Home REIT PLC

Annual Report (ESEF) • Jan 17, 2025

213800A53AOVH3FCGG442022-09-012023-08-31iso4217:GBP213800A53AOVH3FCGG442021-09-012022-08-31iso4217:GBPxbrli:shares213800A53AOVH3FCGG442023-08-31213800A53AOVH3FCGG442022-08-31213800A53AOVH3FCGG442021-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442021-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442021-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442021-08-31ifrs-full:RetainedEarningsMember213800A53AOVH3FCGG442021-08-31213800A53AOVH3FCGG442021-09-012022-08-31ifrs-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:RetainedEarningsMember213800A53AOVH3FCGG442022-09-012023-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442022-09-012023-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442022-09-012023-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442022-09-012023-08-31ifrs-full:RetainedEarningsMember213800A53AOVH3FCGG442023-08-31ifrs-full:IssuedCapitalMember213800A53AOVH3FCGG442023-08-31ifrs-full:SharePremiumMember213800A53AOVH3FCGG442023-08-31homereitplc:SpecialDistributableReserveMember213800A53AOVH3FCGG442023-08-31ifrs-full:RetainedEarningsMember Home REIT plc Annual Report — For the year ended 31 August 2023 Home REIT plc Annual Report — For the year ended 31 August 2023 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 2023 (“FY23”). 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 33. 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 for the year ended 31 August 2022 (“FY22”) 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. The FY22 accounts were approved on 10 October 2024. 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. During the period and subsequently, material information has come to light which is in contradiction to the reporting previously provided to the Board at the time. 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” or “Investment Adviser”) (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 44 The Board 46 Directors’ report 51 Corporate governance statement 56 Report of the Audit Committee 65 Report of the Management Engagement Committee 68 Report of the Nomination Committee 72 Directors’ remuneration report 76 Statement of Directors’ responsibilities 77 Independent Auditor’s report Financial statements 99 Consolidated Statement of Comprehensive Income 100 Consolidated Statement of Financial Position 101 Consolidated Statement of Changes in Shareholders’ Equity 102 Consolidated Statement of Cash Flow 103 Notes to the Consolidated Financial Statements 129 Company Statement of Financial Position 130 Company Statement of Changes in Shareholders’ Equity 131 Notes to the Company Financial Statements Additional information 138 Appendix 1 – Key Regulatory News Services Announcements 1 September 2022 to 13 January 2025 144 Appendix 2 – Governance and Internal Control 147 Glossary 152 Company information Overview  HomeREITplc | AnnualReport | Fortheyearended31August2023     1 ThisAnnualReportcoverstheresultsfortheyear ended31August2023(“FY23”)andthebelowsetsout thebackgroundthatisrelevantforshareholdersto reviewsincetheyearended31August2022(“FY22”). TheseFY23AnnualReportandAccountshave beendelayedasaresultofthetimeandeffortin investigatingandresolvingtheissuesdiscussedin theFY22AnnualReportandAccounts.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and3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entireportfolio, onthebasisoffairvalueasat31August2022and subsequentperiods. 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147to151. Duringtheperiod,therewasachangetothe investmentmanagementoftheGroup: • AHRAwastheappointedInvestmentAdviseruntil 30June2023andAlvariumFMwastheappointed AIFMuntil21August2023. • On22May2023theBoardofHomeREITplc appointedAEWUKInvestmentManagementLLP (“AEW”orthe“InvestmentManager”)toprovide propertyadvisoryservicesandannounceditsintent toengageAEWasInvestmentManagerandAIFM afterreceiptofFCAandshareholderapprovalof theAmendedInvestmentPolicy.On21August2023 shareholdersapprovedtheAmendedInvestment PolicyandtheBoardappointedAEWasInvestment ManagerandAIFM. • AEWisnotresponsibleforthehistorical performanceoftheGrouppriorto21August2023. AEW’sroleasInvestmentManageristomanagethe Groupinaccordancewiththeapplicableinvestment policy.TheAmendedInvestmentPolicy,effective from21August2023,hadtheinvestment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.TheNewInvestmentPolicyeffectivefrom 16September2024hasthe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. FulldetailsoftheNewInvestmentPolicyareon pages29and30. Overview Introduction and Highlights 2     HomeREITplc | AnnualReport | Fortheyearended31August2023 • TheGroupacquired234investmentpropertiesfor £104.1million(includingpurchasecosts)duringthe year(2022:1,528for£597.4million),increasingthe Group’sportfolioto2,473propertiesintotal. • Theportfoliowasindependentlyvaluedat£412.7 millionasat31August2023(2022:£414.3million). Thepropertieshavebeenvaluedonanindividual basis.Noportfoliopremiumhasbeenapplied. • Decreaseinfairvalueofpropertiesof£71.4million to£412.7million,whichrepresents40.7%ofthe historicalacquisitioncostsof£1,014.3million (includingpurchasecosts)(2022:decreaseof £452.9millionto£414.3million,whichrepresents 49.8%ofthehistoricalacquisitioncostsof £910.2million). • 88.3%oftheportfolio(bynumberofproperties, 88.3%byvalue)(2022:39.1%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atenantwasjudgedtobe inpoorfinancialconditionorworseorwhenthe propertyconditionwasjudgedtobeverypoor orworse. • TheGrouprepaid£30millionduringtheyear, reducingtotalborrowingto£220million.This comprisedofa12-yeardebtfacilityof£120million anall-infixedrateof2.07%andafurther15-year debtfacilityof£100millionwithanall-infixedrate of2.53%perannum. • 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. • TheLoan-to-Valueratio(“LTV”)asat 31August2023was53.3%(2022: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 £0.8millionattheyearend(2022:£74.5million). • Lossbeforetaxfortheyearof£118.2million (2022:£474.8million). • NodividendswerepaidinrespectofFY23 (2022:5.50penceperShare). • A37.3%decreaseinnetassetvalue(“NAV”) perShareto27.43penceasat31August2023 (2022:57.5%decreaseto43.76pence),primarily resultingfrom:i)thedecreaseinthefairvalueof investmentpropertyreflectingthere-assessment oftenantcovenantstrengthandconditionofthe assetspurchasedduringFY23;ii)theprovisionfor doubtfuldebts;iii)thewrite-offofleaserelated assets;iv)write-offofSeller’sWorks;v)gainon revaluationofbankborrowingsandvi)dividends. Overview Financial overview  HomeREITplc | AnnualReport | Fortheyearended31August2023     3 • 2,473propertiesasat31August2023 (31August2022:2,239properties). • TheGroupexchangedonthesaleof41properties for£4.8millionon4August2023.Nosaleshad completedasat31August2023. • Theconditionofthepropertiesheldasat 31August2023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2,473properties82.2% wereinspectedinternally(fromAugust2023toMay 2024)andthesehavebeenassessedas0.1%very good,9.3%good,64.1%fair,19.6%poorand6.9% verypoor.Ofthosepropertiesnotinspected,72% havebeensoldsubsequentto31August2023. • 8.0%ofpropertiesweredeemedunhabitableasat 31August2023(31August2022:7.7%)whichincludes thepropertiesdeemedasverypoorfollowingthird partyinspectionsaswellaspropertiesdeemed uninhabitablebasedon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2023,theDirectorsconsider that28ofthesetenantstobeofweakcovenant strength,withthreetenantsinadministration (31August2022:16ofthese29tenantsare consideredtobeofweakcovenantstrength, withonetenantinadministration). • Ofthe£50.8milliontradedebtorsoutstandingasat 31August2023,£50.7millionwasfullyprovidedfor (2022:£7.8millionand£1.9millionrespectively). 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. InvestmentAdviser,InvestmentManager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. Overview Portfolio and operating overview 4     HomeREITplc | AnnualReport | Fortheyearended31August2023 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18totheConsolidatedFinancialStatements, AlvariumSecuritiesresignedascorporatebroker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. 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(both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. 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4and10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. Overview Portfolio and operating overview—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     5 Post year end highlights 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. Disposals From4August2023to13January2025,theGroup exchangedonthesaleof1,622propertiesforgross salesproceedsof£244.1million,ofwhich1,606 propertieshadcompletedwithgrosssalesproceeds of£239.8million.Propertiesexchangedwere presentedontheConsolidatedStatementofFinancial Positionat31August2023at£248.8million.Ofthe proceedsreceivedoncompletions,£182.7millionwas appliedagainsttheoutstandingloanbalances.Asof 13January2025,16propertieshaveexchangedbutnot completedwithatotalgrosssalesvalueof£4.3million. Restrictedcash Ofthecashheldinlockboxaccountsasat 31August2023,thefull£8.9millionappliedagainst outstandingborrowingsinDecember2023. Ofthecashretentionsheldbysolicitorsasat 31August2023,£3.3millionhasbeenreleasedto theGroup,£0.7millionhasbeenreleasedtovendors and£0.6millionisstillheldwithsolicitorsasat 31December2024. Debt 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. On27November2024,theGroupmadeitsfinal paymentontheloansoutstandingtoScottish Widowsandon16December2024theGrouppaidthe outstandingDeferredFeeof£9.0million. Tenantmattersandleaseamendments Since31August2023,furthertenantshavesurrendered leasesorgoneintocreditorsvoluntaryliquidation. Ofleasesassociatedwiththetenantsinplace onthe2,473propertiesownedbytheGroupon 31August2023,52arestillinplace,371propertieshave beenturnedovertoapropertymanagerresultinginthe Grouphavingdirectleaseswiththeoccupants,447are re-tenanted,and1,603havebeensold. 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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. 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 the2022and2023financialstatements,theBoard concludedthatsuchperformancemeasurements wouldnotbenefittheuserofthesefinancial statementsandaccordingly,isnotpresentinganyEPRA PerformanceMeasuresintheseReportandAccounts. Overview Portfolio and operating overview—continued 6     HomeREITplc | AnnualReport | Fortheyearended31August2023 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2023     7 Dearshareholder, Aspreviouslyannounced,theGrouphasfaced unprecedentedchallengesduringtheperiodandpost periodend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forFY22. TheFY22accountswereapprovedon10October2024. Withthedeteriorationintenantcovenantstrengths andsubstantialtenantarrearsduringFY23,significant lossesandafurtherdecreaseofNAVhaveoccurred duringtheperiod. InsimilarformattoFY22accounts,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pages51to55andinAppendix2. The AIFM and the Investment Adviser AlvariumFMwastheAIFMduringtheperioduntil 21August2023,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ensuringthattheCompanycomplied withitsOriginalInvestmentPolicy.TheCompanyand theAlvariumFMappointedtheInvestmentAdviser, AHRA,bywayoftheIAA,until30June2023,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; Strategic report Chair’s statement 8     HomeREITplc | AnnualReport | Fortheyearended31August2023 • 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,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at acquisitionanduptothepointofAHRA’stermination, 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90.6%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toMay2024),ofthe2,473 propertiesownedat31August2023,49.8%were consideredoccupied,14.2%wereconsidered unoccupied,18.2%wereinspectedbyafirmother thanVibrant(whomadenocommentonoccupation) and17.8%remainuninspected(ofwhich72.3%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. The Investment Manager Followingarigorousselectionprocess,theBoard appointedtheAEWasPropertyAdviseron22May2023 andasInvestmentManageron21August2023 followingshareholderapprovaloftheAmended InvestmentPolicy. AmendedInvestmentPolicyandStabilisationperiod TheAmendedInvestmentPolicychanges,effective from21August2023,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would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. Strategic report Chair’s statement—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     9 Post Balance Sheet Activities and Findings Impacting Reporting Annual Results Thefollowingisahigh-levelsummaryofsignificant mattersimpactingfinancialresultswithfurtherdetail providedintheManagementReport. Accountingpolicies Asaconsequenceofinformationthatcametolight duringtheperiod,theBoardreviseditsaccounting policiesaspartofthepreparationoftheFY22financial statementsinrespectofthetreatmentofacquisition ofinvestmentproperties,rentalpropertyincome andleaseinducements.Therevisedaccounting policieswere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relationshipbetweenvendorandtenants. 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. 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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hadlimited experience,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. Subsequentto31August2023,ninetenantsentered intoadministration,whichtogetherwiththreetenants inadministrationat31August2023,represent63.1% ofpropertiesand68.1%ofannualcontractedrentas at31August2023.Rentcollectionhaddeteriorated throughouttheperiodwithrentarrearsof£50.8million (2022:£7.8million)ofwhich£50.7million(2022:£1.9 million)wasprovidedforasat31August2023(see Note10totheConsolidatedFinancialStatements). 28ofthe29tenantsareconsideredtobeof weakcovenantstrengthrepresenting99.8%of propertiesand99.8%ofannualcontractedrentasat 31August2023.Thepoorfinancialconditionofcertain tenantsalsocontributedtothereductioninthevalueof thepropertyportfolio(seefurthercommentarybelow). 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againstthevendor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thepropertieswereclassifiedaseither verygood,good,fair,poororverypoor(seeNote3to theConsolidatedFinancialStatements).Ofthe2,473 propertiesownedat31August2023,82.2%havebeen internallyinspectedwith90.6%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acquiredduringtheyear ended31August2023. Strategic report Chair’s statement—continued 10     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Chair’s statement—continued PortfolioValuation JLLhasindependentlyvaluedtheGroup’sportfolio inaccordancewiththeRICSValuation–Professional Standards.Asat31August2023,theGroup’sportfolio hadamarketvalueof£412.7million(2022:£414.3 million)representing40.7%ofthehistoricalacquisition costsof£1,014.3million(includingpurchasecosts). Thereductioninthepropertyvaluationisprincipally aresultofre-assessmentofthecovenantstrengthof thetenants,severalofwhichenteredintoliquidation duringandpostperiodendandforacquisitionsinthe periodasresultofare-assessmentofthequalityof theassets,Theassessmentofthecovenantstrength oftenantsandtheconditionofthepropertiesasat 31August2023resultedin88.3%(2022:39.1%)(by numberofproperties,88.3%(2022:46.3%)byvalue)of theportfoliobeingvaluedonavacantpossessionbasis forthe31August2023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8tothe ConsolidatedFinancialStatements. 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.Thetotalgross proceedsraisedsinceIPOwere£853million. Financial Results Netassetvalue TheNAVhasdecreasedfrom£345.9millionasat 31August2022to£216.9millionasat31August2023. Significantitemsleadingtothedeclineinclude: (i) decreaseinfairvalueofinvestmentpropertyof £71.4million(Note8totheConsolidatedFinancial Statements),reflectingtheassessmentoftenant covenantstrengthandtheconditionoftheassets fornewacquisitionsasdetailedabove; (ii) provisionfordoubtfuldebtsof£49.5million (Note10totheConsolidatedFinancialStatements); (iii)write-offofleaserelatedassetsof£31.0million; (iv)write-offofSeller’sWorksof£14.2million; (v) dividendspaidof£10.9million;and (vi)gainonrevaluationofbankborrowingsof £14.5million. TheNAVperSharehasdecreasedto27.43pence asat31August2023,adecreaseof37.3%fromthe 43.76penceasat31August2022. Earnings ThelossbeforetaxoftheGroupfortheperiodto 31August2023was£118.2million(2022:£474.8million). Dividends Therewerenodividendsdeclaredinrespectofthe financialyearend31August2023. An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. TheBoardapproved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16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 TheGrouphadtwoloanswithScottishWidowsbeing a12-yearloanagreement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anda 15-year,interestonly,£130millionloanagreement atanall-infixedrateof2.53%perannum,expiring inDecember2036.Thelatterloanwasfullydrawn downon28February2022,butfullusewassubject tomeetingconditionsonassigningcollateral.The facilityarrangementswereintendedtoprovide protectionagainsttheprevailingenvironmentof increasinginterestrates,giventhelong-termfixed rateofinterest.  HomeREITplc | AnnualReport | Fortheyearended31August2023     11 Strategic report Chair’s statement—continued Certainfinancialpenaltieswere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waiverletters related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GroupincurredthefollowingDeferredFees of£9.0million: • 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wasfullyrepaid. DuringFY23theGrouprepaid£30.0millionof borrowings,reducingtheoutstandingbalanceat 31August2023to£220million.On27November2024, theGroupmadeitsfinalpaymentontheloansandon 16December2024paidtheDeferredFees. Limitations of scope in audit opinion Theauditorswereunabletoexpressanopinionon theConsolidatedStatementofComprehensive Income,theConsolidatedandCompanyStatementsof ChangesinShareholders’EquityortheConsolidated StatementofCashFlowsfortheyearended 31August2023asaresultofthelimitationsinscope relatingtoaninabilitytoobtainsufficientaudit evidenceinrelationtomattersdiscussedmorefullyin thereportoftheAuditCommittee.Detailsonthese limitations,theareasoftheFinancialStatements affectedandhowthesehavebeenconsideredby theDirectorsareincludedinthereportoftheAudit Committeebeginningonpage56. Post-balance sheet matters ThepostbalancesheeteventsaredetailedinNote25 totheConsolidatedFinancialStatementsand furtherdetailprovidedintheManagementReport frompage22. InvestmentManagerassetmanagementinitiatives AEWastheInvestmentManagerhas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undertook acomprehensivepropertyconditionreviewand datacollectionexerciseofthepropertyportfolio; • Analysisoftheunderlyingpropertyconditionwas paramounttodeterminepropertysuitability,capital expenditurerequirementsandincomeandcapital returnprospects; • AEWengagedintenant-by-tenantrestructuring negotiationstounlockaccessandinformationon theconditionoftheunderlyingproperties; • AEW’sprimaryfocuswas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waswounddown with82.2%oftheportfoliointernallyinspected asat31May2024onthebasisthattheremaining propertieshavebeendifficulttoaccess.Ofthose propertiesnotinspected,72.3%havebeensold subsequentto31August2023; • 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.Withtheinspection processeffectivelycompleted,AEWexpectedthe re-tenantingprogramwouldaccelerate; • AEWcontinuedtoengage,wherepossible,with providersofvariousformsofSocialUse.Social Useincludesrealestateusedtohousevulnerable individualsincludingbutnotlimitedto:the 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; 12     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Chair’s statement—continued • Rentcollectedonoperatingleasesincluding arrearsrepresentsanaverageof15%ofthe rentinvoicedfortheperiod1September2023to 31December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includedquarterlyretail shareholderwebinarandmonthlyupdates distributedbyRNSuntilOctober2024.During theManagedWind-DownRNSannouncements willbedrivenbyevents(suchasinrespectof materialdisposalsandconsequentialreductionsin borrowings); • FromAugust2023to13January2025,theGroup hascompletedonthesaleof1,606propertiesand exchangedonafurther16properties.Thegross proceedsfrompropertiessoldandexchangedtotals £244.1million,whichinaggregateisinlinewiththe August2023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. 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2023. 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.  HomeREITplc | AnnualReport | Fortheyearended31August2023     13 Strategic report Chair’s statement—continued 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 pages29and30. 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was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areotherwiseexpectedto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provideupdatestoshareholders, butthiswillbedrivenbyeventssuchasmaterial disposalsduringtheManagedWind-Down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2023 Strategic report Chair’s statement—continued Financialstatementsandrestorationoflisting Theinterimresultsfortheperiodsto28February2023 and29February2024andtheauditedannualresults fortheyearended31August2024areexpectedto bepublishedduringthefirstquarter2025.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 13January2025  HomeREITplc | AnnualReport | Fortheyearended31August2023     15 Strategic report Management report Introduction AHRAwastheappointedInvestmentAdviseruntil 30June2023andAlvariumFMwastheappointedAIFM until21August2023. On23May2023theBoardofHomeREITplc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. AEWisnotresponsibleforthehistoricaleventsand performanceoftheGrouppriortoitsappointment. AEW’sroleasInvestmentManageristomanagethe Groupinaccordancewiththeapplicableinvestment policy,initiallybeingtheAmendedInvestmentPolicy. Thispolicyhadtheinvestment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duringthe StabilisationPeriod.TheStabilisationPeriodwas intendedtobetwoyearsfrom22August2023orsuch laterdate(notbeinglaterthanoneyear)approved bytheBoard. 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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. 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234propertiesduringtheperiod totalling£104.1million(includingpurchasecosts)with atotalof2,473propertiesheldasat31August2023. 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Note2and3tothe ConsolidatedFinancialStatements. 16     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Management report—continued 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.Thisamount, alongwiththewrite-offofanyprepaidSeller’sWorks balancesrelatedtotheaffectedproperties,hasbeen chargedtotheP&Lintheperiod. TenantSettlement TheGroupsettledadisputewithatenantwhich requiredaninitialpaymentof£680,000andan additionalamountof£45,000,payableasthetenant meetscertainconditions. 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”). 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theamounttobeallocated topre-paidSeller’sWorks.Furtherinformationis containedinNote3totheConsolidatedFinancial Statements. AsdiscussedinNote10totheConsolidatedFinancial Statements,theGroupwrote-off£14.2millionin respectof650propertiesforthefinancialyearended 31August2023and£11.9millioninrespectof608 propertiesfortheyearended31August2022forwhich thevendorhadnotcompletedtheSeller’sWorksbythe SWLD.Intotal,theGrouphaswrittenoffallofthe£29.7 millionofSeller’sWorksestablishedsinceinception. 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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.Thecomprehensiveinspectionprogramme ledtoasignificantre-assessmentofthequalityof thepropertyassets.Ofthe2,473propertiesowned at31August2023,JLLexternallyinspected2,391 properties,comprising96.7%oftheGroup’sproperty portfolio.Oftheseexternallyinspectedproperties, JLLinternallyinspected195properties.Vibrantor otherthirdpartiesalsoundertookinternalinspections Thebelowprovidesareconciliationofthetotalacquisitioncostfrominceptionto31August2023of£1,014.3million. Asat 31August2023 £million 31August2022 £million 31August2021 £million Total £million Investmentproperty(includingpurchasecosts) 92.2 543.5 289.7 925.4 PrepaidSeller’sWorksrecognisedasreceivable 5.9 19.0 4.8 29.7 Leaseinducementswherebuildingisconsideredashabitable 5.4 32.0 16.7 54.1 Leaseinducementwherebuildingisconsidered asunhabitable 0.6 2.9 1.6 5.1 Total acquisition cost (including purchase costs) 104.1 597.4 312.8 1,014.3  HomeREITplc | AnnualReport | Fortheyearended31August2023     17 Strategic report Management report—continued of2,033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,9.3%good,64.1%fair,19.6%poor and6.9%verypoor.Ofthepropertieswhichwerenot inspected318propertieshavebeensold,ofwhich317 havecompleted. JLLhasconsideredthequalityoftheassetsinreaching itsassessmentofvalue,withpropertieswhichwere inverypoorcondition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2023,the Group’sportfoliohadamarketvalueof£412.7million (2022:£414.3million)representing40.7%ofthe historicalacquisitioncostsof£1,014.3millionincluding purchasecosts(2022:45.5%and£910.2million respectively).Thereductioninthepropertyvaluationis principallyaresultofare-assessmentofthecovenant strengthofthetenants,severalofwhichhavegoneinto liquidationduringtheperiodandpostperiodend,and thequalityoftheassets. Indeterminingthefairvalueasat31August2023,JLL hasusedacombinationofvaluationbases,adoptingan investmentvaluationfor11.7%oftheportfolioandMV- VPvaluefor88.3%oftheportfolio(2022:Investment value60.9%andMV-VP39.1%).Inallcases,JLLhas consideredtherentalvaluefortheexistingusesofthe propertiesandLocalHousingAllowance(“LHA”)rates. 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110%to150%ofMV-VP (2022:150%). Thebelowtableshowsthebreakdownofpropertiesandvaluebyvaluationapproach. 31August2023 31August2022 Asat Number ofproperties FairValue £millions Number ofproperties FairValue £millions Investmentvaluationapproach 289 48.1 1,363 222.4 Marketvalue–vacant possessionapproach 2,184 364.6 876 191.9 Total 2,473 412.7 2,239 414.3 Asat31August2023,198propertiesofthe2,473 wereconsideredunhabitable(2022:172of2,239 properties).Theannualcontractedrentandfairvalue inrespectofthesepropertiesasat31August2023was £4.9millionand£27.1millionrespectively(2022:£4.6 millionand£27.2millionrespectively).Subsequentto 31August2023,181propertieswhichwereconsidered unhabitableat31August2023weresold,ofwhich179 havecompleted. Tenants Tenantarrangements TheBoardreviseditsaccountingpoliciesintheprior period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and3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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 18     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Management report—continued 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£0.7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.Therewasnoimpact ontheFY23resultsashalfwasdistributedduringboth theFY21andFY22periods. 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inrelationtorentsinvoicedduring theyearended31August2022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. Rentfreeperiods WithoutBoardknowledgeorconsent,theGroup, 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4totheConsolidatedFinancialStatements.  HomeREITplc | AnnualReport | Fortheyearended31August2023     19 Strategic report Management report—continued Tenantconcentration Asat31August2023,115propertiesweremanagedbytwothirdpartymanagersand2,358propertieswere100% letto29tenants.Thebelowtablesummarisesrentalexposureforthosepropertiesunderleaseasapercentageof annualcontractedrentasat31August2023: Top10tenants Number ofproperties Rentalexposure Contractedrent £million OneCIC 234 11.9% 6.4 RedemptionProjectCIC 152 11.1% 6.0 SupportiveHomesCIC 209 11.0% 6.0 BigHelpProject 346 9.5% 5.1 GenLivUKCIC 107 6.5% 3.5 BloomSocialHousingCIC 94 5.5% 3.0 CGCommunityCouncil 54 5.2% 2.8 Dovecot&PrincessDriveCommunityAssociation 52 4.6% 2.5 NobleTree 143 4.6% 2.5 LTGVisionCIC 200 4.2% 2.3 Top10tenants 1,591 74.1% 40.1 19othertenants 767 25.9% 14.0 Total 2,358 100.0% 54.1 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at31August2023asiftheydidmeetthe criteriaofagroup: Connectedtenantsasat31August2023 Rentalexposure Connectedrelationships Connectedtenanttotal exposure BigHelpProject CGCommunityCouncil DovecotandPrincessDrive CommunityAssociation 9.5% 5.2% 4.6% Commontrustees–someorallof: ColetteGoulding,JosephGoulding, PaulBanksandPeterMitchell 24.4% BigHelpHomesCIC N-TrustHomesCIC SelectSocialHousingCIC 1.7% 2.2% 1.2% RedemptionProjectCIC EdenSafeHomesCIC 11.1% 2.3% Commondirector– GurpaalSinghJudge 13.4% AshwoodHousingSolutionsCIC SerenitySupportCIC 3.1% 1.3% Formercommondirector– GabrielleDuberry 4.4% 20     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Management report—continued Tenantcovenantstrengthandliquidations Asat31August2023,2,358oftheGroup’s2,473 propertieswere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. 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2023,28ofthe29tenantswereofweak covenantstrengthrepresenting99.8%ofproperties and99.8%ofannualcontractedrentasatthattime (2022:68.3%and66.6%respectively).Threetenants wereinadministrationasat31August2023(2022:one tenant),andafurtherninetenantshaveenteredinto voluntaryadministrationpostperiodend,representing 63.1%ofpropertiesand68.1%ofannualcontracted rentasat31August2023. 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2,473propertiesownedbytheGroup on31August2023,52arestillinplace,371properties havebeenturnedovertoapropertymanagerandthe Grouphasdirectleaseswiththeoccupants,447arere- tenanted,and1,603havebeensold. Rentcollection Rentcollectiondeterioratedsignificantlyduring theperiodwitharrearsat31August2023of £50.8millionofwhich£50.7millionwasfullyprovided for(2022:£7.8millionand£1.9millionrespectively) asdetailedabove. Rentcollectionpostperiodendforrentcollectedunder operatingleasesincludingarrearsof£6.0millionfrom 1September2023to31December2024comparedto rentdemandedof£40.1million. OccupancyandSocialUse Whilstpropertieswere100%lettotenants,thepost periodendinspectionprogrammehasidentified 198propertieswhichwereunhabitableasat 31August2023(2022:172).Contrarytoreportingby AHRAtotheBoard,theGrouphadnoreliabledata formonitoringunderlyingoccupancyofpropertiesas at31August2023andtheDirectorshavetherefore madeassumptionsbasedonthepostperiodend inspectionprogramme. Theinspectionprogrammewhichwasinitiatedin 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,of the2,473propertiesownedat31August2023,49.8% wereconsideredoccupied,14.2%wereconsidered unoccupied,18.2%wereinspectedbyafirmotherthan Vibrant(whomadenocommentonoccupation)and 17.8%remainuninspected. AEWcontinuedtoundertakeacomprehensivereview anddatacollectionexerciseofthepropertyportfolio. Analysisoftheunderlyingpropertyconditionanduse was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theportfolioduring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occupants in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. DebtFinanceandRepayment DuringFY23theGrouprepaid£30.0millionof borrowings,reducingtheoutstandingbalanceat 31August2023to£220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.Further detailisprovidedinPostPeriodEndActivity–Debt financeandrepaymentsectionbelow.  HomeREITplc | AnnualReport | Fortheyearended31August2023     21 Strategic report Management report—continued General and administrative expenses TheGrouphasincurredsignificantexpensesintheyear to31August2023.Thebroadcategoriesofexpenses areasfollows: Fortheyear ended31August 2023 £’000 Fortheyear ended31August 2022 £’000 AHRAinvestmentadvisory fees(Note18) 5,094 5,322 Legalfees 3,502 20 Professionalfees 3,395 276 Valuationfees 2,165 764 AggregatorandTenant Settlementagreements 1,419 – AEWpropertyand investmentmanagement fees(Note18) 1,085 – FeespaidtotheGroup’s IndependentAuditor 1,076 2,280 BoardandDirectors’fee 176 176 Otheradministrative expenses 1,247 1,025 Total 19,159 9,863 • Legalfeesincreasedasaresultof:1-activities supportingtheresponsetoallegationsmadein November2022andtheassociatedcorporate actionsof£1.0million,2-theinvestigationof wrongdoing,thepreparationofdefensiveactionon behalfoftheCompanyandthepursuitofthosethe Companyconsidersresponsibleforthewrongdoing of£1.2millionand3-forensicsupportforthelegal advisersof£0.9million. • Professionalfeeshaveincreasedprimarilyasaresult oftheengagementofSmithSquarePartners,who wereappointedastheCompany’sfinancialadviser inFebruary2023totalling£2.5millionaswellas accounting,PRandtaxsupport. • AHRAandAEWfeesarediscussedmorefullyin Note18totheConsolidatedFinancialStatements. • ValuationfeesincludeamountspaidtoJLLfor inspectionandvaluationservicesaswellasVibrant andotherthirdpartieswhoperformedproperty inspectionstosupportthevaluationprocess. • TheAggregatorsettlementisdescribedmorefully onpage4.TheGroupsettledadisputewithatenant whichrequiredaninitialpaymentof£680,000and anadditionalamountof£45,000,payableafterthe tenantmeetscertainconditions. Losses before tax Thelossbeforetaxfortheyearended31August2023 was£118.2million(2022:£474.8million).Theprimary driversofthelossin2023were: • adecreaseintheFVofinvestmentpropertyof £71.4million(2022:£452.9million), • grossrentalincomeof£57.6million(2022: £38.2million)againstwhichtheGrouprecognised provisionsfordoubtfuldebtsof£49.5million (2022:£1.9million)sothatnetamountofrents recognisedwere£8.1million(2022:£36.3million), • write-offofSeller’sWorksnotinitiatedof £14.2million(2022:£11.9million), • impairmentchargesonleaseinducements andstraight-lineassetsof£31.0million(2022: £31.3million),and • generalandadministrativeexpensesof£19.2million (2022:£9.9million). AmendedInvestmentPolicy On21August2023,theCompany’sshareholders approvedtheAmendedInvestmentPolicy.The AmendedInvestmentPolicyaimed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was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22August2023orsuchlaterdate(notbeing laterthanoneyear)approvedbytheBoard; • thepermittedusesofpropertieswere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was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. 22     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Management report—continued Post period end activity 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was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. InvestmentManageractivity 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,1,622 propertieshavebeensoldatauctionfortotalgross proceedsof£244.1millionofwhich1,606properties havecompletedfor£239.8millionand16remain exchangedforsalefor£4.3million.Theproceedsfrom thesaleofthesepropertiesrepresentanaverageof 39.1%oftheirpurchasepriceand98.1%oftheirAugust 2023valuation. Assetmanagementinitiatives SinceAEWbeganasInvestmentManager,they havecompletedthefollowingsignificant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had 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,HomeREIT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  HomeREITplc | AnnualReport | Fortheyearended31August2023     23 Strategic report Management report—continued 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retainedsevenproperties whichtheydirectlymanageandare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,was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remainsinactivedialoguewithanumberof housingproviderswhohavesignificantdemand forbedswithablendofregionalandnationwide requirements. xi. AEWcontinues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.Theloanwasfullypaidon 25September2024,and • a15-yearinterest-only,fixedrate,£130millionterm loanagreementon1December2021(£100million at31August2023).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.Thisloanwasfullyrepaidon 27November2024. 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waivingcertainbreaches,new waiverlettershavebeenissuedontheexpiryofeach previouswaiverperiod.Thewaiverlettersrelated 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. 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loanswerefullyrepaid.TheDeferredFeesof £9.0millionwerepaidon16December2024. 24     HomeREITplc | AnnualReport | Fortheyearended31August2023 Strategic report Management report—continued 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was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areotherwiseexpectedto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. TheCompanywillcontinuetoprovideupdates duringtheManagedWind-Downtoshareholders, butthiswillbedrivenbyeventssuchasinrespectof materialdisposals. 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interimresultsfortheperiodsto28February2023 and29February2024andtheauditedannualresults fortheyearended31August2024areexpectedtobe publishedinthefirstquarter2025.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 13January2025  HomeREITplc | AnnualReport | Fortheyearended31August2023     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is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is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greenhousegas(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2023theGroup’s currentEPCratingsareasdetailedbelow: Rating Numberof Properties % A 2 0.1 B 8 0.3 C 578 23.4 D 1,455 58.8 E 413 16.7 F 7 0.3 G 10 0.4 Total 2,473 100.0 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ofDirectorscomprisedofnon-executive Directorswhoreceivefixedfeeremuneration.The Group’sBoardreceiveregularmarketandregulatory updatesfromitsprofessionaladviserssuchasAEW, theBrokerandtheCompanySecretaryandattend seminarswhererequired. Strategic report ESG report 26     HomeREITplc | AnnualReport | Fortheyearended31August2023 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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pages47to49.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. Duringtheperiod,theBoardofDirectorshave 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.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duringtheperiodandpostperiod endandhasmademinor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contactdetailsofChair toraiseconcerns; iii. Health&Safety–AsaresultoftheAmended InvestmentPolicywhichincludesanewleasing modelremovingtherequirementforallleasesto befullyrepairingandinsuring(FRI),theGroupis exposedtoincreasedhealthandsafetyrisk.Health &safetyisastandardpriorityitemontheBoard’s agendawithAEWhavinganestablishedHealth& 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andfrom 21August2023inaccordancewiththeAmended InvestmentPolicy. AsdetailedinManagementReportbeginningonpage 15,duringtheperiodand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vacancy/occupancyofproperties. Strategic report ESG report—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     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.TheBoardofDirectors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theoperationalriskonacontinuousbasis andreportregularlytotheBoardonoperational riskmatters. Responsible investment Ownership TheGroup’sInvestmentManagerwastheownerofthis policyatthereportingperiodend.Thepolicyis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2023 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the2023and2022financialstatements,theBoarddidnotconsiderthat theEPRAandotherkeyperformancemeasurementswouldbenefittheuserofthe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 Results2023 2022 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. 9.1% 3.0% Asdescribedonpage21,the expenseratiogrewasthe Groupincurredexceptional levelsoflegaland professionalfeesandother administrativeexpenses. 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. 27.43 pence 43.76 pence Decreaseof37.3%,primarily resultingfrom: i)decreaseintheFVof investmentpropertyof £71.4million, ii) provisionfordoubtful debtsof£49.5million, iii)write-offofSeller’s Worksof£14.2million, iv)impairmentcharges onleaseinducements andstraight-liningof £31.0million, v)dividendspaid of£10.9million,and vi)gainonrevaluation ofbankborrowingsof £14.5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. 53.3% 60.3% GroupLTVdecreased duetothe£30.0million repaymentmadefrom restrictedcashin2023. Strategic report Key performance indicators  HomeREITplc | AnnualReport | Fortheyearended31August2023     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. 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Code,thecurrentinvestment objectiveand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settlement ofallamountsduetotheLender. 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settleallamounts outstandingtotheLender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havebeen usedtosettleallamountsoutstandingtotheLender andwillbereturned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. Excesscashwillbeheldinsterlingonlyand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havebeenused tosettleallamountsoutstandingtotheLender. 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.Sales will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. 30     HomeREITplc | AnnualReport | Fortheyearended31August2023 Return of capital to shareholders ItistheintentionoftheBoard,followingthesettlement ofallamountsoutstandingtotheLender,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interimresultsfortheperiodto29February2024 andtheresultsfortheyearended31August2024are expectedtobepublishedinthefirstquarterof2025. 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. Comprehensiveincomefor2021hadbeenrevisedtoa lowerlevelandtheresultfor2022was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.BecausePIDsareassessed annually,thisoverpaymentofPIDforthefinancialyear 2022is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forFY22,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2023,theBoardofDirectorsofthe GroupcomprisedtwofemaleandtwomaleDirectors. Followingtheyearend,threenewDirectors(male)were appointedtotheBoard.Theappointmentofanynew DirectorismadeinaccordancewiththeCompany’s diversitypolicyasdetailedonpage70. Strategic report Strategic overview—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     31 Strategic report Strategic overview—continued Stakeholder engagement Stakeholdersareintegraltothe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.Inadditiontothe AnnualandHalf-YearReports,theinvestorpresentations madehistorically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,wasproviding monthlyupdatesbywayofmarketannouncements andquarterlyshareholderwebinars.WiththeFY22 annualreportspublishedontheCompany’swebsite on11October2024andtheadoptionofaManaged Wind-Downstrategy,theCompanywillcontinueto provideupdatestoshareholdersbutthiswillbedriven byevents(suchasinrespectofmaterialdisposalsand consequentialreductionsinborrowings)ratherthan afixedmonthlyrelease. 32     HomeREITplc | AnnualReport | Fortheyearended31August2023 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.Shareholders canalsowritedirectlytotheChairoftheCompany throughtheCompanySecretary,asdetailedonthe Company’swebsite. Tenants 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surrenders 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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. TheoutstandingloanbalancesandDeferredFeeswere repaidinNovemberandDecember2024,respectively. 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 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thedraftfinancial statementsbeenprovidedtotheBoardatthetimeof approvingthedistribution,theBoardwouldnothave approvedthe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. Repaymentofdebt TheBoardapprovedrepaymentofloansforatotalof £30.0millionduringtheperiod. TheBoardagreedtopayDeferredFees,payableonfull andfinalrepaymentoftheloans,onloanbalancesof 0.5%oftheaggregateamountsoutstandingonthetwo loansateachof31August2023and30November2023. RepaymentoftheloansandpaymentoftheDeferred Feesweremadepostyearend. AppointmentofAlvarez&Marsal InJanuary2023,theBoardinstructed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.On5May2023,A&Mdeliveredto theCompanyadetailedreport. AppointmentofAdvisers 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. 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. 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,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  HomeREITplc | AnnualReport | Fortheyearended31August2023     33 Strategic report Strategic overview—continued 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. 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aimed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,specifically: • aStabilisationPeriodwas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were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was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. Cessationofpropertyacquisitions TheCompanyannouncedthatitwouldnolongerbe makingacquisitions. Appointmentofvaluer JonesLangLaSalleLimitedwere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. Key decisions made during post period end Repaymentofdebt ScottishWidowsimposedDeferredFees,payable onfullandfinalrepaymentoftheloansof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.On27November2024,theGroupmadeits finalpaymentontheloansandon16December2024 paidtheDeferredFeestotalling£9.0million. Changeofinvestmentpolicy 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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2023 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. Asaresultoftheeventsduringtheperiod,asdetailedonpage32to33,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54.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13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settlementofall remainingamountsowingtotheLender. 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 will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fromthetenants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2023     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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allamountsoutstandingto theLender,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. Borrowing risk: TheGrouphasbeenoperatingunderperiodic debtcovenantwaiversfromandwiththe supportofScottishWidows. On27November2024,theGroupmadeitsfinalpaymentontheloans outstandingtoScottishWidows.On16December2024,theGrouppaid theremainingDeferredFeeof£9.0million. 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. TheGroupismarketingtheremainingportfolioforsaleasasingle portfolio.However,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. Strategic report Principal risks and uncertainties—continued 36     HomeREITplc | AnnualReport | Fortheyearended31August2023 Risk Mitigation 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. 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2023     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repaidbothloanfacilitiesandtheDeferredFeesto theLender. TheBoardandAEWhasaprocedurefortheapprovalofsignificantcapex andunbudgetedexpenses. Netproceedsfromremainingpropertysaleswillbe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. Strategic report Principal risks and uncertainties—continued 38     HomeREITplc | AnnualReport | Fortheyearended31August2023 Risk Mitigation 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thereturnoffundsto shareholders. Factorsincludeinteraliageneraleconomic climate,excesssupplyorfallindemandfor propertiesandchangesinlawsorgovernment regulations. Sinceappointment,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. Tenant default and liquidation: Failurebytenantstocomplywiththeirrental obligationsandtenantliquidationsaffectsthe Group’sabilitytogeneratecashandnegatively impactsassetvaluation. Asat31August2023,28ofthe29tenantsare ofweakcovenantstrengthrepresenting99.8% ofpropertiesand99.8%ofannualcontracted rentasatthattime.Threetenantshadentered administrationasat31August2023anda furtherninetenantshadenteredintovoluntary administrationpostperiodend,representing 63.1%ofpropertiesand68.19%ofannual contractedrentasat31August2023. 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.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. Theperformanceofkeyserviceprovidersisregularlyreviewed bytheBoard. Strategic report Principal risks and uncertainties—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     39 Risk Mitigation 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. 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new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. Strategic report Principal risks and uncertainties—continued 40     HomeREITplc | AnnualReport | Fortheyearended31August2023 Risk Mitigation 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monitoringkey performanceindicators. 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. Strategic report Principal risks and uncertainties—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     41 Risk Mitigation 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,(because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against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. 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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,LynneFennahwillbeemployedonapart-timebasisto provideadditionalsupporttotheBoardinrespectvariousmatters. 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2023 Strategic report Going concern and viability statement 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have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25totheConsolidatedFinancial Statements,on16September2024shareholders approvedanewinvestmentpolicyforaManagedWind- DownoftheGroup’soperations.Partofthatstrategy wastosellenoughpropertiesthroughauctionsto repayallamountsoutstandingtoScottishWidows. On27November2024,theGrouprepaidtheloansand inDecember2024,theGrouppaidtheDeferredFees of£9.0millionandScottishWidowsreleaseditscharge overtheGroup’sassets. PursuanttotheManagedWind-Down,theGroupwill sellitsremainingportfolioofinvestmentproperties andwillnotmakeanyfurtherrealestateacquisitions. Nofurtherinvestmentwillbemadeunlesssuch expenditureisnecessarytoprotectorenhancean asset’snetrealisablevalueorinordertocomplywith statutoryobligations. CashflowprojectionsfortheGrouphavebeenprepared byAEWandagreedwiththeBoardwhichconsider: 1. Thedisposalofallremainingpropertiesinasale oftheportfolioinoneormoretransactions.Such transactionsareexpectedtocompleteinthesecond quarter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Group annualreportandaccountsfortheyearended 31August2025arerequiredtobefiled. Asofthedateofthesefinancialstatements,theGroup hasapproximately£13.2million(including£0.8millionof cashintransitfromcompletedpropertysales)offree cashandexpectsafurther£4.3millionofnetproceeds fromexchangedbutnotcompletedpropertysales.For purposesofthegoingconcernanalysistheDirectors haveassumednilcashrentnetofpropertyexpenses untilthepropertiesaresold.TheDirectorshave forecastexpendituresoverthenexttwelvemonths andarecomfortablethatthecashonhandplusthenet proceedsonexchangedbutnotcompletedproperty saleswillbeadequatetocoverthoseexpenses.In theeventthatexpendituresexceedthoseestimates, theGroupcanselladditionalpropertiestocoverany unforeseenexpenses. 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amounts willberequiredtosettlethesematters.Whenthe Directorsareabletoestimatetherangeofexposure, theCompanymay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thethreatenedlitigation,theFCA investigationand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of Directorsandsignedonitsbehalfby: Michael O’Donnell Chair 13January2025  HomeREITplc | AnnualReport | Fortheyearended31August2023     43 Governance 44 TheBoard 46 Directors’report 51 Corporategovernancestatement 56 ReportoftheAuditCommittee 65 ReportoftheManagementEngagementCommittee 68 ReportoftheNominationCommittee 72 Directors’remunerationreport 76 StatementofDirectors’responsibilities 77 IndependentAuditor’sreport 44     HomeREITplc | AnnualReport | Fortheyearended31August2023 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 (exceptasnoted)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Bachelor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  HomeREITplc | AnnualReport | Fortheyearended31August2023     45 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.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Minto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 46     HomeREITplc | AnnualReport | Fortheyearended31August2023 TheDirectorspresenttheirreportfortheyearended 31August2023.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12 and13. • ImportanteventsaffectingtheGroupwhichhave occurredsincetheendofthefinancialyearare setoutonpages11to12andinNote25tothe ConsolidatedFinancialStatements. Directors TheDirectorsinofficeatthedateofthisReport areasshownonpages44and45.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pages51to 55formspartofthisDirectors’Report. 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23December2022.Thisdividendwas paidasaPID. Therewerenodividendsdeclaredorpaidinrespect oftheyearended31August2023. Capital structure IssueofShares NonewShareswereissuedduringtheyear. 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theAFM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2023,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2023,andatthedateof thisReport,thetotalvotingrightsintheGroupwere 790,570,465. Significantshareholders Asat31August2023,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 M&GInvestment ManagementLimited 124,703,853 15.77 BlackRockInvestment Management(UK)Limited 76,276,862 9.65 LiontrustAsset ManagementPLC 45,273,414 5.73 Sarasin&PartnersLLP 45,549,484 5.38 VangaurdGroupInc. 35,467,207 4.49 Governance Directors’ report  HomeREITplc | AnnualReport | Fortheyearended31August2023     47 Since31August2023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 75,234,633 9.52 LiontrustAsset ManagementPLC 45,273,414 5.73 Sarasin&PartnersLLP 41,308,072 5.23 VanguardGroupInc. 35,555,157 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. 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page46.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,whilsttheemissions fromotherareassuchasGroupofficesfallunderthe responsibilityofotherparties.Notwithstandingthat, theGrouphad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until21August2023.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. Governance Directors’ report—continued 48     HomeREITplc | AnnualReport | Fortheyearended31August2023 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. 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.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. InvestmentManager&AIFM 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).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;and 3. TheadoptionoftheAmendedInvestmentPolicy. AEWisregulatedintheconductofinvestmentbusiness bytheFCAandis,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. DuringtheTransitionPeriod,AEWwaspaid£3,000,000 perannum.AEWispaidanannualfeeinPhase1: a) afixedbaseassetmanagementandAIFMfeeof £3millionperannum(increasingannuallyinlinewith inflationbyamaximumof5percent.perannum); b) avariablemanagementfeefordisposalsof£422per bedforeverypropertysold;and c) avariablemanagementfeetoincentiviserent collectionof10%ofallrentcollected. Theaboveissubjecttoanaggregatecapof£10million fortheInitialPeriod. FollowingtheInitialPeriod,AEWwillinsteadbecome entitledtoaninvestmentmanagementfeeequalto 0.75%ofNAVperannumonanongoingbasis,subject toaminimumfeeof£3millionperannum(increasing annuallyinlinewithinflationbyamaximumof5percent perannum). Undercertaincircumstances,includingatakeover oftheCompanycompletingduringtheInitialPeriod, AEWwillbeentitledtoreceiveaterminationpayment of£9million,lessanyfeesalreadypaidorpayableto AEWundertheagreement. Governance Directors’ report—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     49 Theappointmentwillcontinueuntilterminatedby eitherpartygivingtotheothernotlessthanthree months’noticeinwritingtoterminatethesame,such noticenottoexpireearlierthanthesecondanniversary ofAEW’sappointmenton21August2023. 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. 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. SmithSquarePartnerswereappointedasfinancial adviserfrom13February2023until24November2023 onthefollowingterms: a) Aworkfeeof£185,000permonth b) IneventofanofferfortheCompany,atransaction feeof1.1%ofthevalueoftheoffersubjecttoa minimumof£2.5m c) Atransactionfeeof1.1%ofthevalueofeach transactionsubjecttoanaggregateminimumof £2.5mifamajorityoftheCompany’sassetsaresold d) Afeeinrespectofappointmentofanewinvestment adviserof£750,000 e) Afeeoncompletionofrefinancingormaterial amendmenttotheGroupindebtedness,afee equalto75basispointsnewdebtcapitalraisedor refinancedsubjecttoaminimum£750,000 Feesb)andc)aboveremainpayableforaperiodof 24monthsfollowingtermination. LiberumCapitalLimited(nowPanmureLiberum Limited“Liberum”)wasappointedcorporatebroker andCapitalMarketsAdvisor(“CMA”)on5July2023. Liberumwillinitiallybe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willbeinitially 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. JLLwasappointedIndependentValuertotheGroup on18July2023.Thebelowfeesarepayableinrespect ofvaluations: • Fortheyearended31August2022£900,000with initialinternalinspectionfeesof£25,000and externalinspectionfeesof£100perproperty • Fortheperiodended28February2023£75,000 • Fortheyearended31August2023£50,000 • Fortheperiodended29February2024£100,000 1 • Fortheyearended31August2024£150,000 1 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MEC, comprisingallDirectorsatthetime,havereviewedthe performanceofAEWsinceitsappointmentand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. Governance Directors’ report—continued 1. As varied in an updated fee letter dated 26 July 2024. 50     HomeREITplc | AnnualReport | Fortheyearended31August2023 FurtherdetailsaresetoutintheReportfrom theManagementEngagementCommittee beginningonpage65. Financial risk management InformationabouttheGroup’sfinancialrisk managementobjectivesandpoliciesissetoutin Note13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. BDOLLPhasexpresseditswillingnesstocontinue inofficeastheCompany’sAuditorandresolutions foritsre-appointmentandtoauthorisetheAudit Committeetodetermineitsremunerationwillbeput toshareholdersataGeneralMeetingoftheCompany. ByorderoftheBoard Apex Fund and Corporate Services (UK) Limited 13January2025 Governance Directors’ report—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     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during theyear,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 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pages56to 58,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.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2023 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.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44and45. 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 theAHRA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. 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pages144to146. 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2023     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68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this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64. 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,andtofurtherconsidertheir replacementandappointingAEWastheInvestment ManagerandtheAIFM.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65to67. 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68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acquisition anddisposalofinvestments,investmentrestrictions andcomplianceandtenantandassetmonitoring andupdates,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2023andtheattendanceoftheindividual Directorsinofficeattheyearendisshownbelow: Board Audit Committee Management Engagement Committee Nomination Committee Number entitled to attend 20 2 2 1 LynneFennah 20 2 2 1 PeterCardwell 18 2 2 1 SimonMoore 18 2 2 1 MarleneWood 20 2 2 1 Governance Corporate governance statement—continued 54     HomeREITplc | AnnualReport | Fortheyearended31August2023 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2023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duringthe periodwhichwasincontradictiontoreporting previouslyprovidedtotheBoardbyAHRAand AlvariumFMuptothedateoftheirtermination, 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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; Governance Corporate governance statement—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     55 • 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andreviewedwith theBoard. 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2023 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2023. 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68and69. Meetings TheCommitteemettwiceduringtheyearunder review.TheDirectors’attendanceissetoutonpage53 intheCorporateGovernanceStatement. Role of the Audit 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 ThedelaysinissuingtheAnnualReportandAccounts fortheyearending31August2022severelyimpacted thepreparationandauditofthefinancialstatements fortheyearending31August2023.Manyofthe activitiesundertakenduringtheyearto31August2023 impactedbothFY22andFY23,sothissummarywillin partcoverbothperiods. InJanuary2023,theBoardinstructed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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 4and10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. AsaresultofthefindingsreceivedfromA&M,theBoard undertookthefollowingactivities: • On6February2024,theBoardrevokedtheauthority toapprovepaymentsfromAHRAwithoutthe expressauthorityoftwodirectors; • AEWwereengagedasPropertyManageron 22May2023andasInvestmentManagerandAIFM on21August2023; • On23May2023andsubsequently,theBoard engagedindependentaccountingexpertsto Governance Report of the Audit Committee  HomeREITplc | AnnualReport | Fortheyearended31August2023     57 reviewhistoricaltransactionsandreconsiderthe appropriatenessofallaccountingpolicies; • Afteracompetitivetenderprocessandonthe recommendationofAEW,on18July2023theBoard engagedJLLtopreparetheannualvaluationfor theyearsended31August2022and2023andthe 6-monthperiodended28February2023toreplace KnightFrankwhohadresignedon3May2023; • Afterconsideringvariousalternativesandonthe recommendationofAEW,theBoardengaged VibrantEnergySolutionstoinspectallproperties towhichitcouldgainaccess.Theinspection programmewasintendedtoprovidegreaterclarity onthecompositionandoccupancyoftheproperty portfolioandalsotosupportJLL’svaluation.Vibrant oranotherthirdpartyultimatelyinternallyinspected 2,033propertiesor82.2%oftheportfoliowhenthe programmewasconcludedinMay2024; • TheCompanyengagedsolicitorstoreviewthetitle positionwiththeLandRegistryforallproperties; • TheCompanyengagedsolicitorstoreviewvarious legalagreementstounderstandtheGroup’s positiononenforcingagainstcounterparties. Activities post the year end under review Afterinputfromvariousworkstreamsdescribedabove, 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. Theapplicationofrevisedaccountingpoliciesback toinceptionresultedintherestatementofthe2021 comparativesinthe2022ReportandAccounts. Atthemeetingon29May2024theAuditCommittee consideredtheupdatedauditplanfortheyearended 31August2022andthepreliminaryauditplanforthe yearended31August2023. TheCommitteeagreedthe2023auditplanwiththe Auditor,includingtheprincipalareasoffocusbeing managementoverrideofcontrols,revenuerecognition andinvestmentpropertyvaluationandrelatedparty transactionsincludingtheInvestmentAdviserand InvestmentManager.TheCommitteealsoreviewed andagreedtheauditfeesforthestatutoryauditofthe Companyanditssubsidiaries.TheCommitteealso discussedandconsideredtheAuditor’sperformance, objectivityandindependenceandtheeffectivenessof theexternalaudit. 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inrespectoftheyearended 31August2022werealsopresented. Atameetingconductedon12November2024,the AuditCommitteeconsideredanupdatedmateriality metricpresentedbyBDOandconsideredthe preliminary2024AuditPlan. Becausethevariousactionsdescribedaboveoccurred afterAugust2023,mostoftheAuditCommittee’s activitiesastheyrelatetothe2023financialyear occurredaftertheyear-end.Thoseactivitiesinclude thefollowing: • conductedareviewoftheinternalcontrolsandrisk managementsystemsoftheCompanyanditsthird partyserviceproviders; • conductedareviewoftheCompany’sriskregister asupdatedbyAEW; • reviewedtheannualpropertyvaluationasat 31August2023andrecommendedthesetothe Board.Indoingso,theCommitteemonitoredthe effectivenessoftheCompany’svaluationpolicies andmethodsbasedonnewinformationregarding theconditionofthepropertiesandthefinancial conditionofthetenants; • reviewedtheCompany’sdraftannual consolidatedfinancialstatementsfortheperiod to31August2023aspresentedtotheCommittee on13January2025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BDOtheauditreport ontheresultsoftheauditfortheyearended 31August2023andconsideredthedraftaudit opinionanddraftletterofrepresentationasat 13January2025; • discussedandconsideredtheAuditor’s performance,objectivityandindependenceand theeffectivenessoftheexternalaudit;and Governance Report of the Audit Committee—continued 58     HomeREITplc | AnnualReport | Fortheyearended31August2023 • 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. Atthemeetingon10October2024,theCommittee consideredtheupdatedFinancialPositionand ProspectsProceduresmemorandum(“FPPP”);the updatedriskregisterfortheManagedWind-Down; theGoingConcernandviabilitystatementandREIT taxcompliancereport;JLL’svaluationreportforthe yearended31August2022;BDO’sfinalauditreport totheCommittee;andreviewedtheCompany’sdraft annualconsolidatedfinancialstatementsforthe periodto31August2022andrecommendedtheseto theBoard.Inparticular,theCommitteeadvisedthe Boardthattakenasawhole,the2022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. 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2023.JLLwasappointed inJuly2023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 valuedbyJLLinaccordancewiththeRICSValuation ProfessionalStandards.Asat31August2023,the Group’sportfoliohadamarketvalueof£412.7million representing40.7%ofthehistoricalacquisitioncosts (includingpurchasecosts).Thereductioninthe propertyvaluationfortheyearended31August2023 wasprincipallyasaresultofdeteriorationoftenant covenantstrengthandtheassessmentofthequalityof theassetspurchasedduringthefinancialyear.JLLhave determinedtheconditionofthepropertiesthrough externalinspectionof2,391propertiesandinternal inspectionof195propertiessupportedbythirdparty conditionreportson924properties. Indeterminingthefairvalueasat31August2023,JLL hasusedacombinationoftheinvestmentapproach (11.7%oftheportfoliovalue)andMV-VP(88.3%ofthe portfoliovalue).RefertoNote8totheConsolidated FinancialStatementsforfurtherdetail. Whilst2,358ofthe2,473propertieswithintheportfolio weresubjecttoaleaseasat31August2023,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tenant,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between110%and150%ofMV-VPdepending onthetenant. 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,rentalrevenuerecognitionand loanmodifications.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2023     59 Limitationsofscope BDOwereunabletoexpressanopiniononthe2022 ConsolidatedandCompanyFinancialStatementsand Notesto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.Becausethoselimitationsimpactedopening balancesasat1September2022,BDOwereunableto expressanopinionontheConsolidatedStatement ofComprehensiveIncome,theConsolidatedand CompanyStatementsofChangesinShareholders’ Equity,theConsolidatedStatementofCashFlowsand therelatednotestothefinancialstatementsforthe yearended31August2023.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anduptothedate theAHRAandAlvariumFMcontractswereterminated. Thisabsenceofcompleteaccountingrecords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intheConsolidatedFinancial Statementsfortheyearended31August2022and fortheConsolidatedStatementofComprehensive Income,theConsolidatedandCompanyStatements ofChangesinShareholders’Equity,theConsolidated StatementofCashFlowsandtherelatednotestothe financialstatementsfortheyearended31August2023 primarilyresultfromthefollowingareas: 1. ManyofthepropertiesAHRAacquiredonbehalf oftheGroup,requiredsignificantimprovements tobecompletedbythevendor.Acquisitionsof thisnaturerequiredBoardapproval.Withoutthe knowledgeorapprovaloftheBoard,mostof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31August2022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as at31August2023.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8%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4and10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fortheyearto 31August2022andfortheConsolidatedStatement ofComprehensiveIncome,andtheassociatedimpact ontheConsolidatedandCompanyStatementsof ChangesinShareholders’Equity,theConsolidated StatementofCashFlowsandtherelatednotestothe financialstatementsfortheyearended31August2023 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2023 Financial Statement Area Impacted Limitation in the Scope of the audit How Considered Changes in fair value of investment property Thepropertyconditionwasunknownbythe Directorsuptothedateoftheinspection programme,whichwasundertakenbetween August2023andMay2024,whichimpactsthe valuationofinvestmentpropertyatthebalance sheetdateandtheestimatesofthevalueof Seller’sWorks.BDOwerethereforeunable toobtainsupportforthepropertycondition assumptionunderpinningtheJLLvaluation. Accordingly,thereisalimitationofscopeas tothecostrecognisedforthepropertyat acquisitionandthevalueofinvestmentproperty at31August2022whichimpactstherecognition ofvaluemovementofinvestmentpropertyin FY22andFY23intheConsolidatedStatementsof ComprehensiveIncome. RefertoNote3totheConsolidatedFinancial Statementsforjudgementsandestimatesin relationtotherecognitionofthecostofacquisitions 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. Prepaid Seller’s Works – write -off of Seller’s Works not initiated or completed in theyear TheGrouppurchasedpropertiesrequiring significantrefurbishmentworktobecompleted bythevendorbeforethepropertieswereinan appropriatestatefortheirintendedusebythe Group’stenants.Duetoalackofauditevidence andaccountingrecords,theDirectorsmade assumptionsastothevalueoftheseworksand thetimingforwriteoffofworksnotcompletedin bothFY22andFY23.BDOwereunabletoobtain sufficientsupportinrespectoftheamount allocatedtoSeller’sWorksandthetimingand amountoftheassociatedwrite-off. 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theSeller’sWorksattheacquisitiondate. Themethodologyfollowedtoestimatethevalueof theSeller’sWorkshasbeendetailedinNote3tothe ConsolidatedFinancialStatements. Lease incentive or lease inducement for unhabitable properties Rental income TheDirectorsreviewedthesubstanceofthe agreementsenteredintowithtenantsandvendors anddeterminedthataleaseincentiveorlease inducementforunhabitablepropertiesshould havebeenestablishedonacquisition.Duetoa lackofaccountingrecordsbothoverthecondition ofthepropertyonacquisition,togetherwiththe Groupnotbeingpartytoanyagreementbetween thetenantandthevendor,theDirectorshadto makeassumptionsastotheamountofanytenant incentiveprovidedbythevendor,whichimpacted computationoftheoriginalallocationandthe subsequentimpairmentoftheasset.Thisresults inalimitationofscopeonwhethertheasset resultsinaleaseincentiveoraleaseinducement forunhabitablepropertiesandtheamount recognisedfortheassets. TheDirectorsconcludedthattheleaseagreement andSPAshouldbeaccountedforasasingle contract.TheDirectorsthereforeconsideredthat thepaymentfromthevendortothetenantshould beaccountedforasaleaseincentiveoralease inducementforunhabitableproperties,depending onwhetherthepropertywashabitable.The assumptionsaroundthebasisforthisconclusion andtheclassificationastowhetherthepaymentisa leaseincentiveoraleaseinducementforunhabitable propertiesisdescribed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2023     61 Financial Statement Area Impacted Limitation in the Scope of the audit How Considered Rent commencement date – rental income Duetoalackofevidenceovertheconditionof thepropertyonacquisition,theDirectorshadto makeassumptionsastotherentcommencement datewhichleadstoalimitationofscopeover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atacquisitionandthe appropriaterentalrevenuerecognitionstartdate basedonwhenpropertiesweredeemedtobeina habitablecondition. Cost capitalisation at the acquisition date – Administrative expenses Theindependentinvestigationcarriedoutbythe Directors(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theauditors. BDOwere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theauditors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,resultinginalimitationofscope. TheDirectorshavenotbe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inNote3to theConsolidatedFinancialStatements. Tenant receivables – Provision for expected credit losses of trade receivables DuringtheperiodfromSeptember2021toOctober 2022cashwasreceivedinseveralnon-traditional mannersandtherewasalackofevidenceand accountingrecordstosupporttheapplicationof fundsreceivedtospecificinvoices.Asaresult, therewasinsufficientevidencetothesupport theageingoftradereceivables,resultingina limitationofscope. Notes4and10totheConsolidatedFinancial Statementsdescribetheassumptionsmadebythe Directorssupportingtheaccountingtreatmentfor non-traditionalpayments. Notes to the financial statements relating to the Consolidated Statement of Comprehensive Income Asaresultofthelimitationsoutlinedabove, BDOwereunabletoobtainsufficientappropriate auditevidenceinrespectoftheNotestothe ConsolidatedFinancialStatementsasatandfor theyearended31August2022andtheNotesto theConsolidatedStatementofComprehensive Incomefortheyearended31August2023. AmountsassociatedwithFinancialStatement amountsdiscussedaboveshouldbeconsidered byreferencetoNote3totheConsolidated FinancialStatements. Governance Report of the Audit Committee—continued 62     HomeREITplc | AnnualReport | Fortheyearended31August2023 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have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25totheConsolidatedFinancial Statements,on16September2024shareholders approvedanewinvestmentpolicyforaManagedWind- DownoftheGroup’soperations.Partofthatstrategy wastosellenoughpropertiesthroughauctionsto repayallamountsoutstandingtoScottishWidows. On27November2024,theGrouprepaidtheloansand inDecember2024,theGrouppaidtheDeferredFees of£9.0millionandScottishWidowsreleaseditscharge overtheGroup’sassets. PursuanttotheManagedWind-Down,theGroupwill sellitsremainingportfolioofinvestmentproperties andwillnotmakeanyfurtherrealestateacquisitions. Nofurtherinvestmentwillbemadeunlesssuch expenditureisnecessarytoprotectorenhancean asset’snetrealisablevalueorinordertocomplywith statutoryobligations. CashflowprojectionsfortheGrouphavebeenprepared byAEWandagreedwiththeBoardwhichconsider: 1. Thedisposalofallremainingpropertiesinasale oftheportfolioinoneormoretransactions. Suchtransactionsareexpectedtocompletein thesecondquarter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Group annualreportandaccountsfortheyearended 31August2025arerequiredtobefiled. Asofthedateofthesefinancialstatements,theGroup hasapproximately£13.2million(including£0.8millionof cashintransitfromcompletedpropertysales)offree cashandexpectsafurther£4.3millionofnetproceeds fromexchangedbutnotcompletedpropertysales.For purposesofthegoingconcernanalysistheDirectors haveassumednilcashrentnetofpropertyexpenses untilthepropertiesaresold.TheDirectorshave forecastexpendituresoverthenexttwelvemonths andarecomfortablethatthecashonhandplusthenet proceedsonexchangedbutnotcompletedproperty saleswillbeadequatetocoverthoseexpenses.In theeventthatexpendituresexceedthoseestimates, theGroupcanselladditionalpropertiestocoverany unforeseenexpenses. 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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amounts willberequiredtosettlethesematters.Whenthe Directorsareabletoestimatetherangeofexposure, theCompanymay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thethreatenedlitigation,theFCA investigationand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. Governance Report of the Audit Committee—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     63 Auditor’s remuneration FeespaidtotheGroup’sIndependentAuditorincludethefollowing: Serviceprovided Yearended 31August2023 £’000’s Periodended 31August2022 £’000’s FeespayablefortheauditoftheCompany’sannualaccounts 1,004 2,164 FeespayableinrespectofthereviewoftheInterimReport – 44 FeespayablefortheauditoftheCompany’ssubsidiaries 72 72 FurtherdetailsoftheAuditor’sremunerationaresetoutinNote5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asfollows: Non-auditserviceprovided Yearended 31August2023 £’000’s Yearended 31August2022 £’000’s ReviewofInterimReport – 44 TheindependenceoftheAuditorwasconsideredpriortotheprovisionofthisservice.TheAuditCommittee believesthattheprovisionoftheaboveservicedidnotaffecttheindependenceofBDOLLPastheCompany’s externalAuditor. Effectivenessoftheexternalaudit TheChairoftheCommitteemetwiththeleadauditpartnertoagreetheauditplanfortheyearended 31August2023andtodiscussanyissuesarisingfromtheprioryear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2023withoutthe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AuditCommitteehaschallengedtheAuditor andconcludedthattheAuditorhasdemonstratedagoodunderstandingofthestructureandoperations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notedthattherewere nonon-auditservicesprovidedduringtheyearunderaudit.TheCommitteereceivesannualassurancefrom theAuditorthatitsindependenceisnotcompromisedbytheprovisionofnon-auditservices.TheCommittee issatisfiedthattheAuditor’sobjectivityandindependenceisnotimpairedbytheperformanceofthenon-audit services(inFY22)andthattheAuditorhasfulfilleditsobligationstotheCompanyanditsshareholders. Governance Report of the Audit Committee—continued 64     HomeREITplc | AnnualReport | Fortheyearended31August2023 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theAuditor,theservicesprovided duringtheyearandareviewofBDO’sindependence andobjectivity,theCommitteehasrecommended totheBoardthere-appointmentofBDOfortheyear ended31August2024. Fair,balancedandunderstandable financialstatements TheCommitteehasconcludedthattheAnnualReport fortheyearended31August2023,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 13January2025 Governance Report of the Audit Committee—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     65 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2023. 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68and69. 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theAlvarium FMandAHRA’sinvestmentperformanceandtheir compliancewiththetermsoftheIMAandIAA, respectivelyandfollowingAEW’sappointment,its investmentperformanceandcompliancewiththe termsofAEW’sIMA; • reviewing,atleastannually,theperformance oftheAlvariumFMAHRAandAEWfollowing thelatter’sappointment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theAlvariumFM,AHRAandAEWfollowing thelatter’sappointmentand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 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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our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.Additionallytheprocessincludes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. Governance Report of the Management Engagement Committee 66     HomeREITplc | AnnualReport | Fortheyearended31August2023 Followingacomprehensivereviewon28October2022, 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. TheCommittee,on25April2023,notedthekeyevents inrespectoftheCompany’sserviceprovidersthathad occurredsinceNovember2022including: • AHRAbeingsoldbyitsparentAlvariumRELimited (nowAlTiRELimited)on30December2022to themanagement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,thatarepresentativeofAHRA, withouttheknowledgeandauthorityofthe Board,enteredintoasettlementagreementon 8December2022betweentheCompanyand the‘Aggregators’wherebytheCompanywould pay£0.7millionandpurportedlywaived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. • Thefollowingappointmentswerealsonotedbythe Committee: – JefferiesInternationalLimitedwasappointedas jointbrokeron29October2022.Theagreement withJefferiesInternationalLimitedwas terminatedon1February2023, – AlvariumSecuritiesresignedascorporatebroker on8February2023, – SmithSquarePartnersLLPwasappointed asfinancialadvisertotheCompanyon 13February2023followingtheBoard’sreview ofproposalsandshortlistinterviewswith potentialproviders.Therelationshipwas terminatedon24August2023witheffectfrom 24November2023. Governance Report of the Management Engagement Committee—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     67 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.Followingtheyearend,theCommittee reviewedtheperformanceofAEWfromthedateof theirappointment.TheCommitteeissatisfiedthat theInvestmentManager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 theInvestmentManagerisinthebestinterestsof shareholdersasawhole. TheChairisindependentofAEW. TheCommitteealsonotethefollowingappointments andterminationsintheperiod: • KnightFrankLLPwasappointedtovaluethe investmentpropertiesat31August2022but resignedon5May2023. • JonesLangLaSalleLimited(“JLL”)asthe IndependentValuertotheGroupon18July2023. JLLwasappointedtoundertakethevaluationasat 31August2022,28February2023andsubsequent valuationpoints. • LiberumCapitalLimited(nowPanmureLiberum CapitalLimited)(“Liberum”).Liberumwas appointedascorporatebrokerandCapitalMarkets Adviser(”CMA”)on5July2023. AcomprehensivereviewoftheCompany’skeyservice providerswaspreparedpriortoandreviewedina meetingwiththecommitteeon26October2023.With dueconsiderationoftheeventsthathaveoccurred duringtheperiod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 Committee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 13January2025 Governance Report of the Management Engagement Committee—continued 68     HomeREITplc | AnnualReport | Fortheyearended31August2023 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2023. 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below. Meetings TherehasbeenonemeetingoftheCommittee duringtheyear.TheDirectors’attendanceatthis meeting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,inthepreviousfinancialyear,undertook 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. Governance Report of the Nomination Committee  HomeREITplc | AnnualReport | Fortheyearended31August2023     69 TheresultsofthisBoardevaluationprocesswere reviewedanddiscussedbytheNominationCommittee on28October2022.TheCommittee’sdeliberations concludedthatasawholetheBoardfunctions effectivelyandthecurrentCommitteestructure remained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 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viewoftheexceptional circumstancestheCompanywasexperiencing,aformal performanceevaluationprocesswasnotundertaken inrespectoftheyearended31August2023.Itwasthe Board’sintentionthatoncethenewDirectorswerein placeandtheDirectorsinofficeatIPOhadtransitioned, aninternalperformanceevaluationwouldbecarried outbywayofcompletingwrittenquestionnaires. Thesequestionnaireswouldbe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.Anevaluationofthe newDirectorswascarriedoutinJuly2024withits resultsbeingdiscussedinSeptember2024.TheChair’s evaluationwasconductedbyMrDayandMrWilliams andwasledbyMrWilliamsastheSeniorIndependent DirectoroftheCompany.TheresultsoftheBoard evaluationprocesswerereviewedanddiscussedbythe NominationCommittee.Therecommendationsmade aspartoftheevaluationprocesswerediscussedby theDirectorstoensurethatallpointswereaddressed appropriatelyandtoenablecontinuousimprovement oftheBoard. 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thebestuseofShareholder resourcesatthistime. Governance Report of the Nomination Committee—continued 70     HomeREITplc | AnnualReport | Fortheyearended31August2023 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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2025 AnnualGeneralMeeting. 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 NominationCommitteewilltakeintoconsideration therecommendationsoftheAICCode,theParker Reviewandotherguidanceonboardroomdiversity andinclusion. TheBoardsupportstherecommendationsofthe FTSEWomenLeadersReviewongenderdiversity anditsvoluntarytargetforFTSE350boardstohavea minimumof40%ofwomenonboards.TheCompany alsosupportstheParkerreview’srecommendations toincreaseethnicandculturaldiversityoncompany boards.WhilsttheBoarddoesnotconsiderit appropriatetousespecificdiversitytargetsgivenits smallsize,itacknowledgesthatdiversityisimportant toensurethattheCompanycandrawonabroadrange ofperspectives,skills,experience,knowledgeand backgroundstoeffectivelyleadtheCompany. Asat31August2023,theBoardcomprisedtwofemale (50%)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followingtablessetoutthegenderandethnic diversityoftheBoardasat31August2023: Genderdiversity Number ofBoard members Percentageof theBoard Numberof senior positions ontheBoard 1 Men 2 50 1 Women 2 50 2 Other – – – Notspecified/ prefernottosay – – – Ethnicdiversity Number ofBoard members Percentageof theBoard Numberof senior positions ontheBoard 1 WhiteBritish orotherWhite (includingminority- whitegroups) 4 100 3 Mixed/Multiple EthnicGroups – – – Asia/AsianBritish – – – Black/African/ Caribbean/ BlackBritish – – – Otherethnic groups, includingArab – – – Notspecified/ prefernottosay – – – 1 Senior positions include Chair of the Board, Senior Independent Director and Chair of the Audit Committee. Governance Report of the Nomination Committee—continued HomeREITplc | AnnualReport | Fortheyearended31August2023     71 Asanexternallymanagedinvestmentcompanywith solelyindependent,non-executiveDirectors,the CompanydoesnothaveaChiefExecutiveoraChief FinancialOfficerandhasnoemployeesorinternal operations.Accordingly,therearenodisclosuresabout executivemanagementpositionstobeincluded.The roleoftheAuditCommitteeChairisconsideredtobe aseniorpositionandhasbeenincludedintheabove tables.WiththreeBoardappointmentspostyear end,theCompanyrecognisesthatitiscurrentlynot meetingthetargetonethnicandgenderdiversity. WhilsttheBoardunderstandstheimportanceof diversityandinclusion,itiscognisantthattheCompany isunabletomeetthediversityandinclusiontargets owingtoimplementationofthewind-downstrategy. AsaresultofthedecisiontoentertheManaged Wind-Downandthe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theyearended 31August2023.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 13January2025 Governance Report of the Nomination Committee—continued 72     HomeREITplc | AnnualReport | Fortheyearended31August2023 Governance Directors’ remuneration report Annual report on Directors’ remuneration TheDirectors’RemunerationReportfortheyearended 31August2023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2023,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2024inrespect ofDirectorsinofficeatIPO.Followingtheyearend, MichaelO’DonnellwasappointedastheChairofthe Companywitheffectfrom18January2024atabase feeof£100,000withasupplementaryprorataannual feeof£100,000owingtotheadditionalworkhewould undertakeastheChairoftheCompany,untilthe Companystabilised.PeterWilliamswasappointedasa Directorfrom2April2024,atabasefeeof£60,000and anadditionalfeeof£10,000forhisroleastheSenior IndependentDirector.RodDaywasappointedasa Directorwitheffectfrom7June2024,atabasefeeof £60,000.ItisintendedthatRodwouldreplaceMarlene WoodastheAuditCommitteeChairofCompanyonce shestepsdownfromtheBoardandwouldreceive anadditionalfeeof£10,000onhisappointmentto thisposition. ThefeespayabletotheDirectorswillbereviewed onanannualreview,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2023accountsgeneral meetingoftheCompanytobeheldassoonaspossible followingthepublicationofthe2023AnnualReport andAccounts,toreceiveandapprovetheDirectors’ RemunerationReport. Performance of the Company Thefollowinggraphcompares,sinceAugust2021, 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 NOVAUGMAYJAN 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2023     73 Directors’ remuneration (audited) Fees Expenses Total Forthe yearended 31August2023 £ Forthe periodended 31August2022 £ Forthe yearended 31August2023 £ Forthe periodended 31August2022 £ Forthe yearended 31August2023 £ Forthe periodended 31August2022 £ Percentage changeinfees % Lynne Fennah (Chair) 50,000 50,000 793 – 50,793 50,000 0 Peter Cardwell 36,000 36,000 – – 36,000 36,000 0 Simon Moore 36,000 36,000 – – 36,000 36,000 0 Marlene Wood (Chair of the Audit Committee) 41,000 41,000 4,509 870 45,509 41,870 0 163,000 163,000 5,302 870 168,302 163,870 0 TherearenovariableelementsintheremunerationpayabletotheDirectors.Noneoftheabovefeeswaspaidto thirdparties.TherehasbeennochangeintheremunerationpaidtoDirectorsfrominceptionto31August2023. 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andinvestment managementfeesincurredbytheGroup. Yearended 31August2023 £’000 Periodended 31August2022 £’000 Change % Directors’ fees 163 163 0 Investment Adviser’s fee (until 30June2023) 5,094 5,322 (4.3) Investment Manager’s Fee (From 21August2023) 910 – N/A Dividends 10,910 28,321 (61.5) * Total fees incurred of £5,822,000 less credits negotiated by the directors of £728,000. ** Fee excludes £900,000 paid to AEW in capacity as Property Adviser from 22 May 2023 to 20 August 2023. *** The difference of £13,000 to the amount presented in the Consolidated Statements of Comprehensive Income is due to U.K. National Insurance. 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/investment management fee, which has been included because the Directors believe it will help shareholders’ understanding of the relative importance of the spend on pay. The figures for this measure are the same as those shown in Note 5 to the 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2023 31August2022 Lynne Fennah 55,000 55,000 Peter Cardwell 10,000 10,000 Simon Moore 56,000 56,000 Marlene Wood 30,000 30,000 Therehavebeennochangestotheseinterests between31August2023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. Governance Director’s remuneration report—continued 74     HomeREITplc | AnnualReport | Fortheyearended31August2023 Governance Director’s remuneration report—continued Voting at AGM TheAnnualReportandAccounts,togetherwiththereportsoftheDirectorsandBDOandtheDirectors’ RemunerationReportfortheperiodended31August2022werepresentedtoshareholdersattheGeneralMeeting heldon5December2024.Thevotescastbypollwereasfollows: 2022AnnualReportandAccounts Directors’ Remuneration Report Numberofvotes %ofvotescast Numberofvotes %ofvotescast For 196,861,578 45.25 472,949,024 87.94 Against 238,233,187 54.75 64,833,524 12.06 Total votes cast 435,094,765 100.00 537,782,548 100.00 Number of votes withheld 102,787,803 100,200 TheBoardrecognisesthat,ofthe55%oftheshareholdersthatvoted,amajorityofthoseshareholdersvoted againsttheresolutiontoreceivetheCompany’sAnnualReportandAccountsfortheyearended31August2022 andalsonotesthatashareholderadvisoryconsultancy(ISS)recommendedthatshareholdersvoteagainst theresolution,duetothedelayinpublishing,andqualifiednatureof,theaccounts.InaccordancewiththeAIC CorporateGovernanceCode,theCompanyintendstoconsultfurtherwithrelevantshareholderstounderstand thereasonsbehindtheresult,beyonddiscussionsthathavealreadytakenplacepriortotheGeneralMeeting. AresolutiontoapprovetheDirectors’RemunerationReportfortheyearended31August2023willbeput toshareholdersattheGeneralMeetingtoapprovetheAnnualReportandAccountsfortheyearended 31August2023. 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Company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Company.TheBoardmay,however,payfeesto externalagenciestoassisttheBoardinthesearchand selectionofDirectors. HomeREITplc | AnnualReport | Fortheyearended31August2023     75 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. 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 13January2025 Governance Directors’ remuneration report—continued 76     HomeREITplc | AnnualReport | Fortheyearended31August2023 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appropriatetopresume thattheGroupandtheCompanywillcontinuein business.AsstatedinNote1totheConsolidated andCompanyFinancialStatementsthedirectorsdo notconsidertheGrouporCompanytobeagoing concernandhavepreparedthefinancialstatements onabasisotherthanthatofagoingconcern. 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 13January2025 Governance Statement of Directors’ responsibilities  HomeREITplc | AnnualReport | Fortheyearended31August2023     77 Governance Independent auditor’s report to the members of Home REIT plc Disclaimer of opinion on the Consolidated Statement ofComprehensiveIncomeandQualifiedopinion onthecorrespondingfiguresandNotestothe Financial Statements WehaveauditedthefinancialstatementsofHome REITplc(“theCompany”)anditssubsidiaries(together, the“Group”)fortheyearended31August2023 whichcomprisetheConsolidatedStatementof ComprehensiveIncome,the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financialreportingframeworkthat hasbeenappliedinthepreparationoftheGroup 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). Wedonotexpressanopinionontheaccompanying ConsolidatedStatementofComprehensiveIncome, theConsolidatedandCompanyStatementsof ChangesinShareholders’EquityortheConsolidated StatementofCashFlowsfortheyearended 31August2023.Becauseofthesignificanceofthe mattersdescribedinthesectionofourreportheaded ‘BasisfordisclaimerofopinionontheStatementof ComprehensiveIncomeandQualifiedopinionon thecorrespondingfiguresandNotestotheFinancial Statements’,wehavenotbeenabletoobtain sufficientappropriateauditevidencetoprovide abasisforanauditopinionontheStatementof ComprehensiveIncome. Notwithstandingthis,inouropinion,andexceptfor thepossibleeffectsonthecorrespondingfiguresof themattersandnotestothefinancialstatements setoutinthe‘Basisfordisclaimerofopiniononthe StatementofComprehensiveIncomeandQualified opiniononthecorrespondingfiguresandNotestothe FinancialStatements’: • thefinancialstatementsgiveatrueandfairview ofthestateoftheGroup’sandoftheCompany’s affairsasat31August2023; • theGroupfinancialstatementshavebeen properlypreparedinaccordancewithUKadopted internationalaccountingstandards; • theCompanyfinancialstatementshavebeen properlypreparedinaccordancewithUnited KingdomGenerallyAcceptedAccounting Practice;and • thefinancialstatementshavebeenprepared inaccordancewiththerequirementsofthe CompaniesAct2006. Basis for disclaimer of opinion on the Consolidated StatementofComprehensiveIncomeandQualified opiniononthecorrespondingfiguresandNotestothe Financial Statements Asaresultofthedisclaimerofopinionissuedinrespect oftheConsolidatedandCompanyStatementsof FinancialPositionsasat31August2022,duetoan inabilitytoobtainsufficientappropriateauditevidence inrelationtothematterssetoutbelowandwhich formtheopeningbalancesasat1September2022for thefinancialstatementsasatandfortheyearended 31August2023,wewereunabletoexpressanopinion ontheConsolidatedStatementofComprehensive Incomefortheyearended31August2023. InpreparingtheGroupandCompanyFinancial Statementsfortheyearended31August2022,the Directorsattemptedtoobtaininformation,and provideuswithexplanations,thatweconsidered necessaryforthepurposesofouraudit.However,in somecasestheDirectorswerenotabletoobtainthe informationorprovideuswiththeseexplanations andasaconsequence,theDirectorshadtomake anumberofassumptionsinordertopreparethe GroupandCompanyfinancialstatementsfortheyear ended31August2022asdetailedinNote3tothese ConsolidatedFinancialStatementsandNote2tothese Company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wasnot providedand/oravailabletous. Wesetoutbelowthelimitationswhichledtothe disclaimerofopinionontheConsolidatedand CompanyStatementsofFinancialPositionsasat 31August2022thatarerelevanttoandresultinthe disclaimerofopinionontheConsolidatedStatement ofComprehensiveIncomefortheyearended 31August2023. 78     HomeREITplc | AnnualReport | Fortheyearended31August2023 Financial statement areas impacted Limitations in the scope of our audit which led to the disclaimer of opinion on the Consolidated and Company Statements of Financial Positions as at 31August2022 Impactonthefinancialstatementsasat andfortheyearended31August2023 Changeinfairvalueof investmentproperty Theconditionofthepropertieswas unknownbytheDirectorsuptothedate oftheinspectionprogrammewhichwas undertakenbetweenAugust2023andMay 2024.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ledtotheindependentvaluers havingtomakeassumptionsregarding thephysicalconditionofpropertiesasat 31August2022. Asaresultofthelimitationofscopeover thevaluationofinvestmentpropertyasat 31August2022,thereisalimitationofscope overthechangeinfairvalueofinvestment propertyintheyearended31August2023. PrepaidSeller’sWorks –write-offofSeller’s Worksnotinitiatedor completedintheyear 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fitstatefortheir intendedusebytheGroup’stenants. Duealackofauditevidenceand accountingrecords,theDirectorsmade assumptionsastothevalueofthese worksandthetimingforwriteoffofworks notcompleted. Thislimitationinthescopeofouraudit remainsandasallprepaidSeller’sWorks havebeenwrittenofftotheConsolidated StatementofComprehensiveIncomeas at31August2023,wehavebeenunableto obtainsufficientappropriateauditevidence inrespectoftheamountswrittenoffinthe yearended31August2023. Leaseincentiveor leaseinducementfor unhabitableproperties Rentalincome TheDirectorsreviewedthesubstance oftheagreementsenteredintowith tenantsandvendorsanddeterminedthat aleaseincentiveorleaseinducement forunhabitablepropertiesshouldhave beenestablishedonacquisition.Duea lackofaccountingrecordsbothoverthe conditionofthepropertyonacquisition, togetherwiththeGroupnotbeingparty toanyagreementbetweenthetenant andthevendor,thedirectorshadtomake assumptionsastothelengthofanytenant incentiveprovidedbythevendor. Thislimitationinthescopeofouraudit remainsontheamountsallocatedin thefinancialstatementsfortheyear end31August2022onacquisitionof investmentpropertiestoaleaseinducement receivableforunhabitableproperties.As at31August2023,allamountshavebeen fullyprovidedbut,wehavebeenunableto obtainsufficientappropriateauditevidence inrespectoftheamountsprovidedforinthe yearended31August2023. Rentcommencement date–Rentalincome Duealackofevidenceoverthecondition ofthepropertyonacquisition,the directors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. Thereremainsalimitationinthescopeof ourauditinrespectoftheConsolidated StatementofComprehensiveIncomeforthe yearended31August2023. Governance Independent auditor’s report to the members of Home REIT plc—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     79 Financial statement areas impacted Limitations in the scope of our audit which led to the disclaimer of opinion on the Consolidated and Company Statements of Financial Positions as at 31August2022 Impactonthefinancialstatementsasat andfortheyearended31August2023 Costcapitalisationat theacquisitiondate– Administrativeexpenses 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were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. Thereremainsalimitationinthescopeof ourauditastowhetheranyfurtheramounts neededtohavebeenexpensedinthe ConsolidatedStatementofComprehensive Incomefortheyearended31August2023. Tenantreceivables– Provisionforexpected creditlossesof tradereceivables DuringtheperiodfromSeptember2021to October2022cashwasreceivedinseveral non-traditionalmannersandtherewasa lackofevidenceandaccountingrecordsto supporttheapplicationoffundsreceived tospecificinvoices.Asaresult,therewas insufficientevidencetothesupportthe ageingoftradereceivables. Thereremainsalimitationofscopeasto theexistenceoftradereceivables,lease inducementreceivablesforunhabitable propertiesandrentnotrecognisedbecause propertieswereunhabitable.Asthemajority oftheseamountsasat31August2023have beenfullyprovidedforintheConsolidated StatementofComprehensiveIncomeinthe yearended31August2023,wehavebeen unabletoobtainsufficientappropriateaudit evidenceoftheamountsincludedinthe Provisionforexpectedcreditlossesoftrade receivablesintheConsolidatedStatement ofComprehensiveIncome. Notestothefinancial statementsrelating totheConsolidated Statementof ComprehensiveIncome 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asat andfortheyearended31August2022. Thislimitationinthescopeofouraudit remainsinrespectofthenotestothe ConsolidatedStatementofComprehensive Incomefortheyearended31August2023. 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2023 Notwithstandingthisandthelimitationsofscopein respectofthecurrentyearassetoutabove,inrelation totheConsolidatedandCompanyStatementsof FinancialPositionasat31August2023,webelievethat theauditevidencewehaveobtainedissufficientand appropriatetoprovideabasisforouropiniononthose statementsonly. Inaddition,asaresultoftheabovelimitations,wewere unabletoobtainsufficientappropriateauditevidence overcertainitemsdisclosedintheConsolidatedCash FlowStatementandtheConsolidatedandCompany StatementsofChangesinShareholders’Equityfor theyearended31August2023,andtheassociated notestotheConsolidatedCashFlowStatementand ConsolidatedandCompanyStatementsofChangesin Shareholders’Equity.OuropinionontheConsolidated StatementofCashFlows,ConsolidatedandCompany StatementsofChangesinShareholders’Equityand associatednotesisthereforedisclaimedasaresultof theabovematters. Ouropiniononthecurrentperiod’sfinancial statementsisadditionallymodifiedinrespectofthe notestotheConsolidatedandCompanyStatements ofFinancialPositionasaresultofthematterssetout above.Notwithstandingtheabove,ouropinionin respectoftheConsolidatedandCompanyStatement ofFinancialPositionasat31August2023isunmodified. Ouropiniononthecurrentperiod’sfinancial statementsisfurthermodifiedbecauseofthe possibleeffectsoftheabovemattersonthe comparabilityofthecurrentperiod’sfiguresandthe correspondingfigures. Independence Followingtherecommendationoftheaudit committee,wewereappointedbythedirectorson 17September2020toauditthefinancialstatements fortheperiodfromincorporationto31August2021 andsubsequentfinancialperiods.Theperiodoftotal uninterruptedengagementincludingretendersand reappointmentsisthreeyears,coveringtheperiod from19August2020to31August2023.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. 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andNote1totheCompany financialStatementswhichexplainthatasaresult ofthethreatenedlitigation,theFCAinvestigation andtheDirectors’expectationforanorderlywind- downoftheGroupandCompany’soperations,the Directorsconsideritappropriatetoadoptabasisof accountingotherthanasagoingconcerninpreparing theConsolidated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andNote1totheCompanyFinancial Statements.Ouropinionisnotmodifiedinrespectof thismatter. Overview Key audit matters Key Audit Matter 2023 2022 Investmentpropertyvaluations P P Propertyacquisitioncost,Seller’sWorksand leaseinducements P P Revenuerecognition P P Managementoverrideofcontrols P P Tenantreceivables P P Relatedpartytransactions P P Annualreportpreparationanddisclosures P P Materiality Groupfinancialstatementsasawhole £4.3mbasedon2%ofnetassets Governance Independent auditor’s report to the members of Home REIT plc—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     81 An overview of the scope of our audit OurGroupauditwasscopedbyobtainingan understandingoftheGroupanditsenvironment, includingtheGroup’ssystemofinternalcontrol,and assessingtherisksofmaterialmisstatementinthe financialstatements.Wealsoaddressedtheriskof managementoverrideofinternalcontrols,including assessingwhethertherewasevidenceofbiasbythe Directorsthatmayhaverepresentedariskofmaterial misstatement. TheGroupoperatesintheUnitedKingdominone segment,investmentproperty,structuredthrough anumberofsubsidiaryentities.Wedeterminedthat theGroupoperatesasasinglecomponentandassuch theauditapproachincludedundertakingauditwork onthekeyrisksofmaterialmisstatementsidentified fortheGroup.TheGroupauditengagementteam performedfullscopeauditsinordertoissuetheGroup andCompanyauditopinion,includingundertakingall oftheauditworkontherisksofmaterialmisstatement identifiedinthekeyauditmatterssectionbelow.As aresultofourauditapproach,weplannedtoobtain coverageof100%ofrentalincomeand100%of investmentpropertyvaluations. Climatechange Ourworkontheassessmentofpotentialimpactson climate-relatedrisksontheGroup’soperationsand financialstatementsincluded: • EnquiriesandchallengeoftheInvestmentAdviser andtheGroup’sindependentpropertyvaluerto understandtheactionstheyhavetakentoidentify climate-relatedrisksandtheirpotentialimpactson thefinancialstatementsandadequatelydisclose climate-relatedriskswithintheannualreport; • Ourownqualitativeriskassessmenttakinginto considerationthesectorinwhichtheGroup operatesandhowclimatechangeaffectsthis particularsectorandpropertyassetclass; • ReviewoftheminutesofBoard,AuditCommittee andothercommitteemeetingsandotherpapers relatedtoclimatechangeandperformedarisk assessmentastohowtheimpactoftheGroup’srisk assessmentmayaffectthefinancialstatementsand ouraudit; • Wealsoassessedtheconsistencyofmanagement’s disclosuresincludedas‘StatutoryOther Information’withintheStrategicReportwithour knowledgeobtainedfromtheaudit. Basedonourriskassessmentprocedures,wedidnot identifytheretobeanyKeyAuditMattersmaