Home REIT begins 'stabilisation' process as it transfers leases on 100 properties
Home REIT said it is now expected to generate “significantly higher rent collection” than has previously been received from One CIC.
In a stock exchange notice today (23 August), the company said One (Housing & Support) CIC had agreed to surrender its leases on 100 properties with a total of 418 beds.
Mears Limited, guaranteed by housing and social care provider Mears Group, has been occupying the properties on a sub-lease from One CIC, the trust said.
These sub-leases will now transfer to Home REIT, with Mears Limited becoming a direct tenant for the remaining lease term of 6.6 years with an initial contracted annual rental income of £891,155.
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Home REIT said the surrender agreement allows the company to receive a «sustainable income stream from a strong tenant covenant».
It added it is now expected to generate «significantly higher rent collection» than has previously been received from One CIC in relation to the properties, despite a lower headline rent, which was previously £1,227,405 per annum.
«The company continues to work constructively with One CIC to find sustainable solutions for the other 234 properties it currently rents from Home REIT,» it said.
The transaction reduces the trust's exposure to One CIC from 13.5% to 9.5% by number of properties and 14.2% to 11.9% by contracted rent roll, as at 31 July. The current occupiers of the properties will not be impacted as a result of this transaction.
In a research note, Winterflood said the re-tenanting is likely to have been simplified by the fact that Mears Limited had already been occupying the properties under a sub-lease, noting that «future transfer of leases away
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