassessmentoftheGroup’sprospects,the

periodthisassessmentcoversandwhytheperiodisappropriatesetoutonpages

63to64.

Other Code provisions • Directors’statementonfair,balancedandunderstandablesetoutonpage66;

• Directors’confirmationthattheyhavecarriedoutarobustassessmentofthe

emergingandprincipalriskssetoutonpage66;

• ThesectionoftheAnnualReportthatdescribesthereviewofeffectivenessofrisk

managementandinternalcontrolsystemssetoutonpage55;and

• ThesectiondescribingtheworkoftheAuditCommitteesetoutonpages56to66.

OtherCompaniesAct2006reporting

Basedontheresponsibilitiesdescribedbelowandourworkperformedduringthecourseoftheaudit,weare

requiredbytheCompaniesAct2006andISAs(UK)toreportoncertainopinionsandmattersasdescribedbelow.

Strategic Report and

Directors’ Report

BecauseofthesignificanceofthemattersdescribedintheBasisfordisclaimerof

opinionsectionofourreportabove,wehavebeenunabletoformanopinion,whether

basedontheworkundertakeninthecourseoftheaudit:

• theinformationgivenintheStrategicreportandtheDirectors’reportforthe

ﬁnancialyearforwhichtheﬁnancialstatementsarepreparedisconsistentwiththe

ﬁnancialstatements;and

• theStrategicreportandtheDirectors’reporthavebeenpreparedinaccordance

withapplicablelegalrequirements.

Notwithstandingourdisclaimerofanopinionontheﬁnancialstatements,inthelight

oftheknowledgeandunderstandingoftheGroupandCompanyanditsenvironment

obtainedinthecourseoftheauditperformedsubjecttothepervasivelimitation

describedabove,wehavenotidentiﬁedmaterialmisstatementsintheStrategicreport

ortheDirectors’report.

Directors’ remuneration Inouropinion,thepartoftheDirectors’remunerationreporttobeauditedhasbeen

properlypreparedinaccordancewiththeCompaniesAct2006.

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Matters on which we

arerequiredtoreport

byexception

ArisingfromthelimitationofourworkreferredtoaboveintheBasisfordisclaimerof

opinionsectionofourreportabove:

• wehavenotobtainedalltheinformationandexplanationsthatweconsidered

necessaryforthepurposeofouraudit;and

• inouropinion,adequateaccountingrecordshavenotbeenkeptbytheCompany.

Wehavenothingtoreportinrespectofthefollowingmattersinrelationtowhichthe

CompaniesAct2006requiresustoreporttoyouif,inouropinion:

• returnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedby

us;or

• theCompanyFinancialStatementsarenotinagreementwiththeaccounting

recordsandreturns;or

• certaindisclosuresofDirectors’remunerationspeciﬁedbylawarenotmade.

Responsibilities of Directors

AsexplainedmorefullyintheDirectors’responsibilitiesstatement,theDirectorsareresponsibleforthe

preparationoftheﬁnancialstatementsandforbeingsatisﬁedthattheygiveatrueandfairview,andforsuch

internalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationofﬁnancialstatementsthatare

freefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingtheﬁnancialstatements,theDirectorsareresponsibleforassessingtheGroup’sandtheCompany’s

abilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthe

goingconcernbasisofaccountingunlesstheDirectorseitherintendtoliquidatetheGrouportheCompanyorto

ceaseoperations,orhavenorealisticalternativebuttodoso.

Auditor’sresponsibilitiesfortheauditofthefinancialstatements

OurresponsibilityistoconductanauditoftheCompany’sﬁnancialstatementsinaccordancewithInternational

StandardsonAuditing(UK)(ISAs(UK))andtoissueanauditor’sreport.

However,becauseofthemattersdescribedintheBasisfordisclaimerofopinionsectionofourreportabove,

wewerenotabletoobtainsufﬁcientappropriateauditevidencetoprovideabasisforanauditopiniononthese

ﬁnancialstatements.

WewereappointedbytheDirectors,followingtherecommendationoftheAuditCommittee,on

17September2020toaudittheﬁnancialstatementsfortheperiodfromincorporationon17September2020

to31August2021andsubsequentﬁnancialperiods.Theperiodoftotaluninterruptedengagementincluding

retendersandreappointmentsistwoyears,coveringtheyearended31August2022.

WeremainindependentoftheGroupandtheCompanyinaccordancewiththeethicalrequirementsthatare

relevanttoourauditoftheﬁnancialstatementsintheUK,includingtheFRC’sEthicalStandardasappliedto

listedpublicinterestentities,andwehavefulﬁlledourotherethicalresponsibilitiesinaccordancewiththese

requirements.

Thenon-auditservicesprohibitedbythatstandardwerenotprovidedtotheGrouportheCompany.

Extenttowhichtheauditwascapableofdetectingirregularities,includingfraud

Irregularities,includingfraud,areinstancesofnon-compliancewithlawsandregulations.Wedesignprocedures

inlinewithourresponsibilities,outlinedabove,todetectmaterialmisstatementsinrespectofirregularities,

includingfraud.Theextenttowhichourproceduresarecapableofdetectingirregularities,includingfraudis

detailedbelow:

Non-compliancewithlawsandregulations

BasedonourunderstandingoftheGroupandtheindustryinwhichitoperates;discussionwithAEW,AHRA(during

itstenure)andthosechargedwithgovernance;obtainingandunderstandingtheGroup’spoliciesandprocedures

regardingcompliancewithlawsandregulations;and,weconsideredthesignificantlawsandregulationstobethe

UKCompaniesAct2006,theUKListingRulesandtheUKRealEstateInvestmentTrust(“REIT”)regime.

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TheGroupisalsosubjecttolawsandregulationswheretheconsequenceofnon-compliancecouldhaveamaterial

effectontheamountordisclosuresintheFinancialStatements,forexamplethroughtheimpositionoffinesor

litigations.WeidentifiedsuchlawsandregulationstobeUKVATregulations.

Ourproceduresinrespectoftheaboveincluded:

• Weidentiﬁedareasoflawsandregulationsthatcouldreasonablybeexpectedtohaveamaterialeffecton

theFinancialStatementsfromoursectorexperiencethroughdiscussionwiththeDirectors,AEWandAHRA

(duringitstenure)(asrequiredbyauditingstandards).

• WehadregardtolawsandregulationsinareasthatdirectlyaffecttheFinancialStatementsincludingﬁnancial

reporting(includingrelatedcompanylegislation)andtaxationlegislation.Weconsideredthatextentof

compliancewiththoselawsandregulationsaspartofourproceduresontherelatedﬁnancialstatementitems.

• Wecommunicatedidentiﬁedlawsandregulationsthroughoutourteamandremainedalerttoanyindications

ofnoncompliancethroughouttheaudit.

• WereviewedBoardandCommitteemeetingminutesforanyinstancesofnon-compliancewithlawsand

regulations.

• WereviewedareportfromtheGroup’sexternaltaxadviser,detailingtheactionsthattheGrouphas

undertakentoensurecompliance.Withtheassistanceofourinternaltaxexperts,thispaperwasreviewedand

theassumptionschallenged.

• Wereviewedlegalexpenditureaccountstounderstandthenatureofexpenditureincurredandobtained

confirmationsfromtheGroup’ssolicitorsastoanyongoinglegalaction.

Fraud

Weassessedthesusceptibilityofthefinancialstatementstomaterialmisstatement,includingfraud.Ourrisk

assessmentproceduresincluded:

• ReviewoftheallegationsmadeintheViceroyResearchReportandanyfurtherallegationsmadeinthepress

andtheDirectors’investigationsthereinto;

• EnquirywithAHRA(duringtheirtenure),AEWandthosechargedwithgovernanceregardinganyknownor

suspectedinstancesoffraud;

• ObtaininganunderstandingoftheGroup’spoliciesandproceduresrelatingto:

– Detectingandrespondingtotherisksoffraud;and

– Internalcontrolsestablishedtomitigaterisksrelatedtofraud.

• Reviewofminutesofmeetingsofthosechargedwithgovernanceforanyknownorsuspectedinstances

offraud;

• Discussionamongsttheengagementteam,withassistancefromourinternalforensicspecialists,astohow

andwherefraudmightoccurinthefinancialstatements;

• Performinganalyticalprocedurestoidentifyanyunusualorunexpectedrelationshipsthatmayindicaterisksof

materialmisstatementduetofraud;and

• ConsideringremunerationincentiveschemesandperformancetargetsoftheGroup’sexternaladvisersand

therelatedfinancialstatementareasimpactedbythese.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

94 HomeREITplc | AnnualReport | Fortheyearended31August2022

Basedonourriskassessment,weconsideredtheareasmostsusceptibletofraudtobe:

Areaidentified Details and audit response

Significanttransactions

outside the normal

course of business

Weareawareofcertaintransactionsthathaveoccurredthatareconsideredtobe

outsideofthenormalcourseofbusiness.

Inparticular,weareawareofrent-freeperiodsandsettlementagreementswith

vendorshavingbeengrantedwhichwehavebeeninformedwaswithouttheknowledge

oftheDirectors(asdetailedinNote26totheConsolidatedFinancialStatements),as

wellassettlementoftenantreceivablesinnon-traditionalways(asdetailedinNotes3,

5and11totheConsolidatedFinancialStatements).

Ourproceduresinrespectoftheaboveincluded:

• Weinvolvedourforensicspecialistsinourresponseto,andourauditof,thefindings

oftheInvestigation;

• Wereviewedthecontractualagreementsfortherent-freeperiodsandsettlement

agreementsthatwerenowknowntotheDirectorsandconsideredtheaccounting

treatmentthereof;

• Inrespectofthesettlementoftenantreceivablesinnon-traditionalways:

– WeobtainedananalysisfromtheDirectorsofallcashreceiptsmadefromthe

Group’sinceptiondatetoOctober2022andconsideredwhethertheanalysiswas

accurateandcomplete;

– Furthermore,inrespectoftheamountof£2.1mwithheldfromtheacquisitionof

propertieswhichwasthenoffsetagainstdebtorsfromthreeseparatetenant,

weobtainedthecompletionstatementforsaidtransaction.Wewereunableto

determinewhatthecommercialrationaleforthistransactionwas.

Provisions,

commitmentsand

contingencies

WeareawarethattheGroupiscurrentlythreatenedwithlegalactionandhasalso

stateditsintentiontopursuelegalactionagainstvariouspartiesitsuspectsof

undertakingwrongdoingagainsttheGroupandCompany.Assuch,thereisarisk

thatunrecordedliabilities,provisions,contingentliabilitiesorotherexpensesarenot

appropriatelyidentifiedand/orrecordedatthebalancesheetdate.

Ourproceduresinrespectoftheaboveincluded:

• ObtainingthirdpartyconfirmationsfromallsolicitorsengagedbytheGroup

toconfirminformationofopencasesoflitigationandthepotentialfinancial

implicationsthereof;

• ObtainingtheDirectors’assessmentofthestatusofallcasesoflegalactionagainst

themaswellasplannedlegalactionagainstotherpartiesandconsideringwhether

anyofthemattersindicatepotentialprovisionsorcontingentliabilitiestobe

disclosedinthefinancialstatements;

• ReadingminutesofBoardandCommitteemeetings,riskregisters,public

announcementsissuedandsolicitors’confirmationsobtainedinordertoidentify

anynon-compliancewithlawsandregulations.

• Consideredtheadequacyofthedisclosuresinrelationtocontingentliabilities.

Going concern PleaserefertotheEmphasisofMatterandtheBasisfordisclaimerofopinion

sectionsabove.

Governance

Independent auditor’s report to the members of Home REIT plc—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 95

Investment Property

Valuations; Property

acquisitioncost,

Seller’s Works and lease

inducements; Revenue

recognition; Management

override of controls;

Tenant receivables;

Related party

transactions; and Annual

Report preparation

and disclosures

PleaserefertotherelevantKeyAuditMattersandtheBasisfordisclaimerofopinion

sectionabove.

Ourauditproceduresweredesignedtorespondtorisksofmaterialmisstatementintheﬁnancialstatements,

recognisingthattheriskofnotdetectingamaterialmisstatementduetofraudishigherthantheriskofnot

detectingoneresultingfromerror,asfraudmayinvolvedeliberateconcealmentby,forexample,forgery,

misrepresentationsorthroughcollusion.Thereareinherentlimitationsintheauditproceduresperformedand

thefurtherremovednon-compliancewithlawsandregulationsisfromtheeventsandtransactionsreflectedin

theﬁnancialstatements,thelesslikelywearetobecomeawareofit.Inaddition,theextenttowhichtheauditwas

capableofdetectingirregularities,includingfraudwaslimitedbythemattersdescribedintheBasisfordisclaimer

ofopinionsectionofourreport.

Use of our report

ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter3ofPart16ofthe

CompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembers

thosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextent

permittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’s

membersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Thomas Edward Goodworth (Senior Statutory Auditor)

ForandonbehalfofBDOLLP,StatutoryAuditor

London

UnitedKingdom

10October2024

BDOLLPisalimitedliabilitypartnershipregisteredinEnglandandWales(withregisterednumberOC305127).

Governance

Independent auditor’s report to the members of Home REIT plc—continued

96 HomeREITplc | AnnualReport | Fortheyearended31August2022

Financial Statements

97 ConsolidatedStatementofComprehensiveIncome

98 ConsolidatedStatementofFinancialPosition

99 ConsolidatedStatementofChangesinShareholders’Equity

100 ConsolidatedStatementofCashFlows

101 NotestotheConsolidatedFinancialStatements

134 CompanyStatementofFinancialPosition

135 CompanyStatementofChangesinShareholders’Equity

136 NotestotheCompanyFinancialStatements

 HomeREITplc | AnnualReport | Fortheyearended31August2022 97

Consolidated Statement of Comprehensive Income

			19August2020to
		Fortheyearended	31August2021,
		31August2022	asrestated
	Note	£’000	£’000
Income
Rentalincome	5	38, 249	10, 2 11
Otherincome	5	–	750
Impairmentofleaseinducement	5	(28 , 3 48)	–
Impairmentofrentstraight-lining	5	(2 ,922)	–
Total income		6,979	10,9 61
Operating expenses
Generalandadministrativeexpenses	6	(9, 8 63)	(3, 2 5 5)
Provisionforexpectedcreditlossesoftradereceivables	11	(1, 85 0)	–
Otherexpenses	12	(375)	(37 5)
Total expenses		(1 2 ,0 88)	(3,630)
Changeinfairvalueofinvestmentproperty	9	(452,873)	14 ,01 2
Write-offofSeller’sWorksnotinitiatedorcompleted	11	(11 ,92 2)	(3,6 6 0)
Operating(loss)/profitfortheyear/period		(46 9,9 04)	1 7, 6 8 3
Financecosts	7	(4 ,9 40)	(1 , 58 0)
(Loss)/profitbeforetaxation		(4 74 , 8 4 4)	16,1 03
Taxation	8	–	–
(Loss)/income and total comprehensive (loss)/income for the year/period attributable to shareholders		(4 74 , 8 4 4)	16, 103
(Loss)/earnings per Share – basic and diluted (pence per Share)*	22	(79.52)	7. 8 1

*BasedontheweightedaveragenumberofSharesinissuefortheyearended31August2022/periodended31August2021.

Allitemsintheabovestatementderivefromcontinuingoperations.

Thenotesonpages101to133formpartofthesefinancialstatements.

Financial Statements

Consolidated Financial Statements

98 HomeREITplc | AnnualReport | Fortheyearended31August2022

Consolidated Statement of Financial Position

			Asat
		Asat	31August2021,
		31August2022	asrestated
	Note	£’000	£’000
Non-current assets
Investmentproperty	9	414, 2 70	320,932
Totalnon-currentassets		414 ,2 70	320,932
Current assets
Tradeandotherreceivables	11	1 6,1 39	3,1 30
Restrictedcash	12	101 ,843	39,9 08
Cashandcashequivalents	12	74 , 5 1 4	6, 21 8
Total current assets		192 ,49 6	49, 2 56
Total assets		60 6,76 6	370,1 88
Non-current liabilities
Bankborrowings	10	–	1 1 7, 5 2 8
Total non-current liabilities		–	117,528
Current liabilities
Bankborrowings	10	24 5,0 47	–
Tradeandotherpayables	13	1 5,781	4,79 1
Total current liabilities		260 ,828	4,791
Total liabilities		260 ,828	122, 319
Net assets		345,938	247 ,869
Capital and reserves
Sharecapital	15	7 ,906	2,406
Sharepremium	16	59 5,73 3	–
Specialdistributablereserve	17	20 1 ,04 0	2 2 9, 36 0
(Accumulatedlosses)/retainedearnings		(458,7 41)	1 6,103
Total capital and reserves attributable to equity holders of the company		345,938	2 4 7 ,869
Net asset value per share (pps)	23	43 .76	103.03

Thenotesonpages101to133formpartofthesefinancialstatements.

The consolidated financial statements of Home REIT plc were approved and authorised for issue by the Board

of Directors on 10 October 2024 and signed on its behalf by:

Michael O’Donnell

Chair

Companynumber12822709

Financial Statements

Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 99

Consolidated Statement of Changes in Shareholders’ Equity

						Totalequity
				Special		attributableto
		Share	Share	distributable	Accumulated	ownersofthe
		capital	premium	reserve	losses	company
Fortheyearended31August2022	Note	£’000	£’000	£’000	£’000	£’000
Openingbalanceat
1September2021(restated)		2,406	–	2 29, 3 6 0	16,1 03	2 4 7, 8 6 9
Lossandtotalcomprehensivelossforthe
yearattributabletoshareholders		–	–	–	(4 74 , 8 4 4)	(4 74 , 8 4 4)
Transaction with owners:
Dividenddistribution	17	–	–	(28,320)	–	(28,320)
Sharecapitalissued	15,16	5, 50 0	6 0 7, 7 3 4	–	–	61 3, 2 34
Shareissuecosts	16	–	(12,001)	–	–	(12,001)
Balanceat31August2022		7 ,906	595,733	201 ,0 40	(458,7 41)	345,938

						Totalequity
				Special		attributableto
		Share	Share	distributable	Retained	ownersofthe
Fortheperiodfrom19August2020		capital	premium	reserve	earnings	company
to31August2021,asrestated	Note	£’000	£’000	£’000	£’000	£’000
Incomeandtotalcomprehensive
incomefortheperiodattributable
toshareholders		–	–	–	16,103	16,1 03
Transaction with owners:
Dividenddistribution	17	–	–	(3 ,9 93)	–	(3 ,9 93)
Sharecapitalissued	15,16	2, 406	2 3 8,16 4	–	–	24 0,5 70
Shareissuecosts	16	–	(4,811)	–	–	(4,811)
Cancellationofsharepremium	16,17	–	(2 33 , 35 3)	2 33, 353	–	–
Balanceat31August2021		2, 406	–	229,360	16 ,103	247 ,869

Thenotesonpages101to133formpartofthesefinancialstatements.

Financial Statements

Consolidated Financial Statements—continued

100 HomeREITplc | AnnualReport | Fortheyearended31August2022

Consolidated Statement of Cash Flows

			Fortheperiodfrom
			19August2020to
		Fortheyearended	31August2021,
		31August2022	asrestated
	Note	£’000	£’000
Cashflowsfromoperatingactivities
(Loss)/incomefortheyear/period		(4 74 , 8 4 4)	16,1 03
Changeinfairvalueofinvestmentproperty	9	452,873	(1 4,0 1 2)
Financecosts	7	4,94 0	1 ,580
Effectofstraightlining,leaseinducementsandimpairments	5	2 9, 2 5 8	(597)
Otherincome–escrowaccount	5	–	(750)
Otherexpenses–escrowaccount	12	375	375
Operating result before working capital changes		12 ,6 02	2,69 9
Decrease/(increase)intradeandotherreceivables	11	2,1 35	(3 4 4)
Increaseintradeandotherpayables	13	10,925	4 ,70 4
Netcashflowsgeneratedfromoperatingactivities		2 5,6 62	7, 0 5 9
Cashflowsfrominvestingactivities
Purchaseofinvestmentproperties	9	(597 ,420)	(31 2,7 7 0)
Transfertosolicitorsforfutureacquisitions	12	(18, 260)	–
Net cash used in investing activities		(61 5 ,6 80)	(312,770)
Cashflowsfromfinancingactivities
Proceedsfromissueofsharecapitalandsharepremium	15	61 3, 2 34	240,570
Shareissuecosts	16	(12,001)	(4,811)
Dividenddistribution	17	(28,320)	(3 ,9 93)
Interestpaid		(4, 47 2)	(1 , 2 68)
Loanarrangementfeepaid	20	(2 , 74 3)	(2, 507)
Non-utilisationfee	7	(141)	(19 0)
Cashreleasedfromrestrictedcashaccount	20	92, 757	84,128
Netcashgeneratedfromfinancingactivities		6 58,31 4	311 ,929
Net increase in cash and cash equivalents		68, 296	6,2 18
Cashandcashequivalentsatbeginningoftheyear/period		6,2 18	–
Cash and cash equivalents at end of the year/period	12	74 , 5 1 4	6, 218

Thenotesonpages101to133formpartofthesefinancialstatements.

Financial Statements

Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 101

1. General information

Home REIT plc (the “Company”) is a closed-ended

investment company, incorporated in England and

Wales on 19 August 2020 and is registered as a public

company limited by shares under the Companies Act

2006 with registered number 12822709. The Company

is structured as an externally managed company with

a board of non-executive directors (the “Directors” or

the “Board”). The Company commenced operations on

12 October 2020 when its shares began trading on the

London Stock Exchange.

Since the Company did not comply with the rules

under DTR 4 to publish its 2022 annual financial report

within four months of its year-end, trading in its shares

was suspended on 3 January 2023. Additionally, the

Company did not meet the requirement to file its half-

yearly accounts within three months of its 2023 or 2024

period ends or its 2023 annual report and accounts by

31 December 2023. The suspension of the Company’s

shares cannot be lifted until its financial statement

filings are brought up to date and the Company satisfies

any other requirements of the Financial Conduct

Authority (“FCA”).

The Group (the “Group”) consists of the Company and

its subsidiaries which are listed in Note 25.

The principal activities of the Group and the nature

of the Group’s operations are set out in the Strategic

Report on pages 7 to 43.

As discussed more fully in Note 19, on 15 March 2023, the

Company and its former Investment Adviser, Alvarium

Home REIT Advisors Limited (“AHRA”) (now in liquidation),

agreed by way of letter of agreement that the Company

was entitled to terminate the Investment Advisory

Agreement dated 22 September 2020 (the “IAA”) (which

governed the relationship between the Company and

AHRA) on or before 30 June 2023. On 22 May 2023, the

Company appointed AEW UK Investment Management

LLP (“AEW”) to provide property advisory services and

announced its intent to engage AEW as Investment

Manager and Alternative Investment Fund Manager

(“AIFM”) after receipt of FCA and shareholder approval

for a revised investment policy. On 25 May 2023, the

Company and Alvarium Fund Managers (UK) Limited

(“Alvarium FM”) agreed by way of variation agreement,

as further varied on 18 July 2023, that the Investment

Management Agreement dated 22 September 2020

(the “IMA”) (which governed the relationship between

the Company and Alvarium FM) would be varied to

allow for termination immediately upon the Company

giving notice in writing to Alvarium FM, provided such

notice was given by not later than 31 August 2023, or

upon either party giving not less than six months’ notice

in writing. On 30 June 2023, the IAA was terminated.

On 21 August 2023, the Company terminated the IMA,

the Company’s shareholders approved the revised 

investment policy and the Company appointed AEW as

Investment Manager and AIFM.

Going Concern

The Directors, at the time of approving the financial

statements, are required to consider whether they

have a reasonable expectation that the Company

and the Group has adequate resources to continue in

operational existence for the foreseeable future and

do not consider there to be any threat to their going

concern status.

As discussed in Note 26, shareholders approved the

New Investment Policy on 16 September 2024 to enter

into an orderly process to wind down the Company’s

operations (the “Managed Wind-Down”). The Group will

not make any further real estate acquisitions and will

not make any further investment. Capital expenditure

will be permitted where it is deemed necessary or

desirable to protect or enhance an asset’s net realisable

value or in order to comply with statutory obligations.

Cashflow projections have been prepared by AEW and

agreed with the Board which consider:

1. The expected orderly disposal of properties through

a combination of private treaty and auction sales.

The Board expects that substantially all properties

will be sold no later than 30 June 2025.

2. Revenue will continue to be collected on properties

held by the Group.

3. Expenses are forecast to continue to be incurred

at the current level for those services required

for the continued operation of the Group. Notice

periods have been considered where necessary

and the majority of operations are expected to

have concluded by 31 December 2025, when the

annual report and accounts for the year ended

31 August 2025 are required to be filed.

As discussed in Note 10, the Group has been operating

under periodic debt covenant waivers from and with the

support of Scottish Widows Limited (“Scottish Widows”

or the “Lender”) with the latest waiver extending to

31 October 2024. Scottish Widows has stated that

it expects that both facilities and their associated

interest and Deferred Fees to be fully paid by

31 December 2024. On this basis, the Directors believe

the Lender will continue to support the Group until the

debt is fully repaid. However, there is no guarantee that

the Lender will continue to extend its support beyond

the date of the latest waiver letter.

Since beginning property sales in August 2023, the

average discount from the JLL’s August 2022 valuation

is 11.4%, and 13.2% if August 2023 through November

2023 sales are excluded, as this evidence was used

by JLL as part of the valuation process (1.9% and

3.0% average discount from 31 August 2023 valuation

Financial Statements

Notes to the Consolidated Financial Statements

102 HomeREITplc | AnnualReport | Fortheyearended31August2022

Financial Statements

Notes to the Consolidated Financial Statements—continued

respectively). This discount occurs generally because

at the auction date:

1. The Group did not receive from AHRA or non-

performing tenants, and therefore cannot

produce critical information that buyers require,

such as underlying occupancy, tenant and

income information and property compliance

certificates, and

2. The Group’s advisers have experienced issues

with accessing properties because of tenant

imposed limitations or due to poor management

by the non-performing tenants, which negatively

impacts marketing including producing full

information particulars.

The Group has been selling properties that are in poor

condition in order to minimise operating liabilities

and risks. In order to maximise future sales proceeds,

AEW is prioritising selling properties which the Group

controls and holds complete information for marketing.

However, considering the past shortfall to the

valuations and as a contingency to ensure the Company

can fully repay the Lender and provide adequate

working capital to fund operations, the Group intends

to sell a minimum of a further £25 million of property

in the period to 31 December 2024. The remaining

properties are expected to be sold in the period to

30 June 2025.

The Company has received a pre-action letter of claim

which asserts that the Company provided information

to investors which was false, untrue and/or misleading

and as a result investors suffered losses. The Directors

are not currently able to conclude whether or when

a formal claim may be issued and if a claim is issued,

what the quantum of such claim may be. Further, on

12 February 2024, the Company was notified by the

FCA of its commencement of an investigation into the

Company, covering the period from 22 September 2020

to 3 January 2023. The Company and Directors are

cooperating with the FCA in its investigation. However,

they are not able to assess or quantify what if any

action may be taken. Until the Directors have better

visibility into the ultimate exposure of these and any

other contingent liabilities, they will not be able to

satisfy themselves as to what, if any, reserves of excess

cash will be required to settle these matters. When the

Directors are able to estimate the range of exposure,

the Company intends to return any estimated surplus

capital to investors, whilst maintaining a prudent level

of cash to wind down the Company and Group and

considering any other eventualities.

As a result of (i) uncertainty over the timing of asset

sales, (ii) risks around continued Lender support, (iii)

the threatened litigation, (iv) the FCA investigation

and (v) the Directors’ expectation for an orderly wind-

down of the Company’s operations, the Directors 

consider it appropriate to adopt a basis of accounting

other than as a going concern in preparing the financial

statements. No material adjustments to accounting

policies or the valuation basis have arisen as a result

of ceasing to apply the going concern basis.

2. Accounting policies

The principal accounting policies applied in the

preparation of the financial statements are

set out below.

Basis of Preparation

These Consolidated Financial Statements have

been prepared in accordance with UK-adopted

International Accounting Standards (“IFRS”) and

with the requirements of Companies Act 2006. The

Consolidated Financial Statements of the Group have

been prepared on a historical cost basis, as modified

for the Group’s accounting for investment properties,

which have been measured at fair value. Gains or losses

arising from changes in the fair value of investment

property are included in profit or loss.

Whilst the Directors are satisfied that the Group and

the Company have adequate resources to continue in

operation and to meet all liabilities as and when they fall

due, the Directors consider it appropriate to adopt a

basis other than going concern in preparing the financial

statements because of their announced intention to

enter into a Managed Wind-Down for the Group.

The preparation of financial statements in accordance

with IFRS requires the Directors to make estimates

and assumptions that effect the reported amounts

of revenues, expenses, assets and liabilities, and the

disclosure of contingent liabilities at the reporting

date. Differences between our estimates and the

actual results will be recognised as they occur. Critical

accounting estimates and key sources of estimation

uncertainty in applying these accounting policies are

disclosed in Note 3.

The Group has reviewed its past accounting policies

and practices and, based on new information, the

Board has amended several accounting policies

and corrected certain amounts presented in the

period ended 31 August 2021 Consolidated Financial

Statements. To present comparable information using

the same accounting policies, the Group has restated

the Consolidated Financial Statements for 2021 in the

2022 Annual Report. The reasons why and impact of the

changes are described more fully in Note 4.

The Group invests in residential property in the United

Kingdom and receives revenue and pays expenses

in Sterling. Therefore, the Directors have adopted

Sterling as the presentation and functional currency

in the Consolidated Financial Statements.

 HomeREITplc | AnnualReport | Fortheyearended31August2022 103

Basis of Consolidation

The Consolidated Financial Statements incorporate

the financial statements of the Company and its

subsidiaries. When the Company controls an investee,

it is considered a subsidiary. The Company controls

an investee if all three of the following elements are

present: power over the investee, exposure to variable

returns from the investee and the ability of the investor

to use its power to affect those variable returns.

The results of subsidiaries acquired or disposed of

during the year are included from the effective date of

acquisition or up to the effective date of disposal.

There are no accounting policies of subsidiaries which

differ from Group accounting policies. All intra-Group

transactions, balances, income and expenses are

eliminated in consolidation.

Acquisition of Investment Property

The Group has acquired properties directly and

through the purchase of property-owning companies.

On completion, the Group considers whether each

acquisition represents a business or an asset. Under the

requirements of IFRS 3, to be considered a business,

an acquired set of activities and assets must include,

at a minimum, an input and a substantive process that

together significantly enhance the ability to create

outputs. All purchase transactions to date have met the

criteria of an asset acquisition. The Group recognises

acquisitions on completion.

The cost of an asset acquisition includes direct

transaction costs and is allocated between the

identifiable assets and liabilities acquired based upon

their relative fair values at the transaction date.

Goodwill and deferred taxes are not recorded in the

purchase price allocation.

Purchased or prospective property acquisitions were

previously presented to the Board as being high quality

properties suitable for homeless accommodation in

line with the Investment Policy (as defined on page 34 of

the Company’s prospectus for the Initial Public Offering

dated 22 September 2020). After detailed reviews

of the Sale and Purchase Agreements (each a “SPA”

and collectively, the “SPAs”) by AEW, the Board now

understands that most of the properties acquired were

subject to an obligation for the vendor to complete

certain works (“Seller’s Works”), to ensure that the

property was fit for purpose (which was undefined)

within a specified period as defined in the SPAs. The

vendor was typically given between 6 and 12 months

to complete the Seller’s Works (the “Seller’s Works

Longstop Date” or “SWLD”). Because the acquisition

price was paid in full on completion, the Group

retrospectively estimated the value of the Seller’s

Works based on available information and allocated

that portion of the purchase price as a prepayment

for future enhancements to be made. Where it is not

possible to estimate the value of the Seller’s Works the

Group records the acquisition at cost. If the work was

completed and a certificate of practical completion

was provided by the SWLD, the prepayment was

reclassified into Investment Property. If the work was

not completed by the SWLD, the prepaid balance

was written off to the income statement. The Group

wrote-off £11,922,000 and £3,660,000 during the

periods ending 31 August 2022 and 2021 respectively

of prepaid Seller’s Works when the vendor did not

complete the Seller’s Works by the SWLD. See Note 3

Significant Accounting Judgements and Estimates for a

full discussion of the techniques used and assumptions

made in determining the value of these Seller’s Works.

In some cases, a retention was required to be held

by the Group’s solicitor at the acquisition date to

be released upon receipt of a practical completion

statement from a qualified surveyor or at fixed dates

in the future. Where the only condition of release is the

passage of time, then the amount is initially recorded

as a payable, which is reversed when the cash retention

is released to the vendor. For those retentions

associated with the performance of Seller’s Works,

the independent party would generally release the

retention cash upon receipt of the Practical Completion

Statement or otherwise at the direction of the

Investment Advisor. If the requirements were not met

by the SWLD, the cash was released back to the Group.

As discussed more fully in the Acquisition of Investment

Property section of Note 3, Significant Accounting

Judgements and Estimates, a portion of the purchase

price was allocated to either a lease incentive asset

(where the lease inception date is the same as the

lease commencement date) or a debtor (where the

property was not considered habitable at acquisition

and therefore the lease was not considered to have

commenced.) The lease incentive is amortised as a

reduction of gross rental income on a straight-line basis

over the term of the lease. The debtor was reduced as

cash was received from the tenant. The debtor and the

lease incentive asset are assessed for impairment at

each balance sheet date in line with the accounting for

Financial Instruments and Impairment of Non-Financial

Assets respectively, as outlined in this note.

Investment Properties

Investment properties are those that are held to earn

income or for capital appreciation, or both. Investment

properties are initially measured at cost (including

transaction costs) and adjusted to their fair value, as

determined by an accredited independent external

valuer, at each subsequent balance sheet date. Gains

and losses arising from changes in the fair value of

investment property are included in profit or loss in the

period in which they arise.

Financial Statements

Notes to the Consolidated Financial Statements—continued

2.Accountingpolicies—continued

104 HomeREITplc | AnnualReport | Fortheyearended31August2022

Additions to properties include expenditures which

result in identifiable future economic benefits. All other

property expenditures are expensed as incurred.

Lease incentives and straight-line rent adjustments

(as described below under Rental Income) are offset

against investment property.

Investment property sales are recognised on the

completion date.

Financial Instruments

The Group’s accounting policy for each type of financial

instrument is as follows:

a) Financial assets

The Group’s financial assets comprise rent and

other receivables, restricted cash and cash and cash

equivalents. Financial assets are initially recognised

at fair value less directly attributable transaction

costs and subsequently measured at amortised cost

using the effective interest rate method. There are no

financial assets held at fair value through profit or loss.

The Group utilises the simplified approach to

measuring expected credit losses (“ECL”s) within

IFRS 9 using a provision matrix in the determination

of the lifetime expected credit losses. The receivable

is written off against the provision when it is deemed

uncollectible. Any recoveries made are recognised in

profit or loss when received.

b) Financial liabilities

Trade and other payables that are financial liabilities are

initially recognised at fair value, net of directly attributable

transaction costs and subsequently measured at

amortised cost using the effective interest rate method.

Bank borrowings are initially recognised at fair value

net of directly attributable transaction costs and

subsequently measured at amortised cost using the

effective interest method. Interest expense includes

amortisation of initial transaction costs and an

allocation of any premium payable on redemption.

Cash and Cash Equivalents

Cash and short-term deposits in the balance sheet

comprise cash at bank and short-term deposits with an

original maturity of three months or less.

Restricted cash

Restricted cash represents:

• Cash withheld by the lender on drawdown

borrowings. The Group only has access to this cash

when acceptable security is provided and the Lender

releases the restriction.

• Cash held by third parties, primarily the Group’s

solicitors, for a specific purpose such as future

acquisitions and retentions.

Taxation

Current and deferred taxes are recognised on any

profit or loss not exempt under UK REIT regulations.

Current tax is expected tax payable on any non-REIT

taxable income for the year, using tax rates enacted or

substantively enacted at the balance sheet date.

Dividends Payable to Shareholders

Final dividend distributions to the Group’s shareholders

are recognised as a liability in the Group’s financial

statements in the period in which the dividends

are approved by the Group’s shareholders. Interim

dividends are recognised when paid.

Rental Income

The Group retains substantially all the risks and rewards

of ownership of the properties and accordingly, all

leases are classified as operating leases. Rental income

arising from the operating leases is accounted for on

a straight-line basis over the expected term of the

lease. The lease term is the non-cancellable period of

the lease together with any further term for which the

tenant has the option to continue the lease where, at

the inception of the lease, the Directors are reasonably

certain that the tenant will exercise that option. The

Directors have concluded that due to the length of

time to the option exercise date (19 years), none of

the options to extend were reasonably certain to

be exercised.

The Company’s leases contain annual inflationary

increases which are collared and capped at 1% and 4%

respectively. Because of this change in annual rent, the

straight-line adjustment is rebased each year and the

rental income arising from such uplifts is recognised

on a straight-line basis over the remaining lease term.

Changes in the payment amount or timing, or the lease

term made after the original lease agreement was

signed are accounted as a lease modification. Lease

modifications are accounted for as a new lease from

the effective date of the modification, considering any

prepaid or accrued lease balance at that date.

The standard lease agreement includes requirements

that the tenants establish:

• A sinking fund deposit account in the tenant’s name

to pay in on the rent payment date an amount of up

to 7.5% of the rent due to fund a planned and costed

programme of major repairs, maintenance and

improvements, and

• A Void Surcharge Fund in the tenant’s name to pay

in on the rent payment date an amount of up to 7.5%

of the rent due to be used in the event of a void in

the property.

Because these amounts are established and

controlled by and for the benefit of the tenant,

we have not accounted for these amounts in these

financial statements.

Financial Statements

Notes to the Consolidated Financial Statements—continued

2.Accountingpolicies—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 105

In certain cases, the Group acquired properties which

were not considered habitable at the acquisition date

and simultaneously signed an operating lease. IFRS

16, Leases, defines a lease as ‘a contract, or part of a

contract, that conveys the right to use an asset for

a period of time in exchange for consideration.’ If a

property is deemed unhabitable (as described more

fully in Note 3), the Directors have concluded that the

lease has not conveyed the ‘right to control the use of

an identified asset’ and therefore the Group does not

recognise the associated rental revenue until property

improvement to a lettable standard is complete. Any

cash received from the tenant while the property is

judged to be unhabitable is applied as a reduction in the

cost of property or the debtor, as appropriate and as

described in Acquisition of Investment Property above.

Impairment of Non-Financial Assets

Non-financial assets including lease incentives and

straight-line rent receivable assets are assessed for

impairment at each balance sheet date or whenever

events or changes in circumstances indicate that their

carrying amount may not be recoverable. Where the

carrying value of an asset exceeds its recoverable

amount (the higher of value in use and fair value

less costs to sell), the asset is impaired. As more

fully described in Note 5, Total Income, the Group

has received payments to settle debtors in several

non-traditional ways as well as receiving cash from

tenants which don’t exactly tie to invoiced amounts.

Accordingly, the impairment test is carried out on the

smallest group of assets to which it belongs for which

there are separately identifiable cash flows, which

is on a tenant basis defined as the cash-generating

units (“CGUs”). The Group assesses impairment of

individual lease related assets, such as lease incentives

and straight-line rent receivables, at the tenant levels.

Impairment charges of £31,270,000 (2021: £Nil) were

recognised during 2022 as tenants were experiencing

financial stress from August 2022.

Finance Costs

Costs associated with new financings are capitalised

and amortised to finance costs over the fixed term of

the loans using the effective interest method.

Changes to Accounting Standards and Interpretations

At the date of authorisation of the financial statements,

there were a number of standards and interpretations

which were in issue but not yet effective. The Directors

have assessed the impact of these amendments

and has determined that the application of these

amendments and interpretations in current and

future periods will not have a significant impact on its

financial statements.

Description		Effective Date
Amendments to IFRS 3 Business		1 January
Combinations; IAS 16 Property,		2022
Plant and Equipment; IAS 37
Provisions, Contingent Liabilities and Contingent Assets
Annual Improvements to IFRSs (2018-		1 January
2020 Cycle) – IFRS 1, I examples accompanying IFRS 16, IAS 41	FRS 9, Illustrative	2022
Amendments to IAS 1: Disclosure of		1 January
accounting policies and definition		2023
of estimates
Amendments to IAS 1 on the		1 January
classification of liabilities as non-current,		2024
IFRS 16 on considering profit in sale
leaseback transactions and IAS 7 on
supplier finance
Amendments to IFRS 17 Insurance		1 January
Contracts and IAS 12 Income Taxes		2024
Amendment to IAS 21		1 January
		2025
Amendment to IFRS 7		1 January
		2026
Amendment to IFRS 18 presentation		1 January
of information in the primary		2027
financial statements

As discussed more fully in Note 4, Correction of

Prior Period Errors, in preparing the Consolidated

Financial Statements for 2022, the Board has adjusted

the Group’s accounting treatment in several areas.

The Group has consistently applied the revised

accounting treatment in these areas in the current

year and restated the 2021 comparatives accordingly.

In addition, there are several new standards and

interpretations which were effective for the first time

for periods beginning on or after 1 September 2021. The

new standards impacting the Group are:

• Interest Rate Benchmark Reform – LIBOR ‘phase

2’ (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4,

and IFRS 16). The amendments provide relief to the

Group in respect of certain loans whose contractual

terms are affected by interest benchmark reform

(effective from 1 January 2021). Applying the

practical expedient introduced by the amendments,

when the benchmarks are replaced the adjustments

to the contractual cash flows will be reflected as an

adjustment to the effective interest rate. Therefore,

the replacement of the loans’ benchmark interest

rate will not result in an immediate gain or loss

recorded in profit or loss.

Financial Statements

Notes to the Consolidated Financial Statements—continued

2.Accountingpolicies—continued

106 HomeREITplc | AnnualReport | Fortheyearended31August2022

• Amendments to IFRS 16 Leases: Covid-19-Related

Rent concessions beyond 30 June 2021. The

amendment extends the practical expedient to

reductions in lease payments that were originally

due on or before 30 June 2022. The amendment

is to be applied mandatorily by those entities to

apply the previous amendment Covid-19-Related

Rent Concessions. The Group has not granted rent

related concessions in relation to Covid-19.

These standards have been assessed to have no

significant impact to the Group as they are either

not relevant to the Group’s activities or require

accounting which is consistent with the Group’s

accounting policies.

3. Significant Accounting Judgements and Estimates

The preparation of financial statements in

conformity with IFRS requires the Directors to make

judgements, estimates and assumptions that affect

the reported amounts recognised in the financial

statements. Revisions to accounting estimates are

recognised in the period in which the estimates are

revised. The comparative amounts for the period

ended 31 August 2021 have been restated because

those accounts contained errors as more fully

described in Note 4.

Because AHRA is no longer involved with the Group,

the Directors have had to reconsider judgements based

on factors which were present at each balance sheet

date and, as far as possible, remove hindsight from

its decisions.

In the course of preparing the Consolidated Financial

Statements, the Directors have had to make

assumptions and judgements especially in the areas

of rental revenue recognition, valuation of investment

property, and purchase price allocation related to the

acquisition of investment property. The judgements,

estimates and associated assumptions that have had

a material impact in the presentation of assets and

liabilities in these accounts are outlined below:

Acquisition of Investment Property

As discussed above under Accounting Policies, the

Directors have reconsidered the purchase price

allocation for every acquisition since inception and

corrected previous errors. Because documentation

was not always maintained or otherwise made available

by AHRA, the Directors made a number of assumptions

and estimates in order to make certain allocations

which can be summarised as follows:

Seller’s Works

Purchased or prospective property acquisitions were

presented to the Board as being high quality properties

suitable for homeless accommodation in line with the

Investment Policy at that time. After detailed reviews

of the SPAs by AEW, the Board now understands that

most of the properties acquired were subject to an

obligation for the vendor to complete Seller’s Works, to

ensure that the property was fit for purpose (which was

undefined) within a specified period as defined in the

SPAs. The vendor was typically given between 6 and 12

months to complete the works, the SWLD. The Group

paid the full purchase price except as discussed below

under Retentions on completion. Under most of the

SPA contracts the Group had limited recourse against

the vendor if the vendor did not complete the Seller’s

Works. Accordingly, the portion of the price paid at the

acquisition date related to the Seller’s Works should

have been presented as a prepayment until the works

were complete and then reclassified into Investment

Property. If the Seller’s Works were not completed by

the Seller’s Works Longstop Date, the prepayment

should have been written off to the income statement.

The Directors have corrected these errors in the

previously published 2021 financial statements in the

current year as detailed in Note 4.

AHRA was required to obtain a building condition report

around the acquisition date. However, our use of these

reports for the preparation of these accounts was

limited because of the following:

1. The reports were prepared by the Seller’s advisers

and the Group did not obtain a reliance letter

which would allow the Directors to rely on the work

performed or conclusions reached,

2. The scope of the report and/or the expected

standard of property was not clear or was

undefined, or

3. The report did not always contain a detailed cost

estimate of works required.

The Directors therefore used these reports as follows:

1. Where these reports provide an estimate of the

improvement works required to bring the property

into an acceptable condition (even if the Group

does not have reliance), the Directors have used

the budget associated with the works proposed for

the first five years of ownership as our estimate of

Seller’s Works. The Directors used the first five years

because those works presented after five years were

generally not of a nature which would impact the

current use of the property.

2. For properties where building inspections contained

information about the condition of the property,

but no cost estimate of works required to bring

the property into an acceptable condition (even if 

Financial Statements

Notes to the Consolidated Financial Statements—continued

2.Accountingpolicies—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 107

the Group do not have reliance), the Directors have estimated the value of those Seller’s Works. Our estimate

required an understanding of:

1. the type of property acquired (from single-family homes, Houses in Multiple Occupation (“HMO”) or

residential investments);

2. the condition of the property from building surveys completed at the time of the acquisition (from

conversion, boarded up, very poor, poor, fair, good and very good). The Directors classified any property

deemed in very poor condition, or requiring conversion or boarded-up as unhabitable; and

3. The number of bedrooms in the property.

Using this information, the Directors estimated the value of the Seller’s Works using the following formula:

1. If the building condition was very good or good, then the Seller’s Works value was £0. For single-family

homes, the Directors computed an ‘expected spend’ as the greater of £25,000 or 10% of the property’s

Market Value - with a special assumption of Vacant Possession (“MV-VP”), which was increased by a factor of

50% if the property is located in the South (“South” has been defined generally as the area south of the M4). If

the property condition was assessed as fair, then the Directors used 50% of the expected spend; if assessed

as poor, then the Directors used 100% of expected spend and if very poor then the Directors used 125% of

the expected spend.

2. For HMOs and residential investments, the Directors used the following costings to estimate the

Seller’s Works:

Type	Condition		North	South
HMO	Fair	Each bedroom	£5,000	£5,000
HMO	Poor	Each bedroom	£7,500	£7,500
Residential Investment	Fair	1st bedroom	£5,000	£7,500
Residential Investment	Fair	Additional bedroom	£2,500	£2,500
Residential Investment	Poor	1st bedroom	£7,500	£10,000
Residential Investment	Poor	Additional bedroom	£5,000	£5,000

If a building survey report could not be found or when an internal inspection was not able to be completed, then the

Directors could not make a determination as to whether Seller’s Works were required and accordingly recorded the

acquisition at cost and revalued the property to market value at the next balance sheet date through unrealised

gain or loss (2022 – 542 properties and 2021 – 424 properties).

Lease Inducement Payments

The Group did not provide lease inducement consideration to tenants directly. However, AHRA expected the

vendors to provide, and they generally did provide, the tenant with cash in the amount of the first year’s rent, which

was funded through original acquisition payment made by the Group to the vendor as part of the acquisition price.

Based on the following factors, the Directors concluded that the substance of the transactions is such that the

lease and the SPA should be accounted for as a single contract as set forth in IFRS 16, paragraph B2:

• Every property was acquired with a tenant already identified and ready to sign a standard Home REIT lease

agreement (no property was acquired subject to a pre-existing lease),

• AHRA had publicly stated that they expected each property vendor to provide cash representing at least one

year of worth of rent in advance to the tenant at the acquisition date,

• The vendor and tenant had significant interactions, and in some cases previous or existing connections, both

before and subsequent to the acquisition, and

• The SPA and lease contracts were signed on the same day

Financial Statements

Notes to the Consolidated Financial Statements—continued

3.SignificantAccountingJudgementsandEstimates—continued

108 HomeREITplc | AnnualReport | Fortheyearended31August2022

If the contracts were to be considered a single contract,

the payment to the vendor which funded the tenant

would be considered an inducement to enter into

the lease for a habitable property or a debtor (lease

inducement receivable for unhabitable properties).

Retentions

In certain circumstances, a retention for a portion of

the Seller’s Works was deducted from the cash paid

to the vendor as protection against the vendor not

completing the Seller’s Works. The Group had not

previously accounted for these amounts (see impact

of this in Note 4 ‘Correction of Prior Period Errors’).

The Directors have corrected the previous accounting

by establishing the retention as a restricted cash asset

with an equal and offsetting other payable which is

reclassified into Investment Property when approved

by the lessee or reversed upon receipt of cash if the

necessary condition for release was not achieved

prior to the Seller’s Works Longstop Date. The release

of the retention did not always follow the receipt of

a certificate of practical completion. The Directors

therefore have recorded the release of retentions on

a cash basis which does not always fully align with the

accounting for Seller’s Works as above.

Valuation of Investment Property

As described more fully in Note 9, Investment Property,

a number of significant judgments were made by

the independent valuer in determining fair value of

investment properties, including:

• the credit quality of the tenant and the condition of

the property were considered in determining the

best valuation technique to value each property,

• the Group undertook an exercise to inspect

each property to determine its current condition

which occurred from August 2023 to May 2024.

The condition of the property as determined

at the inspection date is assumed to be the

condition of the property for valuation purposes at

31 August 2022,

• For properties valued on investment basis, rents were

capped at five years and overall value was capped at

150% of vacant possession value (except for certain

subtenants where the full sublease was considered).

Rental Revenue Recognition

If a property was deemed habitable at acquisition,

then rents are recognised on a straight-line basis over

the life of the lease. For those properties that the

Group purchased that were in very poor condition

or boarded up, or required conversion, the Directors

have now concluded, based upon review by AEW of

the original surveyor reports as crosschecked against

recent inspection reports, that these properties

were unhabitable and therefore did not meet the

criteria under IFRS 16 Leases for the lease to reach its

Commencement Date. Accordingly, the Directors’

concluded that revenue recognition would only

begin when the associated properties were put, at a

minimum, into a habitable condition. The Directors

have corrected the lease revenue and instead recorded

any cash received from a tenant (or a party on its

behalf) associated with this lease to reduce the debtor

set up as discussed above under Lease Inducement

Payments. If a property was considered habitable at the

acquisition date, then the Commencement date was

the same as the lease inception date.

During the period from September 2021 to October

2022, without the knowledge or authority of the

Directors, debtors were settled in several non-

traditional ways, including:

• As noted above, at acquisition vendors usually

had an obligation to improve a property to a good

lettable standard and in some cases, vendors paid

tenants to transfer the obligation to the tenants.

The settlement agreements to transition capex

obligations on properties from vendors to tenants

resulted in cash of £1,748,000 being transferred to

the Group to be used to settle debtors instead of

being paid directly to the tenants. Cash in excess

of outstanding debtors at the time was received in

the amount of £282,000 and the excess funds were

reimbursed to the associated two tenants;

• Vendors made payments on behalf of 14 tenants in

the amount of £7,166,000;

• One tenant settled amounts on behalf of two other

tenants in the amount of £1,614,000; and

• The Group withheld £2,142,000 from the acquisition

of properties with an agreed price of £17,040,000,

such that funds transferred at acquisition were

£14,898,000. The funds withheld were offset against

debtors from three tenants.

These transactions were used to settle specific debtors

from specific tenants as directed by AHRA. The

Directors considered whether the more appropriate

accounting would be to reduce the carrying value of

the property for the cash payment or as a creditor.

The debtor balances would then be written off as

uncollectible under IFRS 9. However, there was

correspondence between AHRA and vendors which

provided evidence of the intent of the cash transfers.

Further, there were no signed notes or other

agreements executed which would signify any lending

arrangements. Accordingly, the Directors concluded

that applying the cash received against outstanding

debtors was in-line with the intent of the transaction.

Financial Statements

Notes to the Consolidated Financial Statements—continued

3.SignificantAccountingJudgementsand

Estimates—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 109

Any outstanding debtors at 31 August 2022 after

making the above cash applications were provided

for in full.

The Group assesses impairment of individual lease

related assets, such as lease incentives and straight-

line rent receivables, at the tenant levels. Impairment

charges of £31,270,000 (2021: £Nil) were recognised

during 2022 as tenants were experiencing financial

stress from August 2022.

4. Correction of Prior Period Errors

As described more fully in Note 3 Significant

Accounting Judgements and Estimates, the Directors

have reconsidered the purchase price allocation for

every acquisition since inception which resulted in

the following corrections of information presented in

the 2021 Annual Report and Accounts. IFRS requires

an additional comparative Statement of Financial

Position be presented at the beginning of the year

being restated in order to demonstrate the impact to

the opening position. However, since the Company

commenced operations on 12 October 2020, there is

nothing to present.

Property Condition – Unhabitable Properties and

Seller’s Works

Many of the properties the Group has purchased

were in poor condition and the vendor had agreed to

improve to an acceptable standard within a specified

period as defined in the SPA, including 172 which were

unhabitable (2022 – 120 and 2021 – 52). With some

exceptions where the Group kept a retention, at the

acquisition date, the Company paid the full purchase

price with the expectation that the vendor would

complete the required works from the funds paid at

acquisition. Even where the Group kept a retention, it

had inadequate security and limited recourse against

the vendor if the vendor did not complete the Seller’s

Works, and accordingly, most of the vendors did

not complete the works prior to the agreed SWLD.

Amounts paid in respect of Seller’s Works were

previously included in the cost of properties acquired.

The correction to the previous accounting policy

has resulted in the reallocation of the estimated

value of the Seller’s Works from property cost to

prepaid Seller’s Works, if the property was considered

habitable. Where works were subsequently completed

on a property, the related prepaid Seller’s Works

balance was reclassified into Investment Property.

Where works had not been initiated before the SWLD,

the related prepaid Seller’s Works balance was written

off to the income statement. If the property was

boarded up or otherwise deemed unhabitable, at

the time of acquisition, the Directors could not make

a reasonable retrospective estimate of the works

required and instead recorded the property at cost and

revalued the property in line with the external valuation

at the following balance sheet date.

