Home REIT PLC

Annual Report (ESEF) • Oct 15, 2024

213800A53AOVH3FCGG442021-09-012022-08-31iso4217:GBP213800A53AOVH3FCGG442020-08-192021-08-31iso4217:GBPxbrli:shares213800A53AOVH3FCGG442022-08-31213800A53AOVH3FCGG442021-08-31213800A53AOVH3FCGG442021-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442021-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442021-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442021-08-31ifrs-full:RetainedEarningsMember213800A53AOVH3FCGG442021-09-012022-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442021-09-012022-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442021-09-012022-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442021-09-012022-08-31ifrs-full:RetainedEarningsMember213800A53AOVH3FCGG442022-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442022-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442022-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442022-08-31ifrs-full:RetainedEarningsMember213800A53AOVH3FCGG442020-08-192021-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442020-08-192021-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442020-08-192021-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442020-08-192021-08-31ifrs-full:RetainedEarningsMember213800A53AOVH3FCGG442020-08-18 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 registerasat22December2022.Thisdividendwaspaid 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. Shares 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 registerasat24September2021.Thisdividendwas 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 Shares %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 registerisreviewedatleasteverysixmonthsbythe 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 Report of the Nomination Committee 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 Report of the Nomination Committee—continued 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 21 MAY AUGJAN 22 AUGMAYJAN 23 AUG MAYJAN 24 Home REIT FTSE ALL SHARE FTSE EPRA/NAREIT UK 0 20 40 60 80 100 120 140  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 Independent auditor’s report to the members of Home REIT plc—continued  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. Governance Independent auditor’s report to the members of Home REIT plc—continued 90     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 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. 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     91 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. Governance Independent auditor’s report to the members of Home REIT plc—continued 92     HomeREITplc | AnnualReport | Fortheyearended31August2022 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. 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     93 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 Share capital account £’000 Share 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 Share capital account £’000 Share 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. SA 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. SA 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. F 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. SA 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. IA 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. SA 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. SA 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. SA 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. SN 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. IA 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. T 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. IA 25-Jan-23 Response to media reports – Tenant update LotusSanctuaryhasnotpaidanyrentforthequarterto30November2022. T 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”). T 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. IA 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 IA 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. T 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. T 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. T 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. T 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. F 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. T 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. F 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. D 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. F 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. L 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. D 04-Apr-24 Monthly Update Repaymentof£5.1mofdebt. F 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. F 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. T 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. T 05-Jun-24 Monthly Update Repaymentof£8.3mofdebt. TheCompanyhasnowissuedapre-actionletterofclaimtoAHRA. F IA 07-Jun-24 Directorate Change AppointmentofRodDayasIndependentNon-ExecutiveDirector.Rodwillinduecourse ChairtheAuditCommittee. D 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. F 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. F 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. T 14-Aug-24 Agreement Secured For Surrender Of Leases AgreementwithMansitHousingforthesurrenderofitsleaseson68properties. T 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. F 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 Shares 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 Company Information Designed and produced by Whitehouse Associates London Home REIT plc Annual Report — For the year ended 31 August 2022