Retentions

As noted above, in certain circumstances, a retention

was deducted from the cash paid to the vendor

as protection against the vendor not completing

the Seller’s Works. The Group had not previously

accounted for these amounts. The amounts were

generally held by the buyer’s solicitor to be released

upon receipt of approval as dictated under the SPA,

although in some cases AHRA, without the knowledge

or authority of the Directors, released the retentions

without receiving a certificate of practical completion

as required under most SPAs. If the works were not

completed, the balance was released back to the Group

and the creditor reversed accordingly. The Directors

have corrected the previous accounting by establishing

the retention as a restricted cash balance with an

offsetting short-term creditor.

Lease Inducement Payments

As discussed above, the Group did not provide lease

inducement consideration to tenants directly. However,

the Investment Adviser expected the vendors to

provide, and they generally did provide, the tenant with

cash in the amount of the first year’s rent, which was

funded through the original acquisition payment made

by the Group to the vendor as part of the acquisition

price. The Directors therefore concluded that the

substance of the transactions was such that the lease

and the SPA should have been accounted for as a single

contract as set forth in IFRS 16, paragraph B2.

Accordingly, the Directors allocated an amount equal

to twelve months of rent payable to establish either a

lease inducement asset or a debtor (for habitable and

unhabitable properties respectively) representing

the first year of rent in the revised purchase price

allocation.

Escrow Account

On 18 June 2021, the Company entered into an escrow

agreement with Noble Tree Foundation Limited, a

tenant, and Intertrust Trustee 3 (Jersey) Limited

whereby an affiliate of Karla Asset Management Limited

provided £750,000 to an escrow account in the name of

the Company with such funds to be used as approved by

two AHRA fund managers, acting without the authority

of the Directors. The fund could be accessed by the two

tenants, Noble Tree Foundation Limited and Big Help

Project, and as approved by the two fund Managers.

As at 31 August 2021, £375,000 had been distributed

with the rest distributed in the 2022 financial year. The

financial statements for 2021 did not reflect these

transactions and have been restated to account for the

revenue and expenses associated with this arrangement.

Financial Statements

Notes to the Consolidated Financial Statements—continued

3.SignificantAccountingJudgementsand

Estimates—continued

110 HomeREITplc | AnnualReport | Fortheyearended31August2022

Financing Costs

Financing costs were incorrectly presented net in the 2021 Consolidated Statement of Cash Flows and have been

split into their components in order to be fully consistent with the 2022 presentation.

Impact on Statement of Comprehensive Income:

	31 August 2021,	Unhabitable	Prepaid	Lease
	as Previously	Properties	Seller’s Works	Inducement	Retentions	Escrow Account	31 August 2021,
	Reported	Adjustment	Adjustment	Adjustment	Adjustment	Adjustment	as Restated
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Income
Amounts invoiced
in accordance with
lease agreements	10,677	–	–	–	–	–	10,677
Rent not recognised
because properties
were unhabitable	–	(1,063)	–	–	–	–	(1,063)
Rent straight lining
and lease inducement
amortisation	1,078	–	–	(481)	–	–	597
Rental income	11,755	(1,063)	–	(481)	–	–	10,211
Other income	–	–	–	–	–	750	750
Total income	11,755	(1,063)	–	(481)	–	750	10,961
Expenses
General and
administrative expenses	(3,255)	–	–	–	–	–	(3,255)
Other expenses	–	–	–	–	–	(375)	(375)
Total expenses	(3,255)	–	–	–	–	(375)	(3,630)
Change in fair value of investment property	14,012	–	–	–	–	–	14,012
Write-off of Seller’s Works
not initiated or completed	–	–	(3,660)	–	–	–	(3,660)
Operating
profit for period	22,512	(1,063)	(3,660)	(481)	–	375	17,683
Finance costs	(1,580)	–	–	–	–	–	(1,580)
Profit before taxation	20,932	(1,063)	(3,660)	(481)	–	375	16,103
Taxation	–	–	–	–	–	–	–
Total comprehensive income for the period
attributable to shareholders	20,932	(1,063)	(3,660)	(481)	–	375	16,103
Earnings per share
– basic and diluted
(pence per share)	10.15	(0.52)	(1.77)	(0.23)	–	0.18	7.81

Financial Statements

Notes to the Consolidated Financial Statements — continued

4.CorrectionofPriorPeriodErrors—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 111

Impact on Statement of Financial Position:

	31 August 2021,	Unhabitable	Prepaid	Lease		Escrow	Tenant
	as Previously	Properties	Seller’s Works	Inducement	Retentions	Account	Receivables	31 August 2021,
	Reported	Adjustment	Adjustment	Adjustment	Adjustment	Adjustment	Adjustment	as Restated
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Non-current assets
Investment property:
Property
acquisitions in period	312,770	(16,693)	–	–	–	–	–	296,077
Lease inducement on
unhabitable properties
recognised as receivable	–	(1,604)	–	–	–	–	–	(1,604)
Rent straight lining and
lease inducement	1,078	16,693	–	(481)	–	–	–	17,290
Prepaid Seller’s Works
recognised as receivable	–	–	(4,843)	–	–	–	–	(4,843)
Increase in fair value of
investment property	14,012	–	–	–	–	–	–	14,012
Investment property	327,860	(1,604)	(4,843)	(481)	–	–	–	320,932
Total non- current assets	327,860	(1,604)	(4,843)	(481)	–	–	–	320,932
Current assets
Trade and other receivables:
Tenant receivables	1,191	–	–	–	–	–	–	1,191
Cash received for
unhabitable properties	–	–	–	–	–	–	942	942
Total tenant receivables
in accordance with
lease agreements	1,191	–	–	–	–	–	942	2,133
Rent not recognised
because properties
were unhabitable	–	–	–	–	–	–	(1,063)	(1,063)
Tenant receivables, net	1,191	–	–	–	–	–	(121)	1,070
Prepaid expenses	215	–	–	–	–	–	–	215
Tenant receivables and other financial assets	1,406	–	–	–	–	–	(121)	1,285
Prepaid Seller’s Works
recognised as receivable	–	–	4,843	–	–	–	–	4,843
Write-off of Seller’s
Works not initiated
or completed	–	–	(3,660)	–	–	–	–	(3,660)
Prepaid Seller’s Works	–	–	1,183	–	–	–	–	1,183
Lease inducement on
unhabitable properties
recognised as receivable	–	1,604	–	–	–	–	–	1,604
Cash received for
unhabitable properties	–	(942)	–	–	–	–	–	(942)
Lease inducement
receivable for unhabitable properties	–	662	–	–	–	–	–	662
Trade and other receivables	1,406	662	1,183	–	–	–	(121)	3,130 

Financial Statements

Notes to the Consolidated Financial Statements—continued

4.CorrectionofPriorPeriodErrors—continued

112 HomeREITplc | AnnualReport | Fortheyearended31August2022

	31 August 2021,	Unhabitable	Prepaid	Lease		Escrow	Tenant
	as Previously	Properties	Seller’s Works	Inducement	Retentions	Account	Receivables	31 August 2021,
	Reported	Adjustment	Adjustment	Adjustment	Adjustment	Adjustment	Adjustment	as Restated
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Restricted cash	35,872	–	–	–	3,661	375	–	39,908
Cash and cash equivalents	6,218	–	–	–	–	–	–	6,218
Total current assets	43,496	662	1,183	–	3,661	375	(121)	49,256
Total assets	371,356	(942)	(3,660)	(481)	3,661	375	(121)	370,188
Non-current liabilities
Bank borrowings	117,528	–	–	–	–	–	–	117,528
Total non- current liabilities	117,528	–	–	–	–	–	–	117,528
Current liabilities
Trade and
other payables	1,130	–	–	–	3,661	–	–	4,791
Total current liabilities	1,130	–	–	–	3,661	–	–	4,791
Total liabilities	118,658	–	–	–	3,661	–	–	122,319
Net assets	252,698	(942)	(3,660)	(481)	–	375	(121)	247,869
Capital and reserves:
Share capital	2,406	–	–	–	–	–	–	2,406
Special distribution
reserve	229,360	–	–	–	–	–	–	229,360
Retained earnings	20,932	(942)	(3,660)	(481)	–	375	(121)	16,103
Capital and reserves
attributable to equity
holders of the Company	252,698	(942)	(3,660)	(481)	–	375	(121)	247,869 

Financial Statements

Notes to the Consolidated Financial Statements—continued

4.CorrectionofPriorPeriodErrors—continued

ImpactonStatementofFinancialPosition—continued:

 HomeREITplc | AnnualReport | Fortheyearended31August2022 113

Impact on Consolidated Statement of Cash Flows

	31 August
	2021, as	Unhabitable	Seller’s	Lease		Escrow	Finance	Rent Straight	31 August
	Previously	Properties	Works	Inducement	Retentions	Account	Costs	Lining	2021, as
	Reported	Adjustment	Adjustment	Amortisation	Adjustment	Adjustment	Adjustment	Adjustment	Restated
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Cash flows
from operating
activities
(Loss)/income for
the year/period	20,932	(1,063)	(3,660)	(481)	–	375	–	–	16,103
Change in fair value
of investment
property	(14,012)	–	–	–	–	–	–	–	(14,012)
Finance costs	–	–	–	–	–	–	1,580	–	1,580
Effect of straight
lining, lease
inducements
and impairments	–	–	–	481	–	–	–	(1,078)	(597)
Other income –
escrow account	–	–	–	–	–	(750)	–	–	(750)
Other expenses –
escrow account	–	–	–	–	–	375	–	–	375
Operating result
before working
capital changes	6,920	(1,063)	(3,660)	–	–	–	1,580	(1,078)	2,699
Increase in
trade and other receivables	(1,406)	1,063	3,660	–	(3,661)	–	–	–	(344)
Increase in
trade and other payables	1,130	–	–	–	3,661	–	(87)	–	4,704
Net cash flows
from operating
activities	6,644	–	–	–	–	–	1,493	(1,078)	7,059
Cash flows from
investing activities
Purchase of investment
properties	(313,848)	–	–	–	–	–	–	1,078	(312,770)
Net cash used
in investing
activities	(313,848)	–	–	–	–	–	–	1,078	(312,770)

Financial Statements

Notes to the Consolidated Financial Statements—continued

4.CorrectionofPriorPeriodErrors—continued

114 HomeREITplc | AnnualReport | Fortheyearended31August2022

	31 August
	2021, as	Unhabitable	Seller’s	Lease		Escrow	Finance	Rent Straight	31 August
	Previously	Properties	Works	Inducement	Retentions	Account	Costs	Lining	2021, as
	Reported	Adjustment	Adjustment	Amortisation	Adjustment	Adjustment	Adjustment	Adjustment	Restated
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Cash flows from
financing activities
Proceeds from issue
of share capital and
share premium	240,570	–	–	–	–	–	–	–	240,570
Share issue costs	(4,811)	–	–	–	–	–	–	–	(4,811)
Dividend distribution	(3,993)	–	–	–	–	–	–	–	(3,993)
Interest paid	–	–	–	–	–	–	(1,268)	–	(1,268)
Loan arrangement
fee paid	(2,472)	–	–	–	–	–	(35)	–	(2,507)
Non-utilisation fee	–	–	–	–	–	–	(190)	–	(190)
Cash released from
restricted
cash account	84,128	–	–	–	–	–	–	–	84,128
Net cash generated
from financing activities	313,422	–	–	–	–	–	(1,493)	–	311,929
Net increase in cash
and cash equivalents	6,218	–	–	–	–	–	–	–	6,218
Cash and cash
equivalents
at beginning
of the period	–	–	–	–	–	–	–	–	–
Cash and cash
equivalents at end
of the period	6,218	–	–	–	–	–	–	–	6,218

Financial Statements

Notes to the Consolidated Financial Statements—continued

4.CorrectionofPriorPeriodErrors—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 115

5. Income

		19 August 2020
	For the year	to 31 August
	ended 31 August	2021,
	2022	as restated
	£’000	£’000
Amounts invoiced
in accordance with
lease agreements	38,336	10,677
Effect of straight-lining rent	3,753	1,078
Rent not recognised because
properties were unhabitable	(2,099)	(1,063)
Lease inducement
amortisation	(1,741)	(481)
Rental income	38,249	10,211
Other income	–	750
Impairment of
lease inducement	(28,348)	–
Impairment of rent
straight-lining	(2,922)	–
Total income	6,979	10,961

Rental income includes amounts receivable in respect

of tenant leases for those properties deemed habitable

(see Note 3) and is measured at the fair value of the

consideration received or receivable. All properties

subject to leases are based in the UK.

As discussed in Note 3, in certain cases, the Group

acquired properties which were not considered

habitable at the acquisition date but which were

subject to an operating lease. If a property is deemed

unhabitable, the Group does not recognise any

associated rental revenue until required improvements

are complete. Any cash received from the tenant while

the property is judged to be unhabitable is applied as

a reduction in the debtor established at acquisition

(in lieu of a lease incentive) or the property carrying

value, as appropriate and as described in Note 3,

Acquisition of Investment Property. During the year

and period ended 31 August 2022 and 2021, the Group

purchased 120 and 52 properties, respectively, which

have retrospectively been deemed unhabitable at

acquisition. Payments received of £2,169,000 and

£942,000 in 2022 and 2021 respectively associated

with the in-place leases for unhabitable properties

have been applied against the debtor established at

acquisition in the year/period ended 31 August 2022 and

2021. During the year/period ended 31 August 2022 and

2021, no properties were improved to a state which the

Group considered habitable.

During the period from September 2021 to October

2022, without the knowledge and authority of the

Directors, debtors were settled in several non-

traditional ways, including:

• As noted above, at acquisition vendors usually

had an obligation to improve a property to a good

lettable standard and in some cases, vendors paid

tenants to transfer the obligation to the tenants.

The settlement agreements to transition capex

obligations on properties from vendors to tenants

resulted in cash of £1,748,000 being transferred to

the Group to be used to settle debtors instead of

being paid directly to the tenants. Cash in excess

of outstanding debtors at the time was received in

the amount of £282,000 and the excess funds were

reimbursed to the associated two tenants;

• Vendors made payments on behalf of 14 tenants in

the amount of £7,166,000;

• One tenant settled amounts on behalf of two other

tenants in the amount of £1,614,000; and

• The Group withheld £2,142,000 from the acquisition

of properties with an agreed price of £17,040,000,

such that funds transferred at acquisition were

£14,898,000. The funds withheld were offset against 

debtors from three tenants.

These transactions were used to settle specific debtors 

from specific tenants as directed by AHRA. The

Directors considered whether the more appropriate

accounting would be to reduce the carrying value of

the property for the cash payment or as a creditor.

The debtor balances would then be written off as

uncollectible under IFRS 9. However, there was

correspondence between AHRA and vendors which

provided evidence of the intent of the cash transfers.

Further, there were no signed notes or other

agreements executed which would signify any lending

arrangements. Accordingly, the Directors concluded

that applying the cash received against outstanding

debtors was in-line with the intent of the transaction.

Any outstanding debtors at 31 August 2022 after

making the above cash applications were provided

for in full.

The Group assesses impairment of individual lease

related assets, such as lease incentives and straight-

line rent receivables, at the tenant levels. Impairment

charges of £31,270,000 (2021: £nil) were recognised

during 2022 as tenants were experiencing financial

stress from August 2022.

On 18 June 2021, the Company entered into an escrow

agreement with Noble Tree Foundation Limited, a

tenant, and Intertrust Trustee 3 (Jersey) Limited

whereby an affiliate of Karla Asset Management

Limited provided £750,000 to an escrow account in the

name of the Company with such funds to be used as

approved by two AHRA fund managers, acting without

the authority of the Directors. The fund could be

accessed by the two tenants, Noble Tree Foundation

Limited and Big Help Project, as approved by the

Financial Statements

Notes to the Consolidated Financial Statements—continued

116 HomeREITplc | AnnualReport | Fortheyearended31August2022

two fund managers. As at 31 August 2021, £375,000

had been distributed with the rest distributed in the

financial year 2022.

The future minimum rents receivable under non-

cancellable operating leases are (excluding rents

associated with unhabitable properties) are:

		As at
	As at	31 August 2021,
Future minimum rents receivable	31 August 2022	as restated
in the period:	£’000	£’000
Year 1	49,824	16,830
Year 2	50,323	16,		999
Year 3	50,826	17,169
Year 4	51,334	17,340
Year 5	51,848	17,514
> 5 years	806,460	2	76,378
Total	1,060,615	36	2,230

AEW has assessed the condition of each property and

the credit strength of each tenant and classified the

annual rent receivable under non-cancellable operating

leases in place at 31 August 2022 as detailed below:

	As at
	31 August 2022
	£’000
Performing tenants in habitable properties	17,542
Performing tenants in unhabitable properties	1,814
Non-performing tenants
in habitable properties	31,789
Non-performing tenants
in unhabitable properties	2,770
Rent roll at 31 August 2022	53,915

6. General and administrative expenses

		19 August 2020
	For the year	to 31 August
	ended 31 August	2021,
	2022	as restated
	£’000	£’000
Investment advisory fees	5,322	1,828
Fees paid to the Group’s
Independent Auditor	2,280	268
Board and Directors’ fee	176	150
Other administrative
expenses	2,085	1,009
Total	9,863	3,255

Fees paid to the Group’s Independent Auditor, BDO

LLP, include the following (all fees are inclusive of VAT):

			19 August 2020
		For the year	to 31 August
		ended 31 August	2021,
		2022	as restated
		£’000	£’000
Fees payable to the
company’s auditor for the
audit of the company’s
annual accounts*		2,164	182
Fees payable to the
company’s auditor:
Audit of the accounts of
subsidiaries		72	12
Audit-related
assurance services:
•	Audit of the Group's
	initial accounts	–	43
•	Interim review	44	31
Included in general and adminstrative expenses		2,280	268
Reporting accountant
services, recognised directly
in equity as share issue costs		–	92
Audit services to support
equity raising activities
which were classified
as a prepaid in FY21 and
reclassified directly into
equity in FY22		–	129

*The FY22 audit fee is £1,906,000 in excess of the original audit fee agreed as a result of

additional audit procedures.

7. Finance costs

	For the year	19 August 2020
	ended 31 August	to 31 August
	2022	2021
	£’000	£’000
Loan interest	4,481	1,274
Non-utilisation fees	141	190
Amortisation of loan
arrangement fees	318	116
Total finance costs	4,940	1,580

Financial Statements

Notes to the Consolidated Financial Statements—continued

5.Income—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 117

8. Taxation

The Group is a real estate investment trust (“REIT”)

and as a result the profit and gains arising from the

Group’s property rental business are exempt from UK

corporation tax provided it meets certain conditions

as set out in the UK REIT regulations. Profits arising

from any residual activities (e.g. trading activities and

interest income), after the utilisation of any available

residual tax losses, are subject to corporation tax at the

main rate of 19% for the year.

	For the year	19 August 2020
	ended 31 August	to 31 August
	2022	2021
	£’000	£’000
Current tax	–	–
Origination and reversal of temporary differences	–	–
Total deferred tax	–	–
Tax charge	–	–

The Company made distributions for the 2021 and

2022 financial years as documented in its PID tracker

as submitted to HM Revenue & Customs (“HMRC”)

based on estimates of its Property Income, which is

required to maintain REIT status. As discussed in Note

4, Correction of Prior Period Errors, comprehensive

income for 2021 has been revised lower and the result

for 2022 is a comprehensive loss. The Company has

agreed with HMRC that it will revise it’s PID tracker,

but it will not recall past PIDs and reissue ordinary

dividends. Because PIDs are assessed annually, this

overpayment of PID for the financial years 2021 and

2022 is not expected to impact future periods.

Reconciliation of the total tax charge

The reconciliation of profit before tax multiplied by the

standard rate of corporation tax for the year of 19% to

the total tax charge in the statement of comprehensive

income is as follows:

		19 August 2020
	For the year	to 31 August
	ended 31 August	2021,
	2022	as restated
	£’000	£’000
(Loss)/profit before tax	(474,844)	16,103
Tax at the standard rate of
UK corporation tax of 19%	90,220	(3,060)
Effect of:
REIT exempt
income and gains	–	398
Revaluation of investment properties	(86,046)	2,662
Losses not taxed for which
no benefit can be recognised	(4,174)	–
Tax charge	–	–

UK REIT exempt income includes property rental income

that is exempt from UK Corporation Tax in accordance

with Part 12 of the Corporation Tax Act 2010.

9. Investment property

		As at
	As at	31 August 2021,
	31 August 2022	asrestated
	£’000	£’000
Freehold investment
property at the
beginning year/period	320,932	–
Property acquisitions in
the year/period	597,420	312,770
Reclassification of first year
inducement where building
is considered as habitable	(32,001)	(16,693)
Reclassification of first year
inducement where building
is considered as unhabitable	(2,918)	(1,604)
Prepaid Seller’s Works
recognised as receivable	(19,034)	(4,843)
Rent straight lining and
lease inducement	34,014	17,290
Impairment of rent straight
lining and lease inducement	(31,270)	–
(Decrease)/Increase in fair
value of investment property	(452,873)	14,012
Fair value at the end of the year/period 1	414,270	320,932

1. Included within the carrying value of investment property is £20,034,000 (2021

£17,290,000) in respect of lease inducements and rent-free periods which are allocated

on a linear basis over the lease term.

The Group recognises investment properties at fair

value at each balance sheet date in accordance with

IFRS 13 which recognises a variety of fair value inputs

depending upon the nature of the investment. The

valuations have been prepared in accordance with

the RICS Valuation – Global Standards July 2017 (the

“Red Book”) and incorporate the recommendations

of the International Valuation Standards and the RICS

Valuation – Professional Standards UK January 2014

(Revised April 2015) which are consistent with the

principles set out in IFRS 13. Specifically, IFRS 13 defines

the fair value hierarchy as follows:

Level 1: Quoted (unadjusted) market prices in active

markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level

input that is significant to the fair value measurement is

directly or indirectly observable.

Financial Statements

Notes to the Consolidated Financial Statements—continued

118 HomeREITplc | AnnualReport | Fortheyearended31August2022

Level 3: Valuation techniques for which the lowest level

input that is significant to the fair value measurement is

unobservable.

Property valuations are inherently subjective and

are made by the valuer based on assumptions which

may not be accurate. Accordingly, the valuation of

investment property is classified as Level 3.

The investment properties have been valued as at

31 August 2022 by Jones Lang LaSalle Limited (“JLL”),

an accredited independent external valuer with relevant

and recent experience of valuing residential properties

of the type in which the Group invests. Fair value is

the estimated amount for which a property would

exchange on the date of the valuation in an arm’s-length

transaction and has been estimated using a combination 

of the investment approach and MV-VP. The investment

approach involves applying a yield to the future income

stream net of estimated voids and rent-free periods

and then a reversion to MV-VP, which future cash flows

are discounted back to the balance sheet date. The

yield and estimated rental values are observed based

on the valuers’ judgment of comparable property

and leasing transactions in the market. The primary

factors which have been considered in assessing which

valuation technique to use is the covenant strength

of the tenant including their payment history and the

property’s condition. The other significant factors

which are considered under both techniques include

the property’s type, its location and market conditions.

The Group has been assessing the current condition

(inspections occurred from August 2023 to May 2024) of

each property through a formal inspection programme,

whereby Vibrant Energy Solutions Ltd (“Vibrant”) was

engaged to perform an internal inspection of most

properties and issue a condition report. If properties

were inspected by another party for another purpose

during that period, those properties have been excluded 

from the Vibrant inspection process and instead the

valuer has made use of the report of the alternative

provider. The condition of the properties as assessed in

the inspection programme has been assumed to be the

condition of the properties at the balance sheet dates.

To arrive at opinions of fair value, JLL divided the assets 

into four categories and estimated rental value and

yield for each:

• Individual properties (suitable for occupation by

a single family)

• Houses of Multiple Occupation (properties with

individual bedrooms but common kitchen and other

facilities, “HMO’s”)

• Residential investments (properties with individual

flats for occupation), and

• Development properties (properties which are

considered derelict and require substantial re-

development)

Because JLL were appointed in August 2023 to

perform valuations as at 31 August 2023 and 2022, JLL

computed the values as of 31 August 2023 and adjusted

their opinion of those values as at 31 August 2022 using

reference to house price and rental market indices. To

adjust MV-VP, JLL adopted the Nationwide Seasonally

Adjusted House Price Index on a regional basis, with the

quarters adjusted for the August year ends. To adjust

market rent, JLL adopted the ONS Index of Private

Rented Sector Housing Rental Prices, UK on a regional

basis which is recorded monthly.

At 31 August 2023, all properties within the portfolio

were subject to a lease, albeit as discussed in Note 3,

not all of the leases were deemed to have commenced

(for the purposes of recognising revenue) as those

properties were deemed to be unhabitable. The security

of the unexpired term for these leases differs across

the portfolio depending on the covenant strength of

the tenant. For tenants with a weak covenant strength

(JLL considered each tenant’s credit profile as at

31 August 2022 which resulted in more properties

being valued on an investment basis compared to

31 August 2023) or where a property was deemed

unhabitable or not fit for-purpose, JLL disregarded the

leases and valued the properties on the basis of MV-VP.

Where a property was deemed to be in a reasonable

condition, capable of beneficial occupation, and let to

a tenant who was likely to meet its rent demands in the

short-term, JLL adopted the investment approach.

For those tenants, JLL capped the unexpired lease

term at five years, even where the actual unexpired

lease term was for a longer period. This was due to a

lack of confidence in those tenants being able to fulfil

their lease obligations beyond five years. For those

properties which were sublet to a tenant with a strong

covenant, JLL ignored the primary in-place lease and

instead capitalised the sublease passing rent for its

remaining term (up to eight years). Where a property has

a high passing rent in comparison to JLL’s opinion of MV-

VP, JLL capped the Fair Value at 150% of MV-VP.

Financial Statements

Notes to the Consolidated Financial Statements—continued

9.Investmentproperty—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 119

The Group classifies all assets measured at fair value as below:

Fair value hierarchy

		Quoted prices	Significant	Significant
		in active	observable	unobservable
		markets	inputs	inputs
	Total	(level 1)	(level 2)	(level 3)
As at 31 August 2022	£’000	£’000	£’000	£’000
Assets measured at fair value:
Investment property	414,270	–	–	414,270

		Quoted prices	Significant	Significant
		in active	observable	unobservable
		markets	inputs	inputs
	Total	(level 1)	(level 2)	(level 3)
As at 31 August 2021	£’000	£’000	£’000	£’000
Assets measured at fair value:
Investment property	327,860	–	–	327,860

The investment properties were valued at 31 August 2021

by Knight Frank LLP, an accredited independent external

valuer with relevant and recent experience of valuing

residential properties of the type in which the Group

invests. Knight Frank initially were also engaged to value

the investment properties as at 31 August 2022 but

resigned on 5 May 2023.

The 2021 Knight Frank valuation valued each asset on the

investment approach. Having retrospectively considered

the substance of the transactions and considered the

level of works required, the Directors now consider that

the substance of some transactions was that of a forward

funding arrangement. The Directors have deducted the

estimate of prepaid Seller’s Works from the fair value

of the Knight Frank valuation. Additionally, as discussed

in Notes 3 and 4, the Directors also consider that the

substance of entering into simultaneous acquisition and

leasing transactions resulted in the indirect payment

of lease inducements and the accounting should be

corrected accordingly. These amounts have also been

deducted from the value of the Knight Frank valuation,

including adjustment for associated amortisation.

The Directors have also considered whether the

31 August 2021 Knight Frank valuation required additional

adjustments and concluded that no further adjustments

were required.

	As at
	31 August 2021,
	asrestated
	£’000
Investment property balance, as restated	320,932
Amounts allocated to:
Lease incentive debtor for unhabitable buildings	1,604
Prepaid Seller's Works	4,843
Lease incentive amortisation	481
Investment property as per the Knight
Frank valuation, as previously reported	327,860

Financial Statements

Notes to the Consolidated Financial Statements—continued

9.Investmentproperty—continued

120 HomeREITplc | AnnualReport | Fortheyearended31August2022

The fair value of investment property at 31 August 2022 and 2021 was split between valuation techniques:

	As at	As at
	31 August 2022	31 August 2021,
	£’000	£’000
Investment valuation approach	222,380	327,860
Market value – vacant possession approach	191,890	–
Fair value at the end of the year/period	414,270	327,860

Unobservable inputs used in the valuations (the 2022 figures exclude those properties valued using MV-VP):

Passing rent and yield range

	Passing rent pa	Passing	Valuation	Valuation
	31 August 2022	rent pa range	31 August 2022	yield range
Sector	£’000	£’000	£’000	%
Residential	23,409	3-324	222,380	2.6-32.6

	Passing rent pa	Passing	Valuation	Valuation
	31 August 2021	rent pa range	31 August 2021	yield range
Sector	£’000	£’000	£’000	%
Residential	18,275	3-365	327,860	5.25-5.78

The average passing rent per annum was £17,000 (2021: £26,000) and the average valuation yield was 11% for the

year ended 31 August 2022 (2021: 5.34%).

Sensitivities of measurement of significant unobservable inputs

As noted above, the Group’s property portfolio valuation is open to judgements and is inherently subjective

by nature. Because 876 of 2,239 properties (39.1% of properties) are valued using the MV-VP approach at

31 August 2022, and those valued under the investment approach are capped at 150% of MV-VP, changes in passing

rents and initial yields do not impact the fair value as much as general price movements in the property market.

The table below shows the sensitivities of measurement of the Group’s investment property to those inputs (2022

excludes those properties valued using MV-VP):

	-5%inpassing	+5% in passing	+100bps in net	-100bpsinnet
	rent	rent	initial yield	initial yield
As at 31 August 2022	£’000	£’000	£’000	£’000
Investment property	(3,300)	3,600	(6,800)	6,900

	-5%inpassing	+5% in passing	+25bps in net	-25bpsinnet
	rent	rent	initial yield	initial yield
As at 31 August 2021	£’000	£’000	£’000	£’000
Investment property	(16,393)	16,393	(14,073)	15,395

For 2022, a 5% increase/decrease in MV-VP (for all properties) would increase/decrease the overall value of

investment property by approximately £16,500,000.

As described in the Lease Inducement Payments section of Note 3, lease incentives of £32,001,000 and

£16,693,000 were allocated at each acquisition totalling 1,408 and 659 leases to acquired properties in the year/

period ended 31 August 2022 and 2021, respectively.

Financial Statements

Notes to the Consolidated Financial Statements—continued

9.Investmentproperty—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 121

10. Financial instruments

Set out below is a comparison of the book value and fair value of the Group’s financial instruments where a

difference exists. The fair value of financial instruments not included in the comparison is equal to book value.

	As at 31 August 2022			As at 31 August 2021
	Book value	Fair value	Book value	Fair value
Bank borrowings	£’000	£’000	£’000	£’000
Term loan	250,000	231,746	120,000	113,468
Unamortised loan arrangement fees	(4,953)	–	(2,472)	–
Bank borrowings	245,047	231,746	117,528	113,468

The following table sets out the fair value of those financial liabilities measured at amortised cost where there is

a difference between book value and fair value.

			Quoted prices	Significant	Significant
			in active	observable	unobservable
			markets	inputs	inputs
		Total	(level 1)	(level 2)	(level 3)
Borrowings	Date of valuation	£’000	£’000	£’000	£’000
Borrowings	31 August 2022	231,746	–	–	231,746

			Quoted prices	Significant	Significant
			in active	observable	unobservable
			markets	inputs	inputs
		Total	(level 1)	(level 2)	(level 3)
Borrowings	Date of valuation	£’000	£’000	£’000	£’000
Borrowings	31 August 2021	113,468	–	113,468	–

The Group’s borrowings comprise two fixed term loan facilities, one for £120 million and the other for £130 million.

Both facilities are with Scottish Widows Limited. The £120 million facility has an all-in rate of 2.07% per annum for

the duration of the loan term and was due for repayment in December 2032. The £130 million facility has an all-in

rate of 2.53% for the duration of the loan and was due for repayment in December 2036.

The Company and its subsidiaries are party to agreements with (amongst others) Scottish Widows including (in the

case of the subsidiaries of the Company) facility agreements and (in the case of the Company) guarantees. Various

breaches have occurred under those agreements. Since an initial waiver letter dated 30 January 2023 for an initial

waiver period waiving certain breaches, new waiver letters have been issued on the expiry of each previous waiver

period. The current waiver letter is scheduled to expire on 31 October 2024. The current waiver letter relates to

various matters including financial covenants, an adverse change in the financial position of the Company and

its subsidiaries, a failure to deliver audited accounts and other information, the suspension of the shares of the

Company on the London Stock Exchange and the tax status of the Company. Scottish Widows has indicated

that they expect the Group to undertake all efforts to repay both facilities by 31 December 2024. As a result of

loan covenant breaches, the Group’s borrowings have been reclassified as current liabilities in the year ended

31 August 2022.

The Group utilises a weighted approach of the income method and par to value its bank borrowings. The income

approach estimates the fair value of a debt instrument by calculating the difference between contractual and

market debt service payments discounted at an equity yield reflective of the risks inherent in the investment. The

Group weighted the fair value of the debt at 50% of the income approach and 50% of par. The Group estimated the

market replacement rate to be 4.78% for Home Holdings 1 and 4.97% for Home Holdings 2 as at 31 August 2022. If

the estimated replacement rate were to increase or decrease by 1%, the resulting change in fair value would be a

decease/increase in the mark-to-market of £10,939,000 and £12,757,000 respectively.

Financial Statements

Notes to the Consolidated Financial Statements—continued

122 HomeREITplc | AnnualReport | Fortheyearended31August2022

11. Trade and other receivables

		As at
	As at	31 August 2021,
	31 August 2022	as restated
	£’000	£’000
Tenant receivables
in accordance with
lease agreements	9,916	2,133
Rent not recognised because
properties were unhabitable	(2,099)	(1,063)
Tenant receivables, net	7,817	1,070
Other receivables	426	–
Prepaid expenses	40	215
Tenant receivables and other
financial assets	8,283	1,285
Provision for doubtful debts	(1,850)	–
Net tenant receivables and
other financial assets	6,433	1,285
Prepaid Seller’s Works	8,295	1,183
Lease inducement receivable
for unhabitable properties	1,411	662
Trade and other receivables	16,139	3,130

Debtors

All current trade and other receivable amounts are

due within one year. The carrying value of trade

and other receivables classified at amortised cost

approximates fair value.

The Directors analysed the expected credit loss and

concluded that collection of debtors of £1,850,000

was doubtful and provided for such amounts at

31 August 2022 (2021: nil).

During the period from September 2021 to October

2022, without the knowledge or authority of the Board,

debtors were settled in several non-traditional ways,

including as follows:

• As noted above, at acquisition vendors usually

had an obligation to improve a property to a good

lettable standard and in some cases, vendors paid

tenants to transfer the obligation to the tenants.

The settlement agreements to transition capex

obligations on properties from vendors to tenants

resulted in cash of £1,748,000 being transferred to

the Group to be used to settle debtors instead of

being paid directly to the tenants. Cash in excess

of outstanding debtors at the time was received in

the amount of £282,000 and the excess funds were

reimbursed to the associated two tenants;

• Vendors made payments on behalf of 14 tenants

in the amount of £7,166,000;

• One tenant settled amounts on behalf of two other

tenants in the amount of £1,614,000; and

• The Group withheld £2,142,000 from the acquisition

of properties with an agreed price of £17,040,000,

such that funds transferred at acquisition were

£14,898,000. The funds withheld were offset against

debtors from three tenants.

These transactions were used to settle specific debtors

from specific tenants as directed by AHRA. The Directors

considered whether the more appropriate accounting

would be to reduce the carrying value of the property for

the cash payment or as a creditor. The debtor balances

would then be written off as uncollectible under IFRS 9.

However, there was correspondence between AHRA and

vendors which provided evidence of the intent of the cash

transfers. Further, there were no signed notes or other

agreements executed which would signify any lending

arrangements. Accordingly, the Directors concluded that

applying the cash received against outstanding debtors

was in-line with the intent of the transaction.

Any outstanding debtors at 31 August 2022 after making

the above cash applications were provided for in full.

The following table sets out the ageing profile of trade

and other receivables that are financial assets:

		As at
	As at	31 August 2021,
	31 August 2022	as restated
	£’000	£’000
30 days or fewer	2,839	621
31 to 60 days	1,140	234
61 to 90 days	3,146	408
91 to 120 days	831	22
Over 120 days	327	–
	8,283	1,285

Prepaid Seller’s Works

As discussed more fully in Note 3, a portion of the

purchase price in the amount of £19,034,000 and

£4,843,000 were allocated to Seller’s Works in the year/

period ended 31 August 2022 and 2021, respectively.

This is the estimated amount of capital expenditures

to improve the property to a lettable standard. In the

year/period ended 31 August 2022 and 2021 £11,922,000

and £3,660,000 was written off when the vendor did not

complete the Seller’s Works by the SWLD.

Financial Statements

Notes to the Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 123

		As at
	As at	31 August 2021,
	31 August 2022	as restated
	£’000	£’000
Prepaid Seller's Works at
beginning of the year/period	1,183	–
Prepaid Seller’s Works
recognised during
the year/period	19,034	4,843
Write-off of Seller’s Works
not initiated or completed	(11,922)	(3,660)
Prepaid Seller's Works at the end of the year/period	8,295	1,183

Lease Inducement for unhabitable properties

As discussed more fully in Note 3, a portion of the

purchase price in the amount of £2,918,000 and

£1,604,000 in the year/period ended 31 August 2022

and 2021, respectively were allocated to a receivable

for unhabitable properties in lieu of a lease inducement

because the associated properties were not considered

habitable at acquisition. In the year/period ended

31 August 2022 and 2021 £2,169,000 and £942,000 of

cash was received associated with the leases.

12. Cash reserves

		As at
	As at	31 August 2021,
	31 August 2022	as restated
	£’000	£’000
Cash held in
Lockbox accounts	73,115	35,872
Cash held by solicitors for
property acquisitions	18,260	–
Retentions held by solicitors	10,468	3,661
Cash held in escrow for
property repairs	–	375
Restricted cash held by
third parties	101,843	39,908
Cash and cash equivalents	74,514	6,218
Total cash reserves	176,357	46,126

The Group only gains access to the restricted cash

held in Lockbox accounts when approved security

is provided to the Lender (£73,115,000; 2021:

£35,872,000). Cash of £18,260,000 was held by the

Group’s solicitors which was to be used to complete

investment property acquisitions subsequent to

31 August 2022 (31 August 2021: £nil).

Retentions of £12,089,000 and £5,330,000 were

withheld from the acquisition of properties in the year/

period ended 31 August 2022 and 2021, respectively.

AHRA authorised the release of £5,282,000 and

£1,669,000 retentions to vendors in the year/period

ended 31 August 2022 and 2021, respectively.

		As at
	As at	31 August 2021,
	31 August 2022	as restated
	£’000	£’000
At beginning of
the year/period	3,661	–
New retentions on acquisitions in the
year/period	12,089	5,330
Retentions
released to vendors	(5,282)	(1,669)
Retentions at the end of the year/period	10,468	3,661

On 18 June 2021, the Company entered into an escrow

agreement with Noble Tree Foundation Limited, a

tenant, and Intertrust Trustee 3 (Jersey) Limited

whereby an affiliate of Karla Asset Management

Limited provided £750,000 to an escrow account in the

name of the Company with such funds to be used as

approved by two AHRA fund managers, acting without

the authority of the Directors. The fund could be

accessed by the two tenants, Noble Tree Foundation

Limited and Big Help Project, as approved by the

two fund managers. As at 31 August 2021, £375,000

had been distributed with the rest distributed in the

financial year 2022.

13. Trade and other payables

		As at
	As at	31 August 2021, 
	31 August 2022	as restated
	£’000	£’000
Trade creditors	375	353
Accrued expenses	4,938	777
Retentions payable	10,468	3,661
Total trade creditors and accrued expenses	15,781	4,791

All trade and other payables are due within one year.

The Directors consider that the carrying amount of

trade and other payables approximates fair value.

Retentions payable are amounts due to vendors

payable when they complete property improvements

which were agreed in the original SPA. See Note 12 for

more information on retentions.

Financial Statements

Notes to the Consolidated Financial Statements—continued

11.Tradeandotherreceivables—continued

124 HomeREITplc | AnnualReport | Fortheyearended31August2022

14. Financial risk management

The Group’s activities expose it to a variety of financial

risks: credit risk, liquidity risk and interest rate risk.

Alvarium FM and AHRA had risk management

procedures and processes in place which would have

enabled them to monitor the risks of the Group.

The objective in managing risk is the creation and

protection of shareholder income and value. Risk is

inherent in the Group’s activities, but it is managed

through a process of ongoing identification, impact

assessment, and monitoring and subject to risk limits

and other controls.

The principal financial risks facing the Group in the

management of its portfolio are as follows:

Credit risk

Credit risk is the risk that a tenant or another

counterparty will not meet its obligations under a

lease or other financial instrument which would cause

financial loss to the Group. The Group is exposed to

credit risk through its tenant leases and cash deposits

on account with its commercial bank and with solicitors

pending completion of acquisitions or Seller’s Works.

It is the Group’s policy to enter commercial banking

arrangements with reputable financial institutions.

The AIFM monitors the credit worthiness of banks

used by the Group by review of credit ratings, financial

statements and other public records and news on a

quarterly basis. Where the Group transfers funds to

its solicitors pending acquisitions or as a retention

subject to completion of a workstream, the associated

law firms place those funds in legally restricted

client accounts.

In respect of tenant leases, in the event of a default

by a tenant, the Group suffers an income shortfall

and additional costs in reletting the property as well

as vacancy costs. Payment of dividends is dependent

upon the receipt of rental income. Further, a default

by a tenant would adversely impact the value of

investment property by either widening the yield

underpinning an investment-based valuation or change

the appropriate fair value technique from investment

basis to MV-VP.

The Board were not presented with any information

by AHRA that indicated that tenants were in financial

difficulty. Since its appointment, AEW has undertaken

an assessment of existing tenants classifying each

tenant into the following categories: liquidation (now

or expected), replacement/rationalised and potential

long-term tenants. In situations where the tenant is

not considered long-term, AEW expect to surrender

the leases to take back control of the underlying

properties to either let directly as PRS or re-let to a

housing provider for Supported Living. Where lease

surrenders cannot be agreed commercially, AEW has

taken action against the tenants which could include

statutory demands, forfeiture and winding up petitions.

In the few instances where the tenant is performing

well, the leases will remain in place, although terms

may be varied.

AEW is continuing to assess potential prospective

tenants and property managers, including quality

providers of social housing and support services

for properties suitable for occupation. Stringent

covenant and capability analysis will be undertaken

on all proposed property managers and tenants in

accordance with AEW’s rigorous processes. AEW

provides regular updates to the Board on its strategy

by tenant and the progress against business plans.

The table below shows the Group’s exposure to

credit risk:

		As at
	As at	31 August 2021,
	31 August 2022	as restated
	£’000	£’000
Cash and cash equivalents	74,514	6,218
Restricted cash	101,843	39,908
Tenant receivables and
other financial assets	6,433	1,285
	182,790	47,411

Liquidity risk

AEW manages the Group’s liquidity and funding risks

by regularly updating a short-term (13 week) cash flow

forecast to ensure sufficient unrestricted cash balances

are held within the Group to meet current and future

needs. To assess longer term requirements, AEW

prepares a medium-term cash flow forecast which is

reviewed with the Board. AEW assesses the ability of

tenants to settle obligations within normal terms of

credit which supports both forecasts.

Financial Statements

Notes to the Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 125

The following table details the Group’s liquidity analysis in respect of its financial liabilities on contractual

undiscounted payments (assuming repayment of the debt under the original contractual terms, before

consideration of loan covenant breaches):

		3-12	1-5
	< 3 months	months	years	5 years +	Total
31 August 2022	£’000	£’000	£’000	£’000	£’000
Bank borrowings and interest	1,440	4,337	23,124	293,622	322,523
Retentions payable 1	10,468	–	–	–	10,468
Trade and other payables	5,313	–	–	–	5,313
	17,221	4,337	23,124	293,622	338,304

		3-12	1-5
	< 3 months	months	years	5 years +	Total
31 August 2021, as restated	£’000	£’000	£’000	£’000	£’000
Bank borrowings and interest	620	1,881	9,950	135,640	148,091
Retentions payable 1	3,661	–	–	–	3,661
Trade and other payables	1,130	–	–	–	1,130
	5,411	1,881	9,950	135,640	152,882

1. As discussed in Notes 3 and 4, the Group has accounted for retentions on a cash basis as supporting documentation was not always available to support the release of amounts to vendors.

Accordingly, all amounts are presented as due within the next three months in the table above.

Interest rate risk

Interest rate risk is the risk that the fair value or

future cash flows of a financial instrument will

fluctuate because of changes in market interest

rates. As discussed more fully in Note 1 and below,

Scottish Widows expects the full repayment of the

debt at the earliest possible date and not later than

31 December 2024. AEW is working with: i) an auction

house to sell some properties and ii) third-party brokers

to package portfolios of properties to sell in order to

fully repay the Lender by that date.

Capital management

Until the announcement of the managed wind-down

discussed in Note 1, the Board and AEW monitored the

Group’s capital position to provide sustainable returns

for shareholders, to facilitate growth and to maintain an

optimal capital structure to reduce the cost of capital.

The Group considers proceeds from share issuance,

bank borrowings and retained earnings as capital. The

Group historically targeted aggregate borrowings of

35% of the value of the Group’s assets with a maximum

level of 50%. However, with the unrealised loss on

investment property of £452,873,000 in the year to

31 August 2022, the LTV has risen above 50%. As noted

above, the Group intends to sell portfolios of properties

in order to fully repay the Lender at the earliest possible

date and in any event before 31 December 2024. The

dividend policy of the Group is to distribute at least

90% of its tax-exempt profit.

The Company and its subsidiaries are party to

agreements with (amongst others) Scottish Widows

Limited including (in the case of the subsidiaries of

the Company) facility agreements and (in the case

of the Company) guarantees. Various breaches have

occurred under those agreements. Since an initial

waiver letter dated 30 January 2023 for an initial waiver

period waiving certain breaches, new waiver letters

have been issued on the expiry of each previous waiver

period. The current waiver letter is scheduled to expire

on 31 October 2024. The current waiver letter relates

to various matters including financial covenants, an

adverse change in the position of the Company and its

subsidiaries, a failure to deliver audited accounts and

other information, the suspension of the shares of the

Company on the London Stock Exchange and the tax

status of the Company.

The Company has re-evaluated the covenant

compliance for both fixed term loans (referred to

in Note 10 above) based on the restated financial

information and concluded that the loan-to-value,

historic interest cover and projected interest

cover covenants would have been breached as of

31 August 2022. Accordingly, the bank borrowings

balance is now presented as current.

Financial Statements

Notes to the Consolidated Financial Statements—continued

14.Financialriskmanagement—continued

126 HomeREITplc | AnnualReport | Fortheyearended31August2022

15. Share Capital

	As at	As at
	31 August 2022	31 August 2021
Ordinary Shares of £0.01 each At the beginning of	Number	Number
the year/period	240,570,465	–
Issued on incorporation	–	1
Further Shares issued
during the year/period	550,000,000	240,570,464
Issued and fully paid at year/period end	790,570,465	240,570,465

Share capital is the nominal amount of the Company’s

shares in issue.

The Company was incorporated on 19 August 2020

issuing one ordinary share of £0.01 nominal value

for £1. On 3 September 2020, 50,000 redeemable

preference shares of £1 each were issued at £1 per

share (quarter paid up). The Company achieved

admission to the premium listing segment of the

Official List of the London Stock Exchange (the “IPO”)

on 12 October 2020.

At the date of the Company’s IPO, the Company issued

and allotted a further 240,570,464 ordinary shares of

£0.01 nominal value each at £1 per share. Therefore,

240,570,465 ordinary shares have been issued and

fully paid. The redeemable preference shares were

redeemed at par and cancelled on the date of the IPO.

On 27 September 2021, the Group raised £350 million

through an initial issue of 321,100,917 new Shares at an

issue price of 109 pence per new Share.

On 31 May 2022, the Group raised £263 million through

an initial issue of 228,899,083 new Shares at an issue

price of 115 pence per new Share.

16. Share premium

	As at	As at
	31 August 2022	31 August 2021
	£’000	£’000
Balance at the beginning of
the year/period	–	–
Share premium arising on
shares issued in relation to
equity issuance	607,734	238,164
Share issue costs	(12,001)	(4,811)
Transfer to special
distributable
reserve (Note 17)	–	(233,353)
Balance at end
of year/period	595,733	–

The share premium relates to amounts subscribed for

share capital in excess of nominal value less associated

issue costs of the subscriptions.

17. Special distributable reserve

	As at	As at
	31 August 2022	31 August 2021
	£’000	£’000
Balance at beginning of the year/period	229,360	–
Transfer from share
premium account (Note 16)	–	233,353
Dividend distribution
(Note18)	(28,320)	(3,993)
Balance at end of year/period	201,040	229,360

The special distributable reserve represents

the cancelled share premium (for the first share

issuance) less dividends paid from this reserve.

This is a distributable reserve.

18. Dividends

On 15 September 2021, the Group declared an ordinary

dividend of 0.84 pence per Share, which was paid on

22 October 2021 to shareholders on the register as

at 24 September 2021. This dividend was paid as a

property income distribution.

On 27 January 2022, the Group declared a dividend

of 1.37 pence per Share, which was paid on

25 February 2022 to shareholders on the register as

at 4 February 2022. 0.10 pence of this dividend was

paid as a non-property income distribution. The

remaining balance of 1.27 pence was paid as property

income distribution.

On 5 May 2022, the Group declared a dividend of

1.37 pence per Share, which was paid on 10 June 2022

to shareholders on the register as at 13 May 2022. This

dividend was paid as a property income distribution.

Financial Statements

Notes to the Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 127

On 4 August 2022, the Group declared a dividend

of 1.38 pence per Share, which was paid on

9 September 2022 to shareholders on the register as

at 12 August 2022. This dividend was paid as a property

income distribution.

The Board approved these distributions based on

financial statements and forecasts provided by

AHRA and to ensure it distributed Property Income,

as defined, in order to comply with REIT regulations.

In addition, the Board considered that it had the

substantial Special Distributable Reserve (Note 17)

which could cover any imprecision in AHRA’s estimates.

However, had the full, accurate information regarding

the material corrections made to these financial

statements been provided to the Board at the time of

approving the distributions, the Board would not have

approved the distributions.

19. Related party transactions

Investment Adviser

AHRA was appointed as the investment adviser to

the Group by entering into the IAA with the Company.

Under this agreement, AHRA was to advise the

Group in relation to the management, investment

and reinvestment of the assets of the Group. As at

31 August 2022, AHRA was a subsidiary of Alvarium RE

Limited (now AlTi RE Limited (“AlTi RE”)). As noted in

Note 26, on 4 January 2023, the Company announced

that AlTi RE had sold AHRA, its wholly-owned

subsidiary, to AHRA’s management in exchange for

a promissory note.

The investment advisory fees were calculated as

an amount calculated in arrears in respect of each

month, in each case based upon the net asset value

(adjusted for undeployed cash) of the Group on the

following basis:

a One-twelfth of 0.85%, per calendar month of net

asset value up to and including £500 million;

b One-twelfth of 0.75% per calendar month of net

asset value above £500 million up to and including

£750 million; and

c One-twelfth of 0.65% per calendar month of net

asset value above £750 million.

During the year ending 31 August 2022, the Group

incurred fees of £5,322,000 (2021: £1,828,000). At

31 August 2022 an amount of £582,000 was unpaid

(2021: £175,000).

Initially, the IAA could be terminated on 12 months’

written notice, such notice to expire on or at any

time after the fifth anniversary of 12 October 2020.

Additionally, the IAA could be terminated with

immediate effect on the occurrence of certain events,

including insolvency or in the event of a material and

continuing breach. On 15 March 2023, the Company

and AHRA agreed to terminate the IAA with effect from

30 June 2023.

On 22 May 2023, AEW was appointed as Property

Adviser for the transition period and subsequently

on 21 August 2023, on expiry of the transition period

as AIFM and Investment Manager (see AIFM section

below below). The transition period lasted from the

date of appointment until the commencement of

Phase 1. Phase 1 continues for two years from the date

of commencement, at which time Phase 2 commences.

Phase 1 commenced when the following occurred:

1. Alvarium FM and AHRA ceasing to act for the Group,

2. FCA approval of the appointment of AEW as AIFM

for the Company

3. The adoption of the Amended Investment Policy.

During the transition period, AEW was paid £3,000,000

per annum. AEW is paid an annual fee in Phase 1 :

1. A fixed fee of £3,000,000 from the commencement

of the transition period and as increased at

each successive anniversary by the lower of

CPI, RPI and 5%;

2. A variable fee for disposal of investments of £422 per

bed, as defined; and

3. A variable fee of 10% of rent collected by the Group

from its investments.

The maximum amount payable in any year under

this agreement is £5,000,000 (which is increased in

year 2 to the extent that total fees in year 1 fall below

£5,000,000.) In Phase 2, the Company shall pay a fee

of 0.75% of NAV, subject to a minimum annual fee of

£3,000,000, which increases annually at the lower

of CPI, RPI or 5% (from the commencement of the

transition period).

AIFM

Under the terms of the IMA, Alvarium FM was

appointed as the AIFM of the Company. The AIFM acts

as investment manager with responsibility for the

management of the assets of the Group in accordance

with the investment policy of the Group and the

policies and directions of the Board and is regulated

in the conduct of investment business by the FCA.

Alvarium FM is a subsidiary of Alvarium Investments

Limited (now AlTi Asset Management Holdings 2

Limited). Under the IMA, Alvarium FM received a fee of

£40,000 per annum. No performance fee was payable

to Alvarium FM as at 31 August 2022 and 2021. The IMA

was terminated on 21 August 2023. On the same day,

AEW was appointed as AIFM. Compensation for AEW’s

role as AIFM is included in its fee discussed above.

Financial Statements

Notes to the Consolidated Financial Statements—continued

18.Dividends—continued

128 HomeREITplc | AnnualReport | Fortheyearended31August2022

Corporate Broker

Alvarium Securities Limited (now called Ellora Partners

Limited) (“Alvarium Securities”) was appointed on

22 September 2020 to provide corporate broking

services to the Group. Alvarium Securities is a

subsidiary of Alvarium Investments Limited (now

called AlTi Asset Management Holdings 2 Limited).

Alvarium Securities was paid an annual retainer fee in

the amount of £50,000 by the Group. During the year

ending 31 August 2022, the Group incurred additional

fees of £10,413,000 (2021: £3,878,000) from Alvarium

Securities in relation to equity raises in September

2021 and May 2022. In 2021 these fees were in relation

to the initial public offering and subsequent admission

to the London Stock Exchange. These costs have been

treated as a reduction in equity as share issue costs.

Alvarium Securities resigned on 8 February 2023.

On 1 November 2022, the Company announced that

it had appointed Jefferies International Limited as

Joint Corporate Broker in exchange for an annual

retainer of £50,000. On 1 February 2023, the agreement

was terminated.

On 5 July 2023, the Company appointed Liberum

Capital Limited (now Panmure Liberum Capital Limited)

(“Liberium”) as corporate broker and Capital Markets

Adviser (“CMA”). Liberum are paid an annual corporate

broking fee of £150,000 until the one-year anniversary

of the Company being readmitted to trading on

the main market of the London Stock Exchange

(“readmission”). After that date, Liberum will be paid

an annual retainer of £100,000, with additional fees of

up to £50,000 depending on certain criteria. Liberum

was initially due to be paid a CMA fee of £200,000 until

31 December 2023. When readmission did not occur by

31 December 2023, the annual retainer was increased

to £240,000.

Directors

The Directors are entitled to receive a fee from the

Group at such rate as may be determined in accordance

with the Articles of Association. The initial fees are

£36,000 for each Director and £50,000 for the Chair

per annum. The Chair of the Audit Committee receives

an additional fee of £5,000 per annum. During the year

ended 31 August 2022, Directors’ fees of £176,000,

including related costs of £13,000 (31 August 2021:

£150,000) were paid, of which none was payable at the

31 August 2022 and 2021.

As at 31 August 2022, the Directors had the

following shareholdings in the Group all of which are

beneficially owned:

	Number of Shares held	% of Shares in issue
Lynne Fennah	55,000	0.007
Simon Moore	56,000	0.007
Marlene Wood	30,000	0.004
Peter Cardwell	10,000	0.001

The above Directors were appointed on 3 September 2020. On incorporation on 19 August 2020 William Saunders

and Alan Sauvain were appointed as Directors, and subsequently resigned as Directors on 3 September 2020.

20. Reconciliation of liabilities to cash flows from financing activities

	Borrowing	Borrowing as at
	as at	31 August
	31 August 2022	2021
	(£’000)	(£’000)
Balance at the beginning of year/period	117,528	–
Cash flows from financing activities
Net bank borrowings drawn down	92,757	84,128
Bank borrowing held in restricted account	73,115	35,872
Prior period cash transferred from restricted account	(35,872)	–
Loan arrangement fees paid	(2,743)	(2,507)
Non-cash movements
Amortisation of loan arrangement fees	318	116
Loan arrangement fees accrued	(56)	(81)
Balance at end of the year/period	245,047	117,528

19.Relatedpartytransactions—continued

Financial Statements

Notes to the Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 129

21. Contingent liabilities

Harcus Parker Limited (“Harcus Parker”), a law firm

specialising in claimant group actions, soliciting

investors on a fully contingent basis (‘no win no

fee’) to join together in bringing claims against the

following parties:

• the Company

• the Directors Defendants (those directors who were

in office when the Shares were suspended);

• AHRA;

• Alvarium FM; and

• AlTi RE, the former principal of AHRA by way of an

Appointed Representative Agreement.

As of the date of this document, there has been no

claim issued by Harcus Parker. Harcus Parker has sent a

pre-action letter of claim (enclosing draft particulars of

claim) to the Company and Director Defendants (along

with the other defendant parties listed above) on behalf

of a number of shareholders in the Company, which

alleges that the Company and the Director Defendants

provided information to investors which was false,

untrue and/or misleading and as a result shareholders

suffered losses. The Board is not currently able to

conclude whether or when a formal claim may be

issued and, if a claim is issued, what the quantum of

such a claim may be. The Board has stated publicly

that both the Company and the Director Defendants

intend vigorously to defend the threatened claims. The

Company and the Director Defendants sent a lengthy

and detailed letter of response to Harcus Parker. On

5 March 2024, the Company announced that it intends

to bring legal proceedings against those it considers are

responsible for wrongdoing. To that end, the Company

sent pre-action letters of claim to Alvarium FM and AlTi

RE on 12 April 2024, and AHRA on 29 May 2024.

Two of the Company’s subsidiaries issued statutory

demands to a tenant in August 2024. In response,

the tenant disputed the statutory demands

and subsequently filed a claim in court against 8

different parties, including the Company and the

two subsidiaries. The other defendants include

other companies and individuals, one of which is

a former director of the subsidiaries. The claim

has been issued by Court but the tenant has not

yet served the proceedings on the Company and

subsidiaries. The claim alleges damages for conspiracy,

misrepresentation, rescission of the leases and

interest and court costs. The tenant has not provided

particulars of its losses but claims to have suffered

a primary loss (from all parties) of approximately

£1 million. One of the remedies being sought by the

tenant is rescission of the leases, which would nullify

the effects of the leases from inception. Further,

the Directors believe that if any damages have been

incurred by the tenant, they are lower than the rent

owed to the group (and which are supported by

payments it is receiving from underlying occupants)

However, the Directors cannot estimate what if any

amounts would be payable until the particulars of

the losses are disclosed in detail. The Board intend to

vigorously defend their position if and when the claim is

issued by the tenant.

On 12 February 2024, the Company was notified by the

FCA of its commencement of an investigation into the

Company, covering the period from 22 September 2020

to 3 January 2023. The Directors are not able to assess

or quantify what if any action may be taken.

22. (Loss)/earnings per Share

(Loss)/earnings per share per IFRS is calculated by dividing profit or loss attributable to ordinary equity holders

of the Group by the weighted average number of Shares in issue for the year/period ended 31 August 2022 and

2021. Amounts shown below are both basic and diluted measures as there were no dilutive instruments in issue

throughout the period.

		19 August 2020 to
	Year ended	31 August 2021,
	31 August 2022	as restated
(Loss)/earnings (£’000)	(474,844)	16,103
Weighted average number of Shares in issue during year/period	597,120,672	206,203,256
(Loss)/earnings per share (pence)	(79.52)	7.81

Financial Statements

Notes to the Consolidated Financial Statements—continued

130 HomeREITplc | AnnualReport | Fortheyearended31August2022

23. Net asset value per Share

Net asset value per Share is calculated by dividing the consolidated net assets attributable to ordinary equity

holders of the Group by the number of Shares outstanding at the reporting date. Amounts shown below are

both basic and diluted measures as there were no dilutive instruments in issue throughout the current or

comparative periods.

		19 August 2020 to
	Year ended	31 August 2021,
	31 August 2022	as restated
NAV (£’000)	345,938	247,869
Number of Shares (‘000)	790,570	240,570
NAV per Share	43.76p	103.03p

24. Segmental information

Operating segments are identified on the basis of internal financial reports regarding components of the Group

that are regularly reviewed by the chief operating decision maker (which in the Group’s case is the Board) in order

to allocate resources to the segments and to assess their performance.

The internal financial reports contain financial information at a Group level as a whole and there are no reconciling

items between the results contained in these reports and the amounts reported in the consolidated financial

statements.

The Group’s property portfolio comprises investment property. The Board considers that all the properties have

similar economic characteristics. Therefore, in the view of the Board, there is one reportable segment.

All of the Group’s properties are based in the UK and as such no geographical grouping is considered appropriate

for segmental analysis.

During the year the Group had two tenants, which were considered to be major customers, contributing more

than 10% of the Group’s contractual annual passing rent. The Directors understand that certain tenants have

common directors, however, they do not have enough information to consider whether they would be considered

companies under common control, as defined in IFRS 3, Business Combinations. The Group has not aggregated the

tenants with common directors in this disclosure.

		For the year ended 31 August 2022		19 August 2020 to 31 August 2021
	% of total	£’000	% of total	£’000
Lotus Sanctuary CIC	12%	6,593	13%	2,297
Supportive Homes CIC*	10%	5,585	–	–
Other tenants (eachlessthan 10%)	78%	41,737	87%	15,970
Rental income	100%	53,915	100%	18,267

* In the prior period Supportive Homes CIC annual rent was shown as a part of the other tenant’s balance.

25. Consolidated entities

The Company owns 100% of the equity shares of all subsidiaries listed below and has the power to appoint and

remove the majority of the board of directors of those subsidiaries. The relevant activities of the below subsidiaries

are determined by the respective directors based on simple majority votes. Therefore, the Board has concluded

that the Company has control over all these entities and all these entities have been consolidated within this set of

financial statements.

Name of entity	Principal activity	Country of incorporation	Ownership
Home Holdings 1 Limited	Property investment	UK	100%
Home Holdings 2 Limited	Property investment	UK	100%
Home Holdings 3 Limited	Property investment	UK	100%
Home Holdings 4 Limited	Property investment	UK	100%

Financial Statements

Notes to the Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 131

On 25 May 2022 the below named entities were

subject to a members voluntary liquidation.

The net assets of these entities were transferred

to Home Holdings 1 Limited.

Fox Alpha SPV Limited

Fox Bravo SPV Limited

FPI Co 417 Limited

FPI Co 418 Limited

FPI Co 419 Limited

Grolar Developments SPV 9 Limited

Grolar Developments SPV 11 Limited

Pathway Homes Group (Exeter) Limited

Pathway Homes Group (Luton) Limited

Pathway Homes Group (Morecambe) Limited

Pathway Homes Group (Plymouth) Limited

Pathway Homes Group (Stoke) Limited

26. Post balance sheet events

Investment Adviser and AIFM

On 4 January 2023, the Company announced that

Alvarium RE Limited (now called AlTi Re Limited) sold its

wholly owned subsidiary AHRA, to AHRA’s management

in exchange for a promissory note which was effective on

30 December 2022.

On 15 March 2023, the Company agreed with AHRA

to terminate the IMA (which formed the contractual

relationship between the Company, Alvarium FM and

AHRA) with effect from 30 June 2023. On 22 May 2023,

the Board appointed AEW to provide property advisory

services and announced its intent to engage AEW as

Investment Manager and AIFM after receipt of FCA and

shareholder approval for a revised investment policy. On

21 August 2023, Alvarium FM ceased to act as AIFM after

shareholders approved the revised investment policy

and the Board of the Company formally appointed AEW

as Investment Manager and AIFM.

Non-Executive Director Changes

On 18 January 2024, the Company announced the

appointment of Michael O’Donnell as an independent

non-executive director succeeding Lynne Fennah as

independent non-executive chair with immediate effect.

On 2 April 2024, the Company announced the

appointment of Peter Williams as senior independent

non-executive director with immediate effect.

On 7 June 2024, the Company announced the

appointment of Rod Day as an independent non-

executive director with immediate effect.

Dividends

On 12 December 2022, the Company declared an interim

dividend of 1.38 pence per share in respect of the period

from 1 June 2022 to 31 August 2022, which was paid on

20 January 2023 to shareholders on the register as at

22 December 2022. This dividend was paid as a property

income distribution.

On 16 February 2023, the Board announced that except

for any distributions that would be required to maintain

REIT status, that it has ceased paying any further

dividends until further notice.

Acquisitions and disposals

From 1 September 2022 to 30 November 2022, the Group

acquired 232 new assets totalling £104,061,000 (including

purchase costs) of which £5,882,000 related to Seller’s

Works due to be completed by the vendor.

From 4 August 2023 to 10 October 2024, the Group

exchanged on the sale of 1,491 properties for gross

sales proceeds of £216,522,000, of which 1,228

properties had completed with gross sales proceeds of

£169,749,000. Investment properties which were valued

at £220,145,000 in the 31 August 2022 Consolidated

Statement of Financial Position were exchanged for

£195,151,000. Of the proceeds received on completions,

£120,166,000 was applied against the outstanding loan

balances. As of 10 October 2024, 263 properties have

exchanged but not completed with a total gross sales

value of £46,773,000.

Restricted cash

Of the cash held in lockbox accounts as at

31 August 2022, £34,234,000 of cash was released after

Home Holdings 2 Limited provided approved security

to the Lender. The balance of £38,881,000 was never

released. Of the balance, £30,000,000 was applied

against the outstanding borrowings in April 2023 and the

balance of £8,881,000 was applied in December 2023.

Cash held by solicitors at 31 August 2022 of £18,260,000

was used to fund a portion of the purchase price of the

assets acquired as discussed above.

Of the retentions held by solicitors, £5,240,000 has been

released to the Company since 31 August 2022.

Viceroy Research Report and Subsequent Appointment

of Alvarez & Marsal Disputes and Investigations LLP

On 23 November 2022, the Company acknowledged

that Viceroy Research LLP (“Viceroy Research”) issued a

short-seller report. On 30 November 2022, the Company

published a detailed rebuttal, which was supported by

a full verification exercise conducted by Stephenson

Harwood LLP, the Company’s primary legal advisers

at the time, and based on formal representations from

AHRA and Alvarium FM. Also on 30 November 2022,

Viceroy Research issued a response to the rebuttal.

Financial Statements

Notes to the Consolidated Financial Statements—continued

25.Consolidatedentities—continued

132 HomeREITplc | AnnualReport | Fortheyearended31August2022

In late December 2022 the Board received information

which resulted in the Board considering it appropriate

to instruct Alvarez & Marsal Disputes and Investigations

LLP (“A&M”) to conduct an investigation into allegations

of wrongdoing, including matters raised in the Viceroy

Research report dated 23 November 2022 and the

response thereto issued by the Company. On 5 May 2023,

A&M delivered to the Company a detailed report.

Without waiver of privilege, the key findings of the

report were:

• Arrangements with the Group’s corporate tenants

and vendors relating to the cost of refurbishment

of properties were not brought to the attention of

the Board by AHRA, so that the Board was unable to

consider whether a release of a vendor’s liabilities

for refurbishment of properties was appropriate.

These arrangements included a representative

of AHRA, without the knowledge or authority of

the Board, entering into a settlement agreement

on 8 December 2022 between the Group and

various property vendors (the “Aggregators”),

whereby the Company would pay £675,000 and

purportedly waive any refurbishment claims against

the Aggregators in relation to 488 properties on

8 December 2022.

• The Board had not approved, or been provided with

information regarding alternative arrangements

to settle outstanding rent arrears (as discussed in

Note 5);

• There was limited evidence of detailed ongoing

monitoring of tenants being undertaken by AHRA;

• AHRA provided inaccurate information about

occupancy rates to The Good Economy Partnership

Limited, who had been commissioned by the

Company to produce an independent report on

the Group’s performance and social impact on an

annual basis;

• Certain connections between tenants existed that

were not disclosed to the Board; and

• There existed certain undisclosed potential outside

business interests and undeclared potential

conflicts of interest as between certain persons

associated with AHRA and third parties.

Tenant matters and lease amendments

On 29 September 2022, AHRA entered into deeds of

variation on behalf of the Group with N-Trust Homes

CIC and Select Social Housing CIC (without Board

knowledge) such that all leases with both tenants

received a rent-free period with retroactive effect

from 1 March 2022 and extending eighteen months

to 31 August 2023 in exchange for changing the lease

extension agreement from five years to ten years.

On 4 October 2022, AHRA entered into a deed of

variation on behalf of the Group with ICDE Homes CIC

(without Board knowledge) such that all leases with ICDE

Homes CIC received a rent-free period with retroactive

effect from 1 March 2022 and extending eighteen months

to 31 August 2023 in exchange for changing the lease

extension agreement from five years to ten years.

Since 31 August 2022, a number of tenants have

surrendered leases or gone into creditors voluntary

liquidation. Of leases associated with the tenants in

place on the 2,239 properties owned by the Group on

31 August 2022, 369 are still in in place, 452 properties

have been turned over to a property manager resulting

in the Group having direct leases with the occupants,

349 are re-tenanted, and 1,069 have been sold.

Other Advisor Updates

On 19 January 2023, the Company announced that

AHRA had engaged sector specialist, Simpact Group, to

perform a detailed review of the Group’s portfolio and to

monitor and assist with managing the Group’s tenants,

including rent collection and recovery of arrears. The

contract was subsequently assigned to the Company

and the engagement was terminated with effect from

31 October 2023.

On 13 February 2023, the Company appointed Smith

Square Partners LLP as financial adviser and the

relationship was terminated on 24 August 2023 with

effect from 24 November 2023.

As described more fully in Note 19, Alvarium Securities

resigned as corporate broker on 8 February 2023. On

5 July 2023, the Company engaged Liberum as capital

markets adviser as more fully described in Note 19.

On 29 October 2022, the Company appointed Jefferies

International Limited as joint broker. The agreement

with Jefferies International Limited was terminated on

1 February 2023.

Lender Discussions

As a result of the property sales discussed above and

application of lockbox amounts against the loan balance,

as of 30 September 2024, the outstanding loan balances

totalled £71,981,000.

On 19 June 2023 Scottish Widows imposed a Deferred

Fee of 0.5% of the aggregate amounts outstanding on

the two fixed term loans (referred to in Note 10) at each

of 31 August 2023 and 30 November 2023, payable on the

full and final repayment of the loan. On 4 December 2023

Scottish Widows imposed a further Deferred Fee

effective from 30 November 2023 being the equivalent of

5.0% per annum on the aggregate amounts outstanding

on the two loans as computed on a daily basis, payable at

the earlier of 28 June 2024 or the full and final repayment

of the loans. On 2 July the Deferred Fee was increased

from 5% to 7% with effect from 1 July 2024 until the

26.Postbalancesheetevents—continued

Financial Statements

Notes to the Consolidated Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 133

full repayment of the loan. From 31 August 2022 to the

final repayment of the two loans in December 2024,

the Group expects payments to Scottish Widows will

total £268,534,000, which is comprised of payments

of principal of £250,000,000, of contractual interest of

£9,477,000 and of the Deferred Fees of £9,057,000.

Property Valuation

The investment properties that were held at

31 August 2023 have been valued as at 31 August 2023

by Jones Lang LaSalle Limited (“JLL”) with a fair value of

£412,720,000.

Potential Litigation/FCA Investigation

A pre-action letter of claim has been sent to the

Company and the Director Defendants by Harcus Parker

on behalf of certain shareholders of the Company. On

5 March 2024, the Company announced that it intends to

bring legal proceedings against those parties it considers

are responsible for wrongdoing. On 12 April 2024,

the Company issued pre-action letters of claim to

Alvarium FM and AlTi RE Limited, AHRA’s principal.

On 29 May 2024, the Company issued a pre-action letter

of claim to AHRA.

On 13 February 2024, the Company announced that it

had been notified by the FCA of its commencement of an

investigation into the Company covering the period from

22 September 2020 to 3 January 2023.

Other

As noted above, the following subsidiary entities

were put into member’s voluntary liquidation and

subsequently dissolved on the date in parenthesis:

Fox Alpha SPV Limited (22 August 2023); Fox Bravo

SPV Limited (22 August 2023); FPI Co 417 Limited

(22 August 2023); FPI Co 418 Limited (22 August 2023); FPI

Co 419 Limited (25 August 2023); Grolar Developments

SPV 9 Limited (22 August 2023); Grolar Developments

SPV 11 Limited (22 August 2023); Pathway Homes Group

(Exeter) Limited (22 August 2023); Pathway Homes Group

(Luton) Limited (22 August 2023); Pathway Homes Group

(Morecambe) Limited (10 January 2024); Pathway Homes

Group (Plymouth) Limited (22 August 2023); Pathway

Homes Group (Stoke) Limited (22 August 2023).

27. Controlling parties

There is no ultimate controlling party of the Group.

26.Postbalancesheetevents—continued

Financial Statements

Notes to the Consolidated Financial Statements—continued

134 HomeREITplc | AnnualReport | Fortheyearended31August2022

Company Statement of Financial Position

Companynumber:12822709

Note

Asat

31August2022

£’000

Asat

31August2021

Restated

£’000

Non-current assets

Investmentinsubsidiaries

5 – 10,390

Investmentproperty

6 3,447 8,793

Amountsduefromsubsidiaries

7 329,499 185,551

Total non-current assets 332,946 204,734

Current assets

Amountsduefromsubsidiaries

7 13 26,279

Tradeandotherreceivables

7 161 228

Restrictedcash

8 – 375

Cashandcashequivalents

8 16,581 68

Total current assets 16,755 26,950

Total assets 349,701 231,684

Non-current liabilities

Amountsduetosubsidiaries

9 – 1,750

Total non-current liabilities

– 1,750

Current liabilities

Tradeandotherpayables

9 3,796 589

Total current liabilities 3,796 589

Total liabilities 3,796 2,339

Net assets 345,905 229,345

Capital and reserves

Sharecapital

10 7,906 2,406

Sharepremium

11 595,733 –

Specialdistributablereserve

12 201,040 229,360

Accumulatedlosses (458,774) (2,421)

Total capital and reserves attributable to equity

holders of the company 345,905 229,345

Thelossandtotalcomprehensivelossattributableto

theshareholdersoftheparentCompanyfortheyear

ended31August2022amountedto£456,353,000(for

theperiodfrom19August2020to31August2021:loss

of£2,421,000).

Thenotesonpages136to144formpartofthese

financialstatements.

TheCompanyfinancialstatementsofHomeREIT

plcwereapprovedandauthorisedforissuebythe

BoardofDirectorson10October2024andsignedon

itsbehalfby:

Michael O’Donnell

Chair

Financial Statements

Company Financial Statements

 HomeREITplc | AnnualReport | Fortheyearended31August2022 135

Company Statement of Changes in Shareholders’ Equity

Fortheyearended31August2022 Note

capital

account

£’000

premium

account

£’000

Special

distributable

reserve

£’000

Accumulated

losses

£’000

Totalequity

attributableto

ownersofthe

Company

£’000

Openingbalance 2,406 – 229,360 (2,421) 229,345

Lossfortheyear – – – (456,353) (456,353)

Transaction with owners:

Dividenddistribution

12 – – (28,320) – (28,320)

Sharecapitalissued

10,11 5,500 607,734 – – 613,234

Shareissuecosts

11 – (12,001) – – (12,001)

Balanceat31August2022 7,906 595,733 201,040 (458,774) 345,905

Fortheperiodfrom19August2020

to31August2021,asrestated Note

capital

account

£’000

premium

account

£’000

Special

distributable

reserve

£’000

Accumulated

losses

£’000

Totalequity

attributableto

ownersofthe

Company

£’000

Lossfortheperiod – – – (2,421) (2,421)

Transaction with owners:

Dividenddistribution

12 – – (3,993) – (3,993)

Sharecapitalissued

10,11 2,406 238,164 – – 240,570

Shareissuecosts

11 – (4,811) – – (4,811)

Cancellationofsharepremium

11,12 – (233,353) 233,353 – –

Balanceat31August2021 2,406 – 229,360 (2,421) 229,345

Thenotesonpages136to144formpartofthesefinancialstatements.

Financial Statements

Company Financial Statements—continued

136 HomeREITplc | AnnualReport | Fortheyearended31August2022

1. Basisofpreparation

HomeREITplc(the“Company”)isaclosed-ended

investmentcompany,incorporatedinEnglandand

Waleson19August2020andisregisteredasapublic

companylimitedbysharesundertheCompaniesAct

2006withregisterednumber12822709.TheCompany

isstructuredasanexternallymanagedcompanywith

aboardofnon-executivedirectors(the“Directors”

orthe“Board”).Thissetoffinancialstatementshas

beenpreparedinaccordancewithFinancialReporting

Standard101‘ReducedDisclosureFramework’(“FRS

101”).Wherereferredtoherein,theGroup(the

“Group”)consistsoftheCompanyanditssubsidiaries

whicharelistedinNote25totheConsolidated

FinancialStatements.

Disclosureexemptionsadopted

InpreparingthesefinancialstatementstheCompany

hastakenadvantageofdisclosureexemptions

conferredbyFRS101andthereforethesefinancial

statementsdonotinclude:

• CertaindisclosuresregardingtheCompany’s

capital;

• Astatementofcashflows;

• Theeffectoffutureaccountingstandardsnotyet

adopted;

• Thedisclosureoftheremunerationofkey

managementpersonnel;and

• Disclosureofrelatedpartytransactionswithwholly

ownedsubsidiariesoftheCompany.

TheCompanyhastakenadvantageoftheexemption

allowedunderSection408oftheCompaniesAct2006

andhasnotpresenteditsownprofitandlossaccountin

thesefinancialstatements.

TheGrouphasreviewedtheirpastaccountingpolicies

andpracticesand,basedonnewinformation,the

Boardhasamendedseveralaccountingpolicies

andcorrectedcertainamountspresentedinthe

periodended31August2021ConsolidatedFinancial

Statements.Topresentcomparableinformation

usingthesameaccountingpolicies,theCompanyhas

restateditsfinancialstatementsfor2021.Thereasons

whyandimpactofthechangesaredescribedmore

fullyinNote4.

2. Significantaccountingjudgementsandestimates

Thepreparationoffinancialstatementsrequiresthe

Directorstomakeestimatesandassumptionsthat

effectthereportedamountsofrevenues,expenses,

assetsandliabilities,andthedisclosureofcontingent

liabilitiesatthereportingdate.Differencesbetween

ourestimatesandtheactualresultswillberecognised

astheyoccur.Criticalaccountingestimatesandkey

sourcesofestimationuncertaintyinapplyingthese

accountingpoliciesaredisclosedinNote3tothe

ConsolidatedFinancialStatements.

Valuationofinvestmentproperties

TheCompanypresentsitsinvestmentpropertyat

fairvalue.Significantassumptionsandmethodsof

valuationsareconsistentwiththeGroupdisclosures

forwhichdetailsaregiveninNote9oftheConsolidated

FinancialStatements.

Impairmentofinvestmentsinandamountsdue

fromsubsidiaries

TheCompanyusesthenetassetsoftheinvesteesto

supportboththeinvestmentsinandamountsduefrom

subsidiaries.Whenanimpairmentofaportion(ienotall)

ofthosebalancesisconsideredtohaveoccurred,the

Companyimpairstheinvestmentinsubsidiarybalance

firstandthenanyamountsduefromsubsidiaries

second.Inestimatingthenetassetsavailablefor

assessingimpairment,balancesduefromotherrelated

partiesareconsideredafterotherimpairmentshave

beenrecorded.

3. Principalaccountingpolicies

Theprincipalaccountingpoliciesadoptedinthe

preparationoftheCompanyfinancialstatementsare

consistentwiththeGroupwhicharedescribedinNote2

totheConsolidatedFinancialStatements.Policies

adoptedinthepreparationoftheCompany’sfinancial

statementsthatarenotincludedintheConsolidated

FinancialStatementsaregivenbelow:

a Impairmentofinvestmentsinandamountsdue

fromsubsidiaries

Investmentinsubsidiariesandamountsduefrom

subsidiariesareincludedinthestatementoffinancial

positionatcostlessprovisionforimpairment.

Thebalancesareassessedforimpairmentateach

balancesheetdateorwhenevereventsorchanges

incircumstancesindicatethattheircarryingamount

maynotberecoverable.Wherethecarryingvalueof

anassetexceedsitsrecoverableamount(thehigherof

valueinuseandfairvaluelesscoststosell),theasset

isimpaired.

Becausethenetassetsoftheinvesteessupportboth

theinvestmentsinandamountsduefromsubsidiaries,

whenanimpairmentofaportion(i.e.notall)ofthose

balancesisconsideredtohaveoccurred,theCompany

impairstheinvestmentinsubsidiarybalancefirst

andthenanyamountsduefromsubsidiariessecond.

Inestimatingthenetassetsavailableforassessing

impairment,balancesduefromotherrelated

partiesareconsideredafterotherimpairmentshave

beenrecorded.

Financial Statements

Notes to the Company Financial Statements

 HomeREITplc | AnnualReport | Fortheyearended31August2022 137

b Guarantor

TheCompanyactsasaguarantortotheloanfacilities

oftwoofitssubsidiariesasdescribedinNote10to

theConsolidatedFinancialStatements.Atinception,

theCompanyrecognisestheguaranteeatcostand

subsequentlymeasurestheliabilityatthehigherof:

a. Theinitialcostoftheguarantee,and

b. Theexpectedcreditlossesofthe

financialguaranteeoverthelifeofthe

underlyingcontract.

TheCompanydidnotreceiveanyremunerationfor

theguaranteeanddoesnotexpectanycreditlosses

relatedtotheguaranteeoverthelifeoftheunderlying

contract.Accordingly,theCompanyhasnotrecognised

aliability.

4 CorrectionofPriorPeriodErrors

AsdescribedmorefullyinNote4totheConsolidated

FinancialStatements,therehavebeenanumber

ofcorrectionsmadetotheinformationoriginally

presentedinthe2021AnnualReportandAccounts.

DetailsonthosechangeswhichimpactedtheCompany

areasfollows:

Propertycondition–unhabitablepropertiesand

Seller’sWorks

SeveraloftheCompany’spropertieswereinpoor

conditionatacquisitionandthevendorhadagreedto

improvethosepropertiestoanacceptablestandard

withinaspecifiedperiodasdefinedintheSaleand

PurchaseAgreement(“SPA”).Attheacquisitiondate,

theCompanypaidthefullpurchasepricewiththe

expectationthatthevendorwouldcompletethe

requiredworksfromthefundspaidatacquisition.The

vendorwastypicallygivenbetween6and12monthsto

completetheSeller’sWorks(“Seller’sWorksLongstop

Date”).TheCompanyhadinadequatesecurityand

limitedrecourseagainstthevendorifthevendordid

notcompletetheSeller’sWorks,andmostofthe

vendorsdidnotcompletetheworkspriortotheagreed

SWLD.AmountspaidinrespectofSeller’sWorks

werepreviouslyincludedinthecostofproperties

acquired.Thecorrectiontothepreviousaccounting

policyhasresultedinthereallocationoftheestimated

valueoftheSeller’sWorksfrompropertycostto

prepaidSeller’sWorks,ifthepropertywasconsidered

habitable.Whereworksweresubsequentlycompleted

onaproperty,therelatedprepaidSeller’sWorks

balancewasreclassifiedintoInvestmentProperty.

WhereworkshadnotbeeninitiatedbeforetheSWLD,

therelatedprepaidSeller’sWorksbalancewaswritten

offtotheStatementofComprehensiveIncome.If

thepropertywasboardeduporotherwisedeemed

unhabitable,atthetimeofacquisition,theDirectors

couldnotmakeareasonableretrospectiveestimateof

theworksrequiredandinsteadrecordedtheproperty

atcostandrevaluedthepropertyinlinewiththe

externalvaluationatthefollowingbalancesheetdate.

Leaseinducementpayments

AsdiscussedinNote3totheConsolidatedFinancial

Statements,theCompanydidnotprovidelease

inducementconsiderationtotenantsdirectly.

However,theInvestmentAdviser,AlvariumHome

REITAdvisorsLtd(“AHRA”)expectedthevendorsto

provide,andtheygenerallydidprovide,thetenantwith

cashintheamountofthefirstyear’srent,whichwas

fundedthroughoriginalacquisitionpaymentmadeby

theCompanytothevendoraspartoftheacquisition

price.TheDirectorsthereforeconcludedthatthe

substanceofthetransactionsissuchthattheleaseand

theSPAshouldbeaccountedforasasinglecontractas

setforthinIFRS16,paragraphB2.

Accordingly,theDirectorsallocatedanamountequal

totwelvemonthsofrentpayabletoestablisheithera

leaseinducementassetoradebtor(forhabitableand

unhabitablepropertiesrespectively)representing

thefirstyearofrentintherevisedpurchase

priceallocation.

Escrowaccount

On18June2021,theCompanyenteredintoanescrow

agreementwithNobleTreeFoundationLimited,a

Tenant,andIntertrustTrustee3(Jersey)Limited

wherebyanaffiliateofKarlaAssetManagementLimited

provided£750,000toanescrowaccountinthenameof

theCompanywithsuchfundstobeusedasapproved

bytwoAHRAfundmanagers,actingwithoutthe

authorityoftheDirectors.Thefundcouldbeaccessed

bythetwotenants,NobleTreeFoundationLimited

andBigHelpProject,andasapprovedbythetwofund

managers.Asat31August2021,£375,000hadbeen

distributedwiththerestdistributedinthe2022financial

year.Thefinancialstatementsfor2021didnotreflect

thesetransactionsandhavebeenrestatedtoaccount

fortherevenueandexpensesassociatedwiththis

arrangement.

Financial Statements

Notes to the Company Financial Statements—continued

3. Principalaccountingpolicies—continued

138 HomeREITplc | AnnualReport | Fortheyearended31August2022

Impactonprofitandlossaccountandnetassets

Thechangestotheaccountingpoliciesresultedinanincreasein2021lossreportedfrom£2,151,000to£2,421,000

andadecreaseinnetassetsat31August2021from£229,615,000to£229,345,000.

ImpactonStatementofFinancialPosition

31August

2021,as

Previously

Reported

£’000

Unhabitable

Properties

Adjustment

£’000

Prepaid

Seller’sWorks

Adjustment

£’000

Lease

Inducement

Amortisation

£’000

Escrow

Account

Adjustment

£’000

Tenant

Receivables

Adjustment

£’000

31August

2021,as

Restated

£’000

Non-current assets

Investment Property

Propertyacquisitioninperiod 8,980 (314) – – – – 8,666

Leaseinducementonunhabitable

propertiesrecognised

asreceivables – (224) – – – – (224)

Rentstraightliningand

leaseinducement 48 314 – (14) – – 348

PrepaidSeller’sWorksrecognised

asreceivable – – (434) – – – (434)

Increaseinfairvalueof

investmentproperty 437 – – – – – 437

Investment property 9,465 (224) (434) (14) – – 8,793

Investmentinsubsidiaries 10,390 – – – – – 10,390

Amountsduefromsubsidiaries 185,551 – – – – – 185,551

Total non-current assets 205,406 (224) (434) (14) – – 204,734

Current assets

Amounts due from subsidiaries 26,279 – – – – – 26,279

Trade and other receivables

Cashreceivedfor

unhabitableproperties – – – – – 197 197

Tenant receivables in accordance

with lease agreements – – – – – 197 197

Rentnotrecognisedbecause

propertieswereunhabitable – – – – – (197) (197)

Tenantreceivables,net – – – – – – –

Prepaidexpenses 201 – – – – – 201

Tenant receivables and other

financialassets 201 – – – – – 201

PrepaidSeller’sWorksrecognised

asreceivable – – 434 – – – 434

Write-offofSeller’sWorksnot

initiatedorcompleted – – (434) – – – (434)

Prepaid Seller’s Works – – – – – – –

Financial Statements

Notes to the Company Financial Statements—continued

4.CorrectionofPriorPeriodErrors—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 139

31August

2021,as

Previously

Reported

£’000

Unhabitable

Properties

Adjustment

£’000

Prepaid

Seller’sWorks

Adjustment

£’000

Lease

Inducement

Amortisation

£’000

Escrow

Account

Adjustment

£’000

Tenant

Receivables

Adjustment

£’000

31August

2021,as

Restated

£’000

Leaseinducementonunhabitable

propertiesrecognisedasreceivable – 224 – – – – 224

Cashreceivedfor

unhabitableproperties – (197) – – – – (197)

Lease inducement receivable for

unhabitable properties – 27 – – – – 27

Trade and other receivables 201 27 – – – – 228

Restrictedcash – – – – 375 – 375

Cashandcashequivalents 68 – – – – – 68

Total current assets 26,548 27 – – 375 – 26,950

Total assets 231,954 (197) (434) (14) 375 – 231,684

Non-current liabilities

Amountsduetosubsidiaries 1,750 – – – – – 1,750

Total non-current liabilities 1,750 – – – – – 1,750

Current liabilities

Tradeandotherpayables 589 – – – – – 589

Total current liabilities 589 – – – – – 589

Total liabilities 2,339 – – – – – 2,339

Net assets 229,615 (197) (434) (14) 375 – 229,345

Sharecapital 2,406 – – – – – 2,406

Specialdistributionreserve 229,360 – – – – – 229,360

Accumulateslosses (2,151) (197) (434) (14) 375 – (2,421)

Capital and reserves attributable

to equity holders of the Company 229,615 (197) (434) (14) 375 – 229,345

Financial Statements

Notes to the Company Financial Statements—continued

4.CorrectionofPriorPeriodErrors—continued

140 HomeREITplc | AnnualReport | Fortheyearended31August2022

5. Investmentinsubsidiaries

Investmentinsubsidiariesisincludedinthe

statementoffinancialpositionatcostlessprovision

forimpairment.

Asat

31August2022

£’000

Asat

31August2021

£’000

Balanceatbeginning

ofyear/period 10,390 –

Additionsintheyear/period – 10,390

Impairmentofbalance (10,390) –

Balance at end

of year/period – 10,390

Afterconsideringtherecoverabilityofitsinvestments

insubsidiaries,theCompanyhasfullyimpairedthe

balanceasat31August2022.

AlistoftheCompany’ssubsidiaryundertakings

isincludedinNote25totheConsolidated

FinancialStatements.

6.InvestmentProperty

Asat

31August2022

£’000

Asat

31August2021,

asrestated

£’000

Freeholdinvestment

propertyatthe

beginningyear/period 8,793 –

Propertyacquisitionsin

theyear/period – 8,980

Reclassificationoffirstyear

inducementwherebuildingis

consideredashabitable – (314)

Reclassificationoffirstyear

inducementwherebuildingis

consideredasunhabitable – (224)

PrepaidSeller’sWorks

recognisedasareceivable – (434)

Rentstraightliningand

leaseinducement 35 348

Impairmentofrentstraight

liningandleaseinducement (238) –

(Decrease)/increaseinfair

valueofinvestmentproperty (5,143) 437

Fair value at the end of

the year/period 3,447 8,793

At31August2022,theinvestmentpropertieshave

beenvaluedbyJonesLangLaSalleLimited(“JLL”),an

accreditedindependentexternalvaluerwithrelevant

andrecentexperienceofvaluingresidentialproperties

ofthetypeinwhichtheGroupinvests.Theinvestment

propertieswerevaluedat31August2021byKnight

Frank,anaccreditedindependentexternalvaluerwith

relevantandrecentexperienceofvaluingresidential

propertiesofthetypeinwhichtheGroupinvests.

KnightFrankinitiallywerealsoengagedtovaluethe

investmentpropertiesat31August2022butresigned

on5May2023.Thatvaluationconsideredalltenants

tobefinanciallyviableandpreparedthevaluationof

eachassetontheinvestmentapproach.Otherthan

asdescribedbelow,theDirectorshavenotadjusted

thevaluationasof31August2021becausethe

Directorsbelieveitisrepresentativeofthemarketat

thattime.TheAugust2021KnightFrankvaluationof

£9,465,000hasbeenreducedfortheamountsallocated

toleaseinducementonunhabitablepropertiesand

prepaidSeller’sWorksbothrecordedasreceivables

andadjustedfortheamortisationofthelease

inducementonhabitablepropertiesrecognisedasan

expense,asfollows:

Asat

31August2021,

asrestated

£’000

Investmentpropertybalance,asrestated 8,793

Amountsallocatedto:

Leaseincentivedebtorfor

unhabitablebuildings 224

PrepaidSeller’sWorks 434

Leaseincentiveamortisation 14

Investment property as per the

KnightFrankLLPvaluation,as

previously reported 9,465

Detailedinformationaboutthevaluationofinvestment

propertyisincludedinNote9totheConsolidated

FinancialStatements.

Financial Statements

Notes to the Company Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 141

7.Tradeandotherreceivables

Asat

31August2022

£’000

Asat

31August2021,

asrestated

£’000

Tenantreceivables

inaccordancewith

leaseagreements 148 197

Rentnotrecognisedbecause

propertieswereunhabitable (27) (197)

Tenantreceivables,net 121 –

Prepaidexpenses 40 201

Tenant receivables and

otherfinancialassets 161 201

Leaseinducementon

unhabitableproperties – 27

Trade and other receivables 161 228

Amountsdue

fromsubsidiaries

repayableondemand 47,675 26,279

Provisionfordoubtfuldebts (47,662) –

Amounts due from

subsidiaries (net

of provision) 13 26,279

Trade and other

receivables – current 174 26,507

Amountsduefrom

subsidiaries–non-current 713,909 185,551

Provisionfordoubtfuldebts (384,410) –

Amounts due from

subsidiaries (net of

provision) – non current 329,499 185,551

Trade and other receivables

– non-current 329,499 185,551

Total trade and

other receivables 329,673 212,058

Allcurrenttradeandotherreceivablesaredue

withinoneyear.

Amountsduefromsubsidiariesareinterestfreeand

repayableondemand.TheCompanyhasclassified

theoutstandingbalancesinlinewiththetimingofthe

expectedrecoveryoftheseamounts.

Afterconsideringtherecoverabilityofamounts

duefromsubsidiaries,theCompanyhasrecognised

creditlossesintheamountof£432,072,000asat

31August2022(asat31August2021:none).

TheDirectorsconsiderthattheremaining

carryingamountoftradeandotherreceivables

approximatesfairvalue.

8.Cashandcashequivalents

Asat

31August2022

£’000

Asat

31August2021,

asrestated

£’000

Restrictedcash(seeNote4) – 375

Cashheldatbank 16,581 68

Total cash and

cash equivalents 16,581 443

9.Tradeandotherpayables

Asat

31August2022

£’000

Asat

31August2021,

£’000

Amountsduetosubsidiaries – 1,750

Non-current liabilities – 1,750

Asat

31August2022

£’000

Asat

31August2021,

£’000

Tradeandotherpayables 3,796 589

Current liabilities 3,796 589

Alltradeandotherpayablesareduewithinoneyear.

TheDirectorsconsiderthatthecarryingamountof

tradeandotherpayablesapproximatesfairvalue.

10.Sharecapital

OrdinarySharesof£0.01each

Asat

31August2022

Number

Asat

31August2021

Number

Atthebeginningof

theyear/period 240,570,465 –

Issuedonincorporation – 1

FurtherSharesissued

duringtheyear/period 550,000,000 240,570,464

Issuedandfullypaidat

year/periodend 790,570,465 240,570,465

Detailedinformationaboutthesharecapitalofthe

CompanyisincludedinNote15totheConsolidated

FinancialStatements.

Financial Statements

Notes to the Company Financial Statements—continued

142 HomeREITplc | AnnualReport | Fortheyearended31August2022

11.Sharepremium

Asat

31August2022

£’000

Asat

31August2021

£’000

Balanceatthebeginning

ofyear/period – –

Sharepremiumarisingon

equityissuance 607,734 238,164

Shareissuecosts (12,001) (4,811)

Transfertospecial

distributable

reserve(Note12) – (233,353)

Balance at the end

of year/period 595,733 –

Thesharepremiumrelatestoamountssubscribedfor

sharecapitalinexcessofnominalvaluelessassociated

issuecostsofthesubscriptions.

12.Specialdistributablereserve

Asat

31August2022

£’000

Asat

31August2021

£’000

Balanceatthebeginning

ofyear/period 229,360 –

Transferfromshare

premium(Note11) – 233,353

Dividenddistribution (28,320) (3,993)

Balance at the end

of year/period 201,040 229,360

Thespecialdistributablereserverepresentsthe

cancelledsharepremium(forthefirstshareissuance)

lessdividendspaidfromthisreserve.Thisisa

distributablereserve.

13.Dividends

On15September2021,theCompanydeclaredan

ordinarydividendof0.84penceperShare,whichwas

paidon22October2021toshareholdersontheregister

asat24September2021.Thisdividendwaspaidasa

propertyincomedistribution.

On27January2022,theCompanydeclaredadividendof

1.37penceperShare,whichwaspaidon25February2022

toshareholdersontheregisterasat4February2022.

0.10penceofthisdividendwaspaidasanon-property

incomedistribution.Theremainingbalanceof1.27pence

waspaidaspropertyincomedistribution.

On5May2022,theCompanydeclaredadividendof

1.37penceperShare,whichwaspaidon10June2022

toshareholdersontheregisterasat13May2022.This

dividendwaspaidasapropertyincomedistribution.

On4August2022,theCompanydeclareda

dividendof1.38penceperShare,whichwaspaidon

9September2022toshareholdersontheregisteras

at12August2022.Thisdividendwaspaidasaproperty

incomedistribution.

TheBoardapprovedthesedistributionsbasedon

financialstatementsandforecastsprovidedby

AHRAandtoensureitdistributedPropertyIncome,

asdefined,inordertocomplywithREITregulations.

Inaddition,theBoardconsideredthatithadthe

substantialSpecialDistributableReserve(Note12)

whichcouldcoveranyimprecisioninAHRA’sestimates.

However,hadthefull,accurateinformationregarding

thematerialcorrectionsmadetothesefinancial

statementsbeenprovidedtotheBoardatthetimeof

approvingthedistributions,theBoardwouldnothave

approvedthedistributions.

14.Guaranteeofsubsidiarydebt

AsdescribedinNote10totheConsolidatedFinancial

Statements,theCompanyprovidedaguarantee

toScottishWidowsLimitedontwofixedtermloan

facilitieswherewholly-ownedsubsidiariesarethe

borrowers.Variousbreacheshaveoccurredunder

thoseagreements.Sinceaninitialwaiverletterdated

30January2023foraninitialwaiverperiodwaiving

certainbreaches,newwaiverlettershavebeen

issuedontheexpiryofeachpreviouswaiverperiod.

Thecurrentwaiverletterisscheduledtoexpireon

31October2024.Thecurrentwaiverletterrelates

tovariousmattersincludingfinancialcovenants,an

adversechangeinthepositionoftheCompanyand

itssubsidiaries,afailuretodeliverauditedaccounts

andotherinformation,thesuspensionoftheshares

oftheCompanyontheLondonStockExchangeand

thetaxstatusoftheCompany.Inaddition,Scottish

WidowsLimitedhasindicatedthattheyexpectthe

Grouptoundertakealleffortstorepaybothfacilitiesby

31December2024.Despitethebreaches,theCompany

doesnotbelievethatitwillbecalledtofundanycredit

lossesandthereforehasnotestablishedaliabilityfor

theguarantee.

15.Contingentliabilities

HarcusParkerLimited(“HarcusParker”),alawfirm

specialisinginclaimantgroupactions,soliciting

investorsonafullycontingentbasis(‘nowinno

fee’)tojointogetherinbringingclaimsagainstthe

followingparties:

• theCompany

• theDirectorsDefendants(thosedirectorswhowere

inofficewhentheSharesweresuspended);

• AHRA;

• TheCompany’sformerAIFM,AlvariumFund

Managers(UK)Limited(“AlvariumFM”);and

• AlTiRE,theformerparentofAlvariumFMandAHRA

bywayofanappointedrepresentativeagreement.

Financial Statements

Notes to the Company Financial Statements—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 143

Asofthedateofthisdocument,therehasbeennoclaim

issuedbyHarcusParker.HarcusParkerhassentapre-

actionletterofclaim(enclosingdraftparticularsofclaim)

totheCompanyandDirectorDefendants(alongwith

theotherdefendantpartieslistedabove)onbehalfofa

numberofshareholdersintheCompany,whichalleges

thattheCompanyandtheDirectorDefendantsprovided

informationtoinvestorswhichwasfalse,untrueand/or

misleadingandasaresultshareholderssufferedlosses.

TheBoardisnotcurrentlyabletoconcludewhetheror

whenaformalclaimmaybeissuedand,ifaclaimisissued,

whatthequantumofsuchaclaimmaybe.TheBoardhas

statedpubliclythatboththeCompanyandtheDirector

Defendantsintendvigorouslytodefendthethreatened

claims.TheCompanyandtheDirectorDefendantssenta

lengthyanddetailedletterofresponsetoHarcusParker.

On5March2024,theCompanyannouncedthatitintends

tobringlegalproceedingsagainstthoseitconsidersare

responsibleforwrongdoing.Tothatend,theCompany

sentpre-actionlettersofclaimtoAlvariumFMandAlTi

REon12April2024,andAHRAon29May2024.

TwooftheCompany’ssubsidiariesissuedstatutory

demandstoatenantinAugust2024.Inresponse,

thetenantdisputedthestatutorydemandsand

subsequentlyfiledaclaimincourtagainst8different

parties,includingtheCompanyandthetwosubsidiaries.

Theotherdefendantsincludeothercompaniesand

individuals,oneofwhichisaformerdirectorofthe

subsidiaries.TheclaimhasbeenissuedbyCourtbut

thetenanthasnotyetservedtheproceedingsonthe

Companyandsubsidiaries.Theclaimallegesdamages

forconspiracy,misrepresentation,rescissionof

theleasesandinterestandcourtcosts.Thetenant

hasnotprovidedparticularsofitslossesbutclaims

tohavesufferedaprimaryloss(fromallparties)of

approximately£1million.Oneoftheremediesbeing

soughtbythetenantisrescissionoftheleases,which

wouldnullifytheeffectsoftheleasesfrominception.

Further,theDirectorsbelievethatifanydamageshave

beenincurredbythetenant,theyarelowerthanthe

rentowedtothegroup(andwhicharesupportedby

paymentsitisreceivingfromunderlyingoccupants)

However,theDirectorscannotestimatewhatifany

amountswouldbepayableuntiltheparticularsof

thelossesaredisclosedindetail.TheBoardintendto

vigorouslydefendtheirpositionifandwhentheclaimis

issuedbythetenant.

On12February2024,theCompanywasnotifiedbythe

FCAofitscommencementofaninvestigationintothe

Company,coveringtheperiodfrom22September2020

to3January2023.TheDirectorsarenotabletoassess

orquantifywhatifanyactionmaybetaken.

16.Relatedpartytransactions

InvestmentAdviser

AHRAwasappointedastheinvestmentadviserto

theGroupbyenteringintotheInvestmentAdvisory

AgreementwiththeGroup.Underthisagreement,

theInvestmentAdviseradvisedtheGroupinrelation

tothemanagement,investmentandreinvestment

oftheassetsoftheGroup.Asat31August2022,

AHRAwasasubsidiaryofAlvariumInvestments

Limited,theultimateparentcompanyoftheAIFM

andtheBrokertotheGroup.On4January2023,the

CompanyannouncedthatAlvariumRELimitedsold

itswholly-ownedsubsidiary,AlvariumHomeREIT

AdvisorsLimited,toitsmanagementinexchangefor

apromissorynote.

Theinvestmentadvisoryfeesshallbeanamount

calculatedinarrearsinrespectofeachmonth,ineach

casebasedupontheadjustednetassetvalueofthe

Grouponthefollowingbasis:

a One-twelfthof0.85%,percalendarmonthofnet

assetvalueuptoandincluding£500million;

b One-twelfthof0.75%percalendarmonthofnet

assetvalueabove£500millionuptoandincluding

£750million;and

c One-twelfthof0.65%percalendarmonthofnet

assetvalueabove£750million.

Duringtheyearending31August2022,theCompany

incurredfeesof£5,322,000(2021:£1,828,000).At

31August2022anamountof£582,000wasunpaid

(2021:£175,000).

Initially,theInvestmentAdvisoryAgreementcouldbe

terminatedon12months’writtennotice,suchnotice

toexpireonoratanytimeafterthefifthanniversary

of12October2020.Additionally,theInvestment

AdvisoryAgreementcouldbeterminatedwith

immediateeffectontheoccurrenceofcertainevents,

includinginsolvencyorintheeventofamaterialand

continuingbreach.On15March2023,theCompanyand

AHRAagreedtoterminatetheInvestmentAdvisory

agreementwitheffectfrom30June2023.

On22May2023,AEWUKInvestmentManagement

LLP(“AEW”)wasappointedasPropertyAdviser

forthetransitionperiodandsubsequentlyon

21August2023,onexpiryofthetransitionperiod

asAIFMandInvestmentManager(seeAIFMsection

belowbelow).Thetransitionperiodlastsfromthe

dateofappointmentuntiltheCommencementof

Phase1.Phase1continuesfortwoyearsfromthe

dateofcommencement,atwhichtimePhase2would

havecommenced.Phase1commencedwhenthe

followingoccurred:

1. TheadoptionoftheRevisedInvestmentPolicy,

2. TheoldInvestmentManagerandInvestment

AdvisorceasedtoactfortheGroup,

3. FCAapprovalofAEWasAIFMfortheCompany.

AEWispaidanannualfeeinPhase1oftheagreement:

Financial Statements

Notes to the Company Financial Statements—continued

15.Contingentliabilities—continued

144 HomeREITplc | AnnualReport | Fortheyearended31August2022

1. Afixedfeeof£3,000,000fromthecommencement

oftheTransitionPeriodandasincreasedat

eachsuccessiveanniversarybythelowerof

CPI,RPIand5%;

2. Avariablefeefordisposalofinvestmentsof£422per

bed,asdefined;and

3. Avariablefeeof10%ofrentcollectedbytheGroup

fromitsinvestments.

Themaximumamountpayableinanyyearunder

thisagreementis£5,000,000(whichisincreasedin

year2totheextentthattotalfeesinyear1fallbelow

£5,000,000.)InPhase2,theCompanyshallpayafee

of0.75%ofNAV,subjecttoaminimumannualfeeof

£3,000,000,whichincreasesannuallyatthelowerof

CPI,RPIor5%(fromthecommencementoftheofthe

TransitionPeriod.)

AIFM

UnderthetermsoftheInvestmentManagement

Agreementdated22September2020,Alvarium

FundManagers(UK)Limitedwasappointedasthe

AlternativeInvestmentFundManager(AIFM)tothe

Company.TheAIFMactsasinvestmentmanagerwith

responsibilityforthemanagementoftheassetsofthe

Companyinaccordancewiththeinvestmentpolicy

oftheCompanyandthepoliciesanddirectionsofthe

Boardandisregulatedintheconductofinvestment

businessbytheFCA.AlvariumFundManagers(UK)

LimitedisasubsidiaryofAlvariumInvestments

Limited,theultimateparentcompanyoftheBroker

andtheInvestmentAdvisertotheCompany.

UndertheInvestmentManagementAgreement,

theAIFMreceivedafeeof£40,000perannum.No

performancefeewaspayabletotheAIFMasat

31August2022and2021.TheAIFMagreementwith

AlvariumFundManagers(UK)Limitedwasterminated

on21August2023.Onthesameday,AEWUK

InvestmentManagementLLPwasappointedasAIFM.

CompensationforitsroleasAIFMisacomponentof

theInvestmentAdvisoryfeediscussedabove.

CorporateBroker

AlvariumSecuritiesLimited(“AlvariumSecurities”)

wasappointedon22September2020toprovide

corporatebrokingservicestotheCompany.Alvarium

SecuritiesisasubsidiaryofAlvariumInvestments

Limited,theultimateparentcompanyoftheAIFMand

theInvestmentAdviser.AlvariumSecuritieswaspaid

anannualretainerfeeintheamountof£50,000by

theCompany.Duringtheyearending31August2022,

theCompanyincurredadditionalfeesof£10,413,000

(2021:£3,878,000)fromAlvariumSecuritiesinrelation

toequityraisesinSeptember2021andMay2022.In

2021thesefeeswereinrelationtotheinitialpublic

offeringandsubsequentadmissiontotheLondon

StockExchange.Thesecostshavebeentreated

asareductioninequityasshareissuecosts.On

8February2023,AlvariumSecuritiesresigned.

On1November2022,theCompanyannouncedthatit

hadappointedJefferiesInternationalLimitedasJoint

CorporateBrokerinexchangeforanannualretainer

of£50,000.On1February2023,theagreement

wasterminated.

On5July2023,theCompanyappointedLiberum

CapitalLimitedascorporatebrokerandCapital

MarketsAdvisor(“CMA”).Liberumarepaidanannual

corporatebrokingfeeof£150,000untiltheoneyear

anniversaryoftheCompanybeingreadmittedto

tradingonthemainmarketoftheLondonStock

Exchange(“readmission”).Afterthatdate,Liberumwill

bepaidanannualretainerof£100,000,withadditional

feesofupto£50,000dependingoncertaincriteria.

LiberumwasinitiallyduetobepaidaCMAfeeof

£200,000until31December2023.WhenReadmission

didnotoccurby31December2023,theannualretainer

wasincreasedto£240,000.

Directors

DirectorsareentitledtoreceiveafeefromtheGroupat

suchrateasmaybedeterminedinaccordancewiththe

Articles.Theinitialfeesare£36,000foreachDirector

and£50,000fortheChairperannum.TheChairofthe

AuditCommitteereceivesanadditionalfeeof£5,000

perannum.Duringtheyearended31August2022,

Directors’feesof£176,000(31August2021:£150,000)

werepaid,ofwhichnonewaspayableatthe

31August2022and2021.

Asat31August2022,theDirectorshadthe

followingshareholdingsintheGroupallofwhichare

beneficiallyowned.

Numberof

Sharesheld

%ofShares

inissue

LynneFennah 55,000 0.007

SimonMoore 56,000 0.007

MarleneWood 30,000 0.004

PeterCardwell 10,000 0.001

TheaboveDirectorswereappointedon3September

2020.Onincorporationon19August2020William

SaundersandAlanSauvainwereappointedas

Directors,andsubsequentlyresignedasDirectors

on3September2020.

17.Postbalancesheetevents

PostbalancesheeteventsoftheCompanyareincluded

inNote26totheConsolidatedFinancialStatements.

18.Ultimatecontrollingparty

ThereisnoultimatecontrollingpartyoftheCompany.

Financial Statements

Notes to the Company Financial Statements—continued

16.Relatedpartytransactions—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 145

Additional information

146 Appendix1–KeyRegulatoryNewsServicesAnnouncements

1September2021to10October2024

152 Appendix2–GovernanceandInternalControl

155 Glossary

160 Companyinformation

146 HomeREITplc | AnnualReport | Fortheyearended31August2022

Key Regulatory News Service Announcements 1 September 2021 to 10 October 2024

Date Title Key

15-Sep-21

Interim Dividend Declaration

0.84penceperOrdinaryShareinrespectoftheperiodfrom1May2021to31August2021.

From1September2021,theCompanyistargetinganannualdividendof5.5penceper

OrdinaryShare.

23-Sep-21

Results of Oversubscribed Initial Issue

Grossproceedsof£350mthroughanInitialIssueofNewOrdinarySharesatanissue

priceof109pence.

18-Oct-21

£166.4m of acquisitions

Acquired23portfolioscomprising366propertiesforanaggregatepurchase

price*of£166.4m.

PROP

11-Nov-21

Acquisitions

Acquired19portfolioscomprising173propertiesforanaggregatepurchase

price*of£62.6m.

PROP

02-Dec-21

New 15-year term £130m debt facility agreed

Newfacilitysecuredona15-yeartermwithalowfixedall-inrateof2.53%perannum.

17-Dec-21

Further £60m deployed following equity issue – Acquisitions

Acquired20portfolioscomprising89propertiesforanaggregatepurchase

price*of£60.2m.

PROP

25-Jan-22

Net proceeds of £350m Equity Issue fully deployed – Acquisitions

Acquired240additionalpropertiesforanaggregatepurchaseprice*of£55.1m.

PROP

27-Jan-22

Dividend declaration

Interimdividendof1.37penceperOrdinaryShare.

10-Mar-22

Investment Adviser Update

JamieBeale,partofAHRA’smanagementteamtostepdownforpersonalreasons.

GarethJones,whohasactedasFundManagerandCFO,remainsandwillcontinue

tobesupportedbythewiderteamatAHRA,includingCharlotteFletcherasHead

ofTransactions.

05-May-22

Home REIT acquires 156 properties for £42.4m

Acquired156propertiesforanaggregatepurchaseprice*of£42.4m.

PROP

05-May-22

Interim Dividend Declaration

Interimdividendof1.37penceperOrdinaryShare.

27-May-22

Result of Oversubscribed Placing

Grossproceedsof£263mthroughanissueofNewOrdinarySharesatanissueprice

of115pence.

04-Jul-22

Home REIT adds 998 beds to portfolio for £92.3m

Acquired183propertiesforanaggregatepurchaseprice*of£84.9m.

Inaddition,33propertiesrecentlyacquiredforanaggregatepurchaseprice*of£7.4m.

PROP

04-Aug-22

Interim Dividend Declaration

Interimdividendof1.38penceperOrdinaryShare.

05-Aug-22

£85.1m of acquisitions and Investment Adviser update

Acquired199propertiesforanaggregatepurchasepriceof£85.1m.

AlexBakerhasjoinedGarethJonesandCharlotteFletcherwithinthesenior

managementteamatAHRA.

PROP,IA

13-Sep-22

Home REIT acquires 158 properties for £57.4m

Acquired158propertiesforanaggregatepurchasepriceof£57.4m.

PROP

Additional information

Appendix 1

 HomeREITplc | AnnualReport | Fortheyearended31August2022 147

Date Title Key

01-Nov-22

Trading update

CircleHousing,atenantwasplacedintovoluntaryadministrationinJuly2022.

AHRAUpdate:appointedJamesSnapeasCFO;GarethJonessteppingbackfromhis

roleasfundmanagerwhilsthetakesaperiodofleaveforhealthreasons.Charlotte

Fletcherremainsasco-fundmanagerwhilstAlexBakerhasbeenpromotedfrom

assistantfundmanagertoco-fundmanager.

T,IA

23-Nov-22

Response to inaccurate short selling report

RTP

25-Nov-22

Full year results delay

TheCompanyisrequiredtodelaypublicationofitsResultswhileBDOcompletesan

additionalverificationexercise.

RES

30-Nov-22

Full response to short selling report

RTP

12-Dec-22

Dividend announcement and further update

Interimdividendof1.38penceperOrdinarySharedeclaredandtakesthetotal

dividendspaidanddeclaredinrespectofthefinancialyearended31August2022to

5.5penceperOrdinaryShare.TheCompany’sauditorBDOiscarryingoutenhanced

auditprocedures.

SA,RES

03-Jan-23

Temporary share suspension

ThelistingoftheCompany’sordinaryshareshasbeentemporarilysuspendedwith

effectfrom7.30a.m.on3January2023.

04-Jan-23

Statement re Alvarium Home REIT Advisors Limited

AlvariumRELimited(nowcalledAlTiRELimited)enteredintoanagreementtosell

AHRAtoanewlyformedentityownedbythemanagementofAHRAfundedbywayof

apromissorynote.

12-Jan-23

Response to media reports

TheCompanyhasseenageneraldeteriorationinitsrentcollectionpositionandneither

BigHelpGroupnorNobleTreeFoundationhaspaidrentcontractuallydueforthe

quarterto30November2022.

19-Jan-23

External Property Manager

AHRAhasenteredintoanagreementwithSimpacttoaccelerateandfurthersupport

AHRA’songoingassetmanagementandmonitoringprogramme.

25-Jan-23

Response to media reports – Tenant update

LotusSanctuaryhasnotpaidanyrentforthequarterto30November2022.

16-Feb-23

Update, Review of Strategic Options, Possible Sale

AlvariumSecuritiesresignedasbrokerandtheagreementwithJefferieswas

terminated.SmithSquarePartnersLLPappointedasFinancialAdviserson

13February2023.

ForthequarterendingNovember2022,only23%ofrenthasbeencollected.

TheBoardisconsideringallstrategicoptionsincludingthepossiblesaleofthe

Company.TheCompanyreceivedanunsolicitedapproachfromBluestarGroupLimited.

A&MinstructedtoinvestigateallegationsofwrongdoinginearlyJanuary2023.

SP,SN,IA

06-Mar-23

Tenant update

GenLivUKCICandLotusSanctuaryCIC,tenantsmakingup5.7%and12.5%

respectivelyoftheCompany’sannualrentroll,haveenteredintoacreditors’voluntary

liquidation(“CVL”).

15-Mar-23

Update on Review of Strategic Options

TheBoardisconsideringallitsoptionsfortheongoingmanagementoftheCompany’s

assets,and,consequently,isinitiatingaprocesstoconsidercandidatestoactas

investmentadviser.

TheBoardcontinuestoexplorealloptions,includinganorderlyrealisationofsomeorall

ofitsassetsand/orasaleoftheCompanytomaximisevalueforshareholders.

IA,SN

Additional information

Appendix1—continued

148 HomeREITplc | AnnualReport | Fortheyearended31August2022

Date Title Key

16-Mar-23

Extension of PUSU deadline

TheTakeoverPanelhasconsentedtoanextensiontothedeadlinebywhichBluestaris

requiredeithertoannounceafirmintentiontomakeanofferorannouncethatitdoes

notintendtomakeanoffer.

SN

05-Apr-23

Further Update on Review of Strategic Options

TheBoardcontinuestoexploreallavailableoptions,andisgivingparticularconsideration

tothepotentialsaleinthenear-termofalimitednumberofproperties.

TheGrouphasagreedtorepay£30mofdebt.TheLenderhasalsoprovidedtheGroup

withaccesstoadditionalfundsforgeneralworkingcapitalpurposes.

TheBoardhasrecentlyreceivedaninitialdraftofA&M’sreportonits

investigationfindings.

IA,SN,F

13-Apr-23

Further extension of PUSU deadline

TheTakeoverPanelhasconsentedtoanextension.

SN

11-May-23

Response to announcement by Bluestar

TheBoardbelievesthatprogressingBluestar’sproposalatthistimeisunlikelyto

maximisevalueforshareholders.TheCompanyisnownolongerinanofferperiodunder

theTakeoverCode.

SN

23-May-23

Appointment of AEW

TheBoardhasenteredintoanagreementwithAEWunderwhich,effectiveimmediately,

AEWwillactastheCompany’sPropertyAdviserandwillbecometheInvestment

ManagerandAIFMtotheCompany.

30-May-23

Update on Internal Investigation

A&MhasdeliveredtotheCompanyadetailedreport(“A&MReport”).TheCompany

reservesallofitsrightsinrespectofthemattersreferredtointheA&MReportand

doesnotwishtoprejudiceitspositioninrespectofanyfurtheractionwhichmayfollow.

Accordingly,andmindfulofitsobligations,thereisalimitontheinformationthatthe

Companyfeelsthatitisappropriatetodisclosepublicly.

Keyfindings:

• ArrangementsfortherefurbishmentofpropertieswerenotbroughttotheBoard’s

attentionbytheInvestmentAdviser.

• Settlementofrentarrearsandarrangementswithtenantswerenotbroughttothe

Board’sattentionbytheInvestmentAdviser.

• OngoingmonitoringoftenantswaslimitedbytheInvestmentAdviser.

• InformationprovidedtoTheGoodEconomybytheInvestmentAdviser

wasinaccurate

28-Jul-23

Notice of General Meeting

CircularpublishedcontainingdetailsofproposedamendmentstotheCompany’s

OriginalInvestmentPolicy.

TheCompanyhasappointedJLLasitsnewpropertyvaluer.

SN,INV,SP

02-Aug-23

Tenant update

RedemptionProjectCIC,atenantmakingup11%ofrentdemandedinJune,has

enteredintoaCVL.

SerenitySupportCIC,atenantmakingup1%ofrentdemandedinJune,hasalso

enteredintoaCVL.

04-Aug-23

Property Sales

Exchangedonthesaleof40propertiesforgrossproceedsof£4.8m.

PROP

21-Aug-23

Result of General Meeting

ShareholdersapprovedtheAmendedInvestmentPolicy.

AEWhasbeenappointedastheCompany’sAIFMandInvestmentManagerwith

immediateeffect.

INV,IA

Additional information

Appendix1—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 149

Date Title Key

23-Aug-23

Transfer of sub-leases

100leasesofpropertiesintheOne(Housing&Support)CICportfoliowere

surrendered,withtheCompanyassumingdirectleaseswiththeexistingsub-tenant,

MearsLimited.

04-Sep-23

Monthly Update

JLLtoundertakevaluationsasat31August2022,28February2023and31August2023.

VibrantEnergyMattersappointedtoinspectall2,473properties.

Revisedaccountingpoliciesforleaseincomerecognitionandacquisitionaccountingare

beingfinalised.

TheBoardhasinitiatedaformalandphasedsuccessionprocess.

SP,RES,D

07-Sep-23

Tenant update

SupportiveHomesCIC,atenantrepresenting11.3%ofrentdemandedinAugust2023,

hasenteredintoaCVL.

22-Sep-23

Surrender of leases and transfer of sub-leases

Redemptionhasagreedtosurrenderitsleaseson146propertieswithMears

Limitedbecomingadirecttenantfor77propertiestheremainingleaseterm.Forthe

remaining69properties,theCompanyhasagreedflexibleleaseswiththeCommunity

AccommodationGroupandappointedMyshonLimitedtomanagetheproperties.

29-Sep-23

Property Sales

Exchangedonthesaleof137propertiesforgrossproceedsof£22.8m.

PROP

02-Oct-23

Monthly Update

Repaymentof£3.8mofdebt.

06-Nov-23

Monthly Update

Exchangedonthesaleofafurther14propertiesfor£9.0mon2November2023.

PROP

09-Nov-23

Property Sales

Exchangedonthesaleof153propertiesforgrossproceedsof£24.3m.

PROP

28-Nov-23

Surrender of leases

AgreementwithEdenSafeforthesurrenderofitsleaseson38properties.The

CompanywillbeappointingCentrickasPropertyManagertotheseproperties.

05-Dec-23

Monthly Update

MarigoldHousing,whichleases15propertiesrepresenting0.9%ofrentdemandedin

November,enteredintoliquidationon15November2023.

Repaymentof£17.9mofdebt.

TheCompanyandtheLenderhaveagreedanadditionalfeeof5.00%perannum

chargedontheaggregateoutstandingloanbalancesonadailybasisfrom

30November2023.Theadditionalfeeispayableattheearlierof28June2024oronfull

repaymentoftheloans.

T,F

20-Dec-23

Property Sales

Overlastfivedaysexchangedonthesaleof80propertiesforgrossproceedsof£16.2m.

PROP

20-Dec-23

Property Valuation and Portfolio Update

JLLhasissueddraftvaluationreportasat31August2023,28February2023and

31August2022.

Thereductioninthepropertyvaluationisprincipallyaresultofare-assessmentofthe

qualityoftheassetsandofthecovenantstrengthofthetenants.

PROP

08-Jan-24

Monthly Update

Repaymentof£25.6mofdebt.

Additional information

Appendix1—continued

150 HomeREITplc | AnnualReport | Fortheyearended31August2022

Date Title Key

18-Jan-24

Directorate Change

AppointmentofMichaelO’DonnelltosucceedLynneFennahasIndependentNon-

ExecutiveChairwithimmediateeffectwithLynneremainingontheBoardtoprovide

continuity.TheremainingmembersoftheBoardunderstandthatshareholderswould

liketoseearefreshoftheBoardandsotheywillstepdownonpublicationonthe

Company’sfinancialresults.

24-Jan-24

Property Sales

Exchangedonthesaleof103propertiesforgrossproceedsof£6.6m.

PROP

05-Feb-24

Monthly Update

Repaymentof£9.9mofdebt.

13-Feb-24

Notification of Investigation by the FCA

TheCompanyhasbeennotifiedbytheFCAofitscommencementofaninvestigation

intotheCompany,coveringtheperiodfrom22September2020to3January2023.

15-Feb-24

Property Sales

Exchangedonthesaleof117propertiesforgrossproceedsof£5.6m.

PROP

05-Mar-24

Monthly Update

Repaymentof£13.7mofdebt.

TheCompanyintendstobringlegalproceedingsagainstthosepartiesitconsidersare

responsibleforwrongdoing.

F,L

28-Mar-24

Property Sales

Exchangedonthesaleof63propertiesforgrossproceedsof£6.1m.

PROP

02-Apr-24

Directorate Change

AppointmentofPeterWilliamsasSeniorIndependentNon-ExecutiveDirector.

04-Apr-24

Monthly Update

Repaymentof£5.1mofdebt.

18-Apr-24

Update on Potential Litigation

TheCompanyhasrecentlyissuedacomprehensiveresponsetoapre-actionletterof

claimreceivedfromHarcusParker,onbehalfofcertainshareholders.

TheCompanyrecentlyissuedpre-actionlettersofclaimtoAlvariumFMandAlTiRE**.

L,IA

19-Apr-24

Property Sales

Exchangedonthesaleof65propertiesforgrossproceedsof£15.9m.

PROP

07-May-24

Monthly Update

Repaymentof£3.9mofdebt.

10-May-24

Property Sales

Exchangedonthesaleof76propertiesforgrossproceedsof£14.6m.

PROP

29-May-24

Agreement Secured For Surrender Of Leases

AgreementwithBigHelpforthesurrenderofitsleasesonover600properties.

04-Jun-24

Tenant Update

NobleTreeFoundationLimited(“NobleTree”)atenantof143propertiesand

representingc.7%ofrentdemandedinApril,hasenteredintoadministration.

05-Jun-24

Monthly Update

Repaymentof£8.3mofdebt.

TheCompanyhasnowissuedapre-actionletterofclaimtoAHRA.

07-Jun-24

Directorate Change

AppointmentofRodDayasIndependentNon-ExecutiveDirector.Rodwillinduecourse

ChairtheAuditCommittee.

Additional information

Appendix1—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 151

Date Title Key

17-Jun-24

Update on Re-financing

TheBoardhasconcludedthatitwillnotbeabletosecureare-financingoftheexisting

facilitywithScottishWidows,ontermsthatitcouldrecommendtoshareholders,

despiteextensiveandadvanceddiscussionswithapotentiallender.

21-Jun-24

Property Sales

Exchangedonthesaleof133propertiesforgrossproceedsof£11.36m.

PROP

28-Jun-24

Publication of Accounts

FurtherdelaytothepublicationofAnnual&InterimReportsnowexpectedfor

August2024.

RES

03-Jul-24

Monthly update

Repaymentof£17.1mofdebt

Theexistinglenderhasrevisedthetermsoftheadditionalfeechargedonthe

outstandingloanamountandthe5%feewillincreaseto7%from1July2024until

thefullrepaymentoftheloan.TheLenderexpectstobefullyrepaidnolaterthan

31December2024.

16-Jul-24

Proposed managed wind-down strategy

TheCompanyannouncedtheproposedadoptionofamanagedwind-downstrategy

pursuanttowhichtheassetsoftheCompanywouldbesoldwiththeobjectivesof

optimisingremainingshareholdervalueandrepayingtheCompany’sloanbalance.

INV

02-Aug-24

Property Sales

Exchangedonthesaleof226propertiesforgrossproceedsof£26.5m.

PROP

05-Aug-24

Monthly Update

Repaymentof£8.5mofdebt.

LynneFennahhasnotifiedtheCompanyofherintentiontostepdownfromtheBoard

onthepublicationofthe2023financialresults,butwillcontinuetoassisttheCompany,

whennecessary,onhistoriclegalandFCAmatters.

F,D

08-Aug-24

Tenant Update

One(Housing&Support)CIC,atenantof110propertiesandrepresentingc.7%of

propertiesasat31July2024,hasenteredintoadministration.

14-Aug-24

Agreement Secured For Surrender Of Leases

AgreementwithMansitHousingforthesurrenderofitsleaseson68properties.

23-Aug-24

Notice of General Meeting

CircularpublishedcontainingdetailsofproposedamendmentstotheCompany’s

AmendedInvestmentPolicy.

SN,INV

30-Aug-24

Property Sales

Exchangedonthesaleof101propertiesforgrossproceedsof£18.5m.

PROP

05-Sep-24

Monthly Update

Repaymentof£12.2mofdebt.

16-Sep-24

Result of General Meeting

ShareholdersapprovedtheordinaryresolutionfortheManagedWind-Downstrategy.

SN,INV

30-Sep-24

Property Sales

Exchangedonthesaleof200propertiesforgrossproceedsof£36.9m.

PROP

* Purchasepriceincludingacquisitioncosts

** Correction:theRNSannouncementdated18April2024referredtoAlTiRELimitedastheCompany’sformerinvestmentadviser’s“appointedrepresentative”insteadof“principal”.

Key:

D Directors

F FinancingUpdate

IA InvestmentAdviser/AIFM/InvestmentManager

INV InvestmentPolicy

L PotentialLitigation/FCAInvestigation

PROP Property–Acquisition,Disposal,Valuation

RES Resultsandtradingupdates

RTP ResponsetoThirdPartyReports

SA ShareholderActivity–Dividend,ShareIssuance

SN ShareholderNotice–AnnualGeneralMeeting.GeneralMeeting

SP ServiceProvider

T TenantUpdate

Additional information

Appendix1—continued

152 HomeREITplc | AnnualReport | Fortheyearended31August2022

Governance and Internal Control

Overview of the Company

TheCompanyisanexternallymanagedrealestate

investmenttrustthathasnoemployees,onlynon-

executivedirectors.Thenon-executiveBoardis

responsibleforleadingandcontrollingtheGroupand

hasoverallauthorityforthemanagementandconduct

oftheCompany’sbusiness,strategyanddevelopment.

Inordertofulfiltheseobligations,theBoardappointed

AEWastheInvestmentManagerandAIFMtoprovide

investmentmanagementservices.

TheDirectorshavecontractuallydelegatedthe

managementoftheinvestmentportfolio,the

registrationservices,administrationservicesandother

servicestothirdpartyserviceprovidersandreliance

isthereforeplacedontheinternalcontrolsofthose

serviceproviders.AlthoughtheCompany’sexecutive

managementfunctionisoutsourced,itremainsthe

responsibilityoftheBoardto:

i. assesswhethertheoutsourcedfunctionsarebeing

performedadequately;

ii. ensurethattheCompanyhasadequate

resources;and

iii. establishprocedurestomonitortheperformance

ofthirdpartiesperformingtheoutsourced

functions.TheBoardensuresthatthereareclear

financialreportinglinesandaccountability,with

segregationofduties.

Corporate Governance

TheBoardisultimatelyresponsibleforthereviewing

theeffectivenessoftheCompany’soverallinternal

controlarrangementsandprocesses.TheBoardis

responsiblefortheongoingprocessforidentifying,

carryingoutarobustassessmentof,andmanagingand

mitigatingtheprincipalrisksfacedbytheCompany.

TheprincipaldocumentationfortheGovernanceand

InternalControlistheFinancialPositionandProspects

Procedures(“FPPP”)memorandum.TheFPPP

detailsproceduresfortheDirectorstomakeproper

judgementsonanongoingbasisastothefinancial

positionandprospectsoftheCompany.

Theriskmanagementprocessandsystemsof

internalcontrolaredesignedtomanageratherthan

eliminatetheriskoffailuretoachievetheCompany’s

investmentobjectives.Suchsystemscanonlyprovide

reasonable,notabsolute,assuranceagainstmaterial

misstatementorloss.

Theinternalfinancialcontrolsystemsaimtoensure

themaintenanceofproperaccountingrecords,the

reliabilityofthefinancialinformationuponwhich

businessdecisionsaretaken,reportsarepublishedand

theassetsoftheCompanyaresafeguarded.

Thekeyproceduresincludereviewofmanagement

accounts,monitoringofperformanceoftheCompany

andAEWatquarterlyBoardmeetings,segregation

oftheadministrativefunctionfrominvestment

management,maintenanceofappropriateinsurance

andadherencetophysicalandcomputersecurity

procedures.

TheBoardmeetsataminimumquarterlyandmore

oftenifrequired.CurrentlytheBoardholdsmonthly

reviewmeetingswithAEW.Quarterly(andcurrently

monthly)reviewmeetingsfollowstandingagendas

withothermattersconsideredappropriatefrom

timetotime.

Board Responsibility

TheBoardhasadoptedaformalscheduleofmatters

reservedfordecisionbytheBoard,acopyofwhich

isavailableontheCompany’swebsite.These

mattersinclude:

i. responsibilityforthedeterminationofthe

Company’sinvestmentobjectiveandpolicy

includinganyinvestmentrestrictions(subjecttoany

necessaryshareholderapprovals);

ii. overallresponsibilityfortheGroup’sactivities,

includingthereviewofinvestmentactivity,gearing,

performanceandsupervisionofAEWandotherkey

serviceproviders;

iii. approvalofAnnualandHalf-YearlyReportsand

FinancialStatementsandaccountingpolicies,

prospectuses,circularsandothershareholder

communications;

iv. raisingnewcapitalandapprovaloffinancing

facilities;

v. approvaloftheCompany’sdividendpolicyand

approvalofdividends;

vi. approvaloftheNAVoftheGroup;

vii.Boardappointmentsandremovals;

viii.appointmentandremovaloftheInvestment

Manager,AIFM,InvestmentAdviser,Auditorandthe

Company’sotherkeyserviceproviders;

ix. approvalofmaterialcontractsenteredinto,varied

orterminatedbytheCompany;

x. corporategovernance,riskmanagementframework

andinternalcontrol;and

xi. compliancewithtaxandotherregulations.

Additional information

Appendix2

 HomeREITplc | AnnualReport | Fortheyearended31August2022 153

TheAmendedInvestmentPolicydetailstheparameters

foracquisitionanddisposalofinvestmentstobe

undertakenbyAEW.Anyinvestmenttransactionsto

beundertakenoutsidetheseparametersandmaterial

contractsrequireBoardapproval.Acquisitionsareno

longerpermittedundertheNewInvestmentPolicy.

Internal Control Assessment Process

Reviewsofinternalcontrolsareundertakenregularly

inthecontextoftheCompany’soverallinvestment

objective.TheBoardhascategorisedriskmanagement

controlsunderthefollowingkeyheadings:investment

strategyandoperations;realestatesector;risks

relatingtoShares;engagementswiththirdparty

serviceproviders;taxation;accounting,operational

andfinancialreporting;governanceandregulatory

compliance;andemergingrisksincludingclimaterisk.

InarrivingatitsjudgementofwhatriskstheCompany

faces,theBoardhasconsideredtheCompany’s

operationsinlightofthefollowingfactors:

i. thenatureandextentofriskswhichitregardsas

acceptablefortheGrouptobearwithinitsoverall

businessobjective;

ii. thethreatofsuchrisksbecomingreality;

iii. theCompany’sabilitytoreducetheincidenceand

impactofriskonitsperformance;and

iv. thecosttotheCompanyandbenefitsrelated

tothereviewofriskandassociatedcontrolsof

theCompany.

Ariskmatrixisinplaceagainstwhichtherisks

identifiedandthecontrolstomitigatethoseriskscan

bemonitored.Therisksareassessedonthebasisof

thelikelihoodofthemhappening,theimpactonthe

businessiftheyweretooccurandtheeffectivenessof

thecontrolsinplacetomitigatethem.Thisriskregister

isreviewedatleasteverysixmonths.

Internal Audit Consideration

TheBoardkeepstheneedforaninternalauditfunction

underperiodicreview.Allkeyserviceprovidersreport

atleastannuallyregardingtheirinternalcontrols

includingprovisionoftheirISAE3402,orequivalent

reports.TheBoardhasconsideredthecost-benefitof

engagingindependentreviewofkeyserviceproviders

andconcludedtheexistingsystemofmonitoringand

reportingbythird-partyserviceprovidersremains

appropriate.

Review of Governance and Internal Control

TheBoardhasconsidereditsriskmanagement

framework,internalcontrolsystems,proceduresand

processes.TheFPPPwasupdatedinOctober2023with

minoramendmentstoreflecttheappointmentofthe

newInvestmentManagerandAIFMandtheAmended

InvestmentPolicy,furtheramendmentsweremade

inSeptember2024includingdetailsofthefinalised

accountingpolicies,newBoardmembersandupdateof

theriskregisterfortheNewInvestmentPolicy.

TheBoardandtheAuditCommittee,hasundertaken

arobustassessmentandreviewoftheemergingand

principalrisksfacingtheCompanyandtheGroup,

togetherwithareviewofanynewriskswhichmayhave

arisen,includingthosethatwouldthreatenitsbusiness

model,futureperformance,solvencyorliquidity.The

riskregisterhasandcontinuestoberegularlyupdated

(mostrecentlyinOctober2024)andwassubstantially

amendedduetotheincreasedriskandactivitiesofthe

GroupduringtheStabilisationPeriodandsubsequently

therevisedrisksfollowingshareholderapprovalofthe

ManagedWind-Down.

Duetoinformationthatcametolightpostperiodend

whichwasincontradictiontoreportingpreviously

providedtotheBoardbyAHRAandAlvariumFM

duringtheperiod,togetherwithlowrentcollection

andfurtherevidenceofmaterialinformationbeing

withheldfromtheBoard,theBoardhasconsidered

itsriskmanagementframework,internalcontrol

systems,proceduresandprocesses.Asaresultof

thatsignificantandmaterialinformation,thefollowing

amendmentsoftheriskmanagementframeworkand

internalcontrolssystemshavebeenmade:

• Rigorousselectionprocessfortheappointment

ofanewInvestmentManagerandAIFM;

• InternalinspectionofpropertiesbyVibrant,JLL

andotherthirdpartiestoascertaincondition;

• ProvisionofacontactaddressfortheChairon

theGroup’swebsiteandrequestforkeyservice

providerstoproviderelevantemployeescontact

detailsoftheChairtoraiseconcerns,withthe

Group’swhistleblowingpolicyupdatedaccordingly;

• Health&SafetyconsiderationwithAEWhaving

establishedaHealth&SafetyCommitteewhich

regularlyreportstotheBoard.Health&safetyisa

standarditemontheBoardagenda’srecognising

thenewleasingmodelsuchthatleasesarenolonger

limitedFRIleasesandtheGrouphavingleases

(ASTs)withoccupiersduringtheStabilisationPeriod

andtheManagedWind-Down;

• Boardapprovalofarevisedexpensepaymentpolicy;

and

• a13weekcashflowiscurrentlymaintainedand

updatedregularlybyAEWastheDirectorsseekto

stabilisethefinancialpositionoftheGroupduring

theStabilisationPeriodandtheManagedWind-

Down.

Additional information

Appendix2—continued

154 HomeREITplc | AnnualReport | Fortheyearended31August2022

Investment Manager

TheInvestmentManagerisappointedtoactasAIFM

oftheCompanywithresponsibilitytomanagethe

assetsoftheCompanyinitiallyinaccordancewith

theAmendedInvestmentPolicyoftheCompanyand

subjecttotheoverallpoliciesanddirectionsofthe

Board.From16September2024,theNewInvestment

Policyapplies.

AEW’skeyresponsibilitiesincludethefollowing:

i. providingAIFMmanagementfunctions

includingportfoliomanagementandrisk

managementservices;

ii. managingtheinvestmentandre-investmentof

theassetsoftheGrouponadiscretionarybasisin

accordancewiththeAmendedInvestmentPolicy/

NewInvestmentPolicyandinvestmentrestrictions

andwithaviewtoachievingtheinvestment

objectiveoftheCompany;

iii. managingtheborrowingsandgearinginaccordance

withpoliciesandguidelinesandmanaging

workingcapitalandliquiditywithintheGroup’s

investmentportfolio;

iv. monitoringtheperformanceoftheadministrator,

thevaluerandthedepositary;

v. seekingandevaluatingpotentialinvestmentsbythe

Group,includingcarryingoutfinancialevaluation

andduediligenceandprovidingwrittenevaluations

ofthefinancial,structuralandlegalissuesrelevant

tothepotentialinvestments;

vi. performingduediligenceonapprovedinvestments;

vii.monitoringandanalysingtheperformanceofthe

Group’sinvestments;and

viii.performingcreditanalysispriortomakingan

investmentandperformingongoingtenant

creditanalysis(includingcheckingthatrenthas

beenreceivedandfollowingupwithtenantson

unpaidamounts).

AEWreportskeymattersatthequarterlyBoard

meetingsincludingbutnotlimitedto:

• FinancialpositionoftheGroup.

• PerformanceoftheGroup.

• Acquisitionanddisposalofinvestments.

• Investmentrestrictionsandcompliance.

• Debtleverageandcovenantanalysis.

• Tenantandassetupdateincludingrelevant

informationontenantssuchasoccupancy,

condition,capexrequirements,rentcollections,

creditanalysis,andfinancialviability.

• Propertymanagersandkeythird-party

appointments.

• Reportonpropertiesunderseparatemanagement

agreements.

• DuringtheStabilisationPeriodandtheManaged

Wind-Down,a13weekcashflow.

• InvestmentManagerresourcingandthird-party

providers.

• Health&Safety–materialmatters.

• Anyothermaterialmattersthatshouldbebrought

totheBoard’sattention.

TheInvestmentManagerhasanestablishedtrack

recordofsuccessfullyinvestinginUKrealestate,

foundedonarobustanddisciplinedinvestmentand

assetmanagementprocess.AEWoperatesamulti-

layeredgovernanceframeworkwithchallengeat

everylevel.Theunderlyingprincipleoftheprocess

istoensurethatclientobjectivesareoptimisedina

controlledandriskmanagedenvironment.

Asasubsidiaryofoneoftheworld’slargestbanking

groups,AEWhasrigorouspoliciesandprocessesin

placetoensurecompliancewithallrelevantregulations

andlegislation.AEWparticipatesinthewidergroup’s

EnterpriseComplianceandRiskProgrammeoperated

byNatixisInvestmentManagers(“NatixisIM”),which

providesacomprehensivecomplianceandrisk

managementframeworkandgovernancestructure

basedonthethreelinesofdefencemodel.The

principleofthethreelinesofdefencereliesonamulti-

tieredapproach:

• Firstlineofdefence:riskmanagementcontrolsare

integratedintotheoperatingprocessesformalised

inclearlydefinedpoliciesandprocedures.Teams

arealsorequiredtoparticipateinrelevanttrainings

andescalateanypotentialrisk-relatedissuesor

incidentstothesecondlineofdefence.

• Secondlineofdefence:appropriatereviewand

challengeoffirstlineactivities.Thisincludes

controlcarriedoutbythecompliancedepartment

throughthepermanentcontrolprogramme.The

ComplianceOfficerandtheRiskManagerbothhave

additionaldualreportinglinesintothelocalCEOand

AEWGroupcounterpartsandintotherespective

NatixisIMChiefComplianceOfficerorChiefRisk

Officer.

• Thirdlineofdefence:Internalauditundertakenwith

independentNatixisIM’scompliancedepartment

andauditinspectionsundertakenbyNatixisandthe

GroupeBPCE’sauditfunctions.

Additional information

Appendix2—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 155

Administrator

ApexFundandCorporateServices(UK)Limited.The

AdministratorisresponsibleforcalculatingtheNet

AssetValueoftheOrdinarySharesinconsultationwith

theAIFMandtheInvestmentAdviserorInvestment

ManagerasrelevantandreportingthistotheBoard

AEW

AEWUKInvestmentManagementLLP–Investment

ManagerandAIFMfrom21August2023

AGM

AnnualGeneralMeeting

Aggregators

Thevariouspropertyvendorsthatenteredintoa

settlementagreementdated8December2022

AHRA

AlvariumHomeREITAdvisorsLimitednowin

liquidation–InvestmentAdviseruntil30June2023

AIC

AssociationofInvestmentCompanies.Thisisthetrade

bodyforclosed-endedinvestmentcompanies(www.

theaic.co.uk)

AIC Code

TheAICCodeofCorporateGovernance,aspublishedin

February2019.Aframeworkofbestpracticeguidance

forinvestmentcompanies

AIFM

AlternativeInvestmentFundManager.Theentitythat

providesportfoliomanagementandriskmanagement

servicestotheCompanyandwhichensuresthe

CompanycomplieswiththeAIFMD.TheCompany’s

AIFMwasAlvariumFundManagers(UK)Limiteduntil

21August2023whenAEWUKInvestmentManagement

LLPsucceededit

AIFMD

AlternativeInvestmentFundManagersDirective.

AlTi RE Limited

AHRA’sformerprincipalbyvirtueofanappointed

representativeagreement

A&M

Alvarez&MarsalDisputesandInvestigationsLLP

consultingfirminstructedbyBoardinJanuary

2023toconductaninvestigationintoallegationsof

wrongdoing,includingmattersraisedintheViceroy

ResearchReport

Alvarium FM

AlvariumFundManagers(UK)Limited,theAIFMuntil

21August2023

Alvarium Securities

AlvariumSecuritiesLimited(nowcalledElloraPartners

Limited)providedcorporatebrokingservicestothe

Groupuntil8February2023

Amended Investment Policy

Investmentpolicyapprovedbyshareholderson

21August2023includingaStabilisationPeriod

Articles

ThearticlesofassociationoftheCompany

Assured Shorthold Tenancies (“AST”)

AtypeofresidentialtenancyinEnglandandWales.

Themostcommonformofarrangementthatinvolves

aprivatelandlordorhousingassociation

BDO

BDOLLPistheGroup’sindependentauditor

Big Help

ComprisesBigHelpHomesCIC,BigHelpProject,

CGCommunityCouncil,Dovecot&PrincessDrive

CommunityAssociation,N-TrustHomesCIC,Select

SocialHousing

Broker

Athirdpartythatprovidescorporatefinanceadvisory

servicestotheCompany,includingresearchand

fundraisesupport(includingroadshow,marketingand

book-buildingservices).AlvariumSecuritiesLimited

actedassoleBrokerfrom21September2020until

JefferiesInternationalLimitedwasappointedasJoint

Brokerfrom29October2022.AlvariumSecurities

Limitedresignedon8February2023.Theagreement

withJefferiesInternationalLimitedwasterminatedon

1February2023.LiberumCapitalLimited(nowPanmure

LiberumLimited)wasappointedasCapitalMarkets

Advisoron5July2023andwillactasBrokerfromthe

dateonwhichtheCompany’sordinarysharesarere-

admittedtolistingonthepremiumlistingsegmentof

theOfficialListandtotradingonthemainmarketof

theLondonStockExchange

Capital Markets Adviser

PanmureLiberumLimited(previouslyLiberumCapital

Limited)wasappointedasCapitalMarketsAdviser

on5July2023andwillactasBrokerfromthedateon

whichtheCompany’sordinarysharesarere-admitted

tolistingonthepremiumlistingsegmentoftheOfficial

ListandtotradingonthemainmarketoftheLondon

StockExchange

CIC

ACommunityInterestCompany.Alimitedcompany,

withspecialadditionalfeatures,createdfortheuse

ofpeoplewhowanttoconductabusinessorother

activityforcommunitybenefit,andnotpurelyfor

privateadvantage

Additional information

Glossary

156 HomeREITplc | AnnualReport | Fortheyearended31August2022

Company

Home REIT plc

Company Secretary

ApexFundandCorporateServices(UK)Limited

Company website

www.homereituk.com

Completion

Thepointatwhichownershipofthepropertyislegally

transferredbydatingthetransferdeed

Consolidated Financial Statements

TheGroupaccountswhichincludetheCompanyand

thesubsidiariesincludedinNote25totheConsolidated

FinancialStatements

Covenant strength

Thestrengthofatenant’sfinancialstatusanditsability

toperformthecovenantsinthelease

Creditors Voluntary Liquidation (CVL)

ACreditors’VoluntaryLiquidationisaformalliquidation

processwhichbringsabouttheendofaninsolvent

company.Liquidationinvolvesthewindingupofa

company’saffairs,resultinginthesaleofitsassetsand

dissolution.Companiesmayalternativelyenterinto

administrationwhichfocusesonrescuingthecompany

frominsolvencybyrestructuringitsoperations

andfinances

Deferred Fees

TheDeferredFeeimposedbyScottishWidows

computedas:i)0.5%oftheaggregateamounts

outstandingonthetwoloansateachof31August

2023and30November2023,andii)afeefrom

30November2023computedastheequivalentof5.0%

perannumontheaggregateamountsoutstandingon

thetwoloansascomputedonadailybasis,whichfrom

1July2024increasedfrom5%to7%.Allofthesefees

arepayableuponfullandfinalrepaymentoftheloans

Depositary

ApexDepositary(UK)Limitedappointedtoprovide

cashmonitoring,safekeepingandassetverificationand

oversightfunctionsasprescribedbytheAIFMD

Directors Defendents

TheDirectorswhowereinplacefrominception

to3January2023

Dividend per share

Thetotaldividendpaidandproposedinrespectofa

perioddividedbythenumberofordinaryshareseligible

forthedividendontherecorddate

EPC

EnergyPerformanceCertificate

EPRA

EuropeanPublicRealEstateAssociation,theindustry

bodyrepresentinglistedcompaniesinthereal

estatesector

ERV

EstimatedRentalValue

ESG

Environmental,SocialandGovernance

Exempt Accommodation

Supportedhousingwherethelandlordisanot-for-

profitorganisationandprovidescare,supportand

supervisiontotheclaimant

Exempt Rents

RentsinrelationtoExemptAccommodation

Exchange

Thepointonapropertytransactionatwhichthe

contracttosellisexchangedanddatedandbecomes

legallybinding

Fair Value

Theestimatedamountforwhichaproperty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partieshadeachacted

knowledgeably,prudentlyandwithoutcompulsion

Fair value movement

Anaccountingadjustmenttochangethebookvalue

ofanassetorliabilitytoitsfairvalue

FCA

TheFinancialConductAuthority

FRI lease

Aleasewhichimposesfullrepairingandinsuring

obligationsonthetenant,relievingthelandlordfrom

allliabilityforthecostofinsuranceandrepairs

FPPP

FinancialPositionandProspects

Proceduresmemorandum

FY21

Periodfrom19August2020to31August2021

FY22

Yearended31August2022

FY23

Yearended31August2023

Gross Asset Value

TheaggregatevalueofthetotalassetsoftheCompany

asdeterminedinaccordancewithIFRS

Group

HomeREITplcanditssubsidiaries

Additional information

Glossary—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 157

Groupe BPCE

TheultimateownerofAEW.GroupeBPCEisthe

second-largestbankinggroupinFrance.Groupe

BPCEoperatesintheretailbankingandinsurance

fieldsinFranceviaitstwomajornetworks,Banque

PopulaireandCaissed’Epargne,alongwithBanque

Palatine.Italsopursuesitsactivitiesworldwidewith

theasset&wealthmanagementservicesprovided

byNatixisInvestmentManagers(NatixisIM)andthe

wholesalebankingexpertiseofNatixisCorporate&

InvestmentBanking

Harcus Parker

HarcusParkerLimitedalawfirmspecialisinginclaimant

groupactions,solicitinginvestorsonafullycontingent

basis(‘nowinnofee’)tojointogetherinbringingclaims

againsttheCompanyandotherparties

House of Multiple Occupation (“HMO”)

Rentalpropertywhereatleastthreetenantslive,

formingmorethanonehouseholdsharingcommon

facilities,suchaskitchensandbathrooms

IAA

InvestmentAdvisoryAgreementbetween

theCompany,AlvariumFMandAHRAdated

22September2020

IFRS

UKadoptedinternationalaccountingstandardsin

conformitywiththerequirementsoftheCompanies

Act2006(“AdoptedIFRSs”)

Independent valuer

Anindependentexternalvaluerofaproperty.The

Company’sexternalvaluerwasKnightFrankforthe

periodended28February2022andprior.JLLwas

appointedonthe18July2023toretrospectivelyvalue

propertiesasat31August2022andsubsequentperiods

Investment Adviser

AlvariumHomeREITAdvisorsLimited(“AHRA”)the

appointedinvestmentadviseruntil30June2023

Investment Manager

AEWUKInvestmentManagementLLP(“AEW”),

theappointedInvestmentManagerandAIFMfrom

21August2023

IMA

InvestmentManagementAgreementbetweenthe

CompanyandAlvariumFMdated22September2020

orInvestmentManagementAgreementbetweenthe

CompanyandAEWdated22May2023

IPO

TheadmissiontotradingontheLondonStock

Exchange’sMainMarketofthesharecapitalofthe

CompanyandlistingofOrdinarySharestothe

premiumsegmentoftheOfficialListoftheFCA,

on12October2020

JLL

JonesLangLaSalleLimited,theGroup’sIndependent

Valuerappointedon18July2023tovalueproperties

retrospectivelyasat31August2022and

subsequentperiods

Knight Frank

KnightFrankLLPtheGroup’sindependentvaluerasat

28February2022andpreviousperiods

KPIs

Keyperformanceindicators

Lease incentives/inducements

Incentivesofferedtotenantstoenterintoalease.

Typicallythiswillbeaninitialrent-freeperiod,oracash

contributiontofit-out.Underaccountingrules,the

valueoftheleaseincentiveisamortisedthroughthe

StatementofComprehensiveIncomeonastraight-line

basisuntiltheleaseexpiry

Lender

ScottishWidowsLimited(“ScottishWidows”)

Liberum

LiberumCapitalLimited(nowPanmureLiberum

CapitalLimited)appointedon5July2023ascapital

marketsadviserandwillactasthecorporatebrokerto

theCompanyoncommencementofre-listingonthe

Company’sshares

Listing Rules

ThelistingrulesoftheFCAmadeundertheFinancial

ServicesandMarketsAct2000asamendedfrom

timetotime

Loan to value (“LTV”)

Theoutstandingvalueofbankborrowingsasa

percentageofthefairvalueofinvestmentproperty

asstatedintheindependentvaluation

Local Housing Allowance (“LHA”)

Ratesusedtocalculatehousingbenefitfortenants

rentingfromprivatelandlords

Managed Wind-Down

TheCompanybeingmanagedwiththeintention

ofrealisingalltheassetsinitspropertyportfolio

inanorderlymannerandwithaviewtorepaying

borrowingsandmakingtimelyreturnsofcapitalto

shareholderswhilstaimingtooptimisevalueforthe

Company’sassets

Market capitalisation

Themid-marketpriceforanordinaryshareofthe

Companymultipliedbythenumberofordinary

sharesinissue

MEC

ManagementEngagementCommittee

Additional information

Glossary—continued

158 HomeREITplc | AnnualReport | Fortheyearended31August2022

MV-VP

MarketValue–VacantPossession–referstothevalue

ofanincome-producingasset,assumingthereisno

tenant.Itrepresentsthevalueofthepropertywithout

consideringanyleaseorrentalincome

Natixis IM

NatixisInvestmentManager,aninternationalasset

managementgroupbasedinParis,France,thatispart

oftheGlobalFinancialServicesdivisionofGroupe

BPCE.NatixisIMiswhollyownedbyNatixis,aFrench

investmentbankingandfinancialservicesfirm.Natixis

iswhollyownedbyBPCE,France’ssecondlargest

bankinggroup

Net Asset Value (NAV)

NetAssetValueistheequityattributableto

shareholderscalculatedunderIFRS

NAV per share

Equityshareholder,fundsdividedbythenumberof

Sharesinissue.Thismeasureallowsacomparisonwith

theCompany’ssharepricetodeterminewhetherthe

Company’ssharesaretradingatapremiumordiscount

toitsNAVcalculatedunderIFRS

NAV total return

ThepercentagechangeinNAV,assumingthat

dividendspaidtoshareholdersarereinvestedatNAV

topurchaseadditionalShares.Thisisanalternative

performancemeasurethattheCompanytracks,as

itisadirectindicatorofthevalueproducedbythe

Company’soperations

Net break gains/losses

Netbreakgainsresultfromprovisionsoftheloan

facilityagreementswhich,ateachearlyrepayment

event,generateasyntheticinterestrateswap

breakageonthefixedrate(effectiveswaprate)element

oftheloansresultinginabreakgainorloss,andamake

wholeonthemarginsoftheloans(SpensCost)

New Investment Policy

Investmentpolicyapprovedbyshareholderson

16September2024inrespectoftheManagedWind-

DownoftheGroup

Noble Tree

NobleTreeFoundationLimited

Original Investment Policy

InvestmentpolicyinplaceatIPOuntil21August2023

Non-PID

Non-PropertyIncomeDistribution.Thedividend

receivedbyashareholderoftheCompanyarisingfrom

anysourceotherthanprofitsandgainsoftheTax

ExemptBusinessoftheCompany

PID

PropertyIncomeDistribution.Adividendreceivedby

ashareholderoftheCompanyinrespectofprofitsand

gainsofthetaxexemptbusinessoftheCompany

Property Adviser

AEWUKInvestmentManagementLLPduringthe

period22May2023to21August2023

Practical completion

Thepointatwhichabuildingprojectiscomplete,

exceptforminordefectsthatcanbeputrightwithout

undueinterferenceordisturbancetothetenant

Property Income

Netpropertyincomeandnetgainsonthedisposalof

propertywhichareexemptedfromcorporationtaxas

longasatleast90%netpropertyincomeisdistributed

toshareholderswithin12monthsoftheendofthe

financialyear

PRS

PrivateRentedSector–housingclassificationwhereby

propertiesareownedbylandlords(individualsor

companies),andleasedouttooccupiers

Registrar

LinkMarketServicesLimited,(tradingasLinkGroup)

hasresponsibilityformaintainingtheregisterof

shareholders,receivingtransfersofSharesfor

certificationandregistrationandreceivingand

registeringshareholders’dividendpaymentstogether

withrelatedservices

REIT

ARealEstateInvestmentTrust.Acompanywhich

complieswithPart12oftheCorporationTaxAct2010

SubjecttotherelevantUKREITcriteriabeingmet

continually,theprofitsfromthepropertybusinessof

aREIT,arisingfrombothincomeandcapitalgains,are

exemptfromcorporationtax

RNS

RegulatoryNewsService,theserviceproviderused

bytheGrouptodistributeregulatorynewsand

announcements

Sale and Purchase Agreements (“SPAs”)

Abindinglegalcontractbetweentwopartiesthat

obligatesatransactiontooccurbetweenabuyer

andseller

Seller’s Works

Obligationforthevendorstocompletecertainworks

onpropertiesacquired,toensurethattheproperty

wasfitforpurposewithinaspecifiedperiod,as

definedintheSPAs

Additional information

Glossary—continued

 HomeREITplc | AnnualReport | Fortheyearended31August2022 159

OrdinarySharesof£0.01eachinthecapitalofthe

Company.OrdinarySharesarethemaintypeofequity

capitalissuedbyconventionalInvestmentCompanies.

Shareholdersareentitledtotheirshareofbothincome,

intheformofdividendspaidbytheCompany,andany

capitalgrowth

Share price

Thevalueofashareatapointintimeasquotedona

stockexchange.TheCompany’sShareswerequoted

ontheMainMarketoftheLondonStockExchangeuntil

theyweresuspendedon3January2023

Social Use

Realestateusedtohousevulnerableindividuals,

includingbutnotlimitedtothoseaffectedbyanyofthe

followingcircumstances:homelessness,ex-service

menandwomen,individualsfleeingdomesticabuse,

vulnerablewomen,peopleleavingprison,asylum

seekersandrefugees,fostercareleavers,substance

misuse,careleavers,mentalillness,disability,specialist

supportedlivingandgeneralneedssocialhousing

SRI

SociallyResponsibleInvestment

Stabilisation Period

TheperiodpertheAmendedInvestmentPolicy,

beginningon21August2023andendingon

21August2025,orsuchlaterdate(notbeinglaterthan

21August2026)approvedbytheBoard,duringwhich

theCompanywillhavetheobjectiveofstabilising

theGroup’sfinancialconditionthroughinitiativesto

maximiseincomeandcapitalreturnsbyinvestingin

aportfolioofUKresidentialrealestate

Supported Living

Housingwheresupportand/orcareservicesare

providedtohelppeopletoliveasindependently

aspossible.

SWLD

Seller’sWorksLongstopDate

The Good Economy

TheGoodEconomyPartnershipLimited,asocial

impactassessorandadviserappointed

bytheCompany

Total shareholder return

Thegrowthinvalueofashareholdingoveraspecified

period,assumingdividendsarereinvestedtopurchase

additionalunitsofstock

UK Code

TheUKCodeofCorporateGovernancebeingthe

codeissuedbytheFinancialReportingCouncilwhich

setsoutstandardsofgoodpracticeinrelationto

boardleadershipandeffectiveness,remuneration,

accountabilityandrelationswithshareholders.All

companieswithapremiumlistingofequitysharesin

theUKarerequiredundertheListingRulestoreporton

howtheyhaveappliedtheCodeintheirannualreport

andaccounts

Valuer

Anindependentexternalvaluerofaproperty.The

Company’sexternalvaluerwasKnightFrankLLPforthe

periodended31August2021andJonesLangLaSalle

Limitedfortheyearended31August2022

Vibrant

VibrantEnergyMattersLimited,appointedbythe

GroupinAugust2023toundertakeaproperty

inspectionprogramme

Viceroy Research

ViceroyResearchLLP

Viceroy Research Report

ViceroyResearchreportdated23November2022

Additional information

Glossary—continued

160 HomeREITplc | AnnualReport | Fortheyearended31August2022

Companynumber:12822709

Countryofincorporation:EnglandandWales

Directors,ManagementandAdvisers

Non-ExecutiveDirectors

MichaelO’Donnell(Chair)

LynneFennah

PeterWilliams

PeterCardwell

SimonMoore

MarleneWood

RoderickDay(“Rod”)

Registeredoffice

6th Floor

125 London Wall

London

EC2Y 5AS

InvestmentManager&AIFM

AEWUKInvestmentManagementLLP

8Bishopsgate

London

EC2N4BQ

CompanySecretaryandAdministrator

ApexFundandCorporateServices(UK)Limited

6thFloor

125LondonWall

London

EC2Y5AS

CapitalMarketsAdviser

PanmureLiberumLimited

RopemakerPlace,Level12

25RopemakerStreet

London

EC2Y9LY

Communicationsadviser

FTIConsulting

200Aldersgate

AldersgateStreet

London

EC1A4HD

Depositary

ApexDepositary(UK)Limited

6thFloor

125LondonWall

London

EC2Y5AS

Registrar

LinkAssetServices

CentralSquare

29WellingtonStreet

Leeds

LS14DL

Independentvaluer

JonesLangLaSalleLimited

30WarwickStreet

London

W1B5NH

Auditor

BDOLLP

55BakerStreet

London

W1U7EU

Legaladvisers

GowlingWLG(UK)LLP

4MoreLondonRiverside

London

SE12AU

Additional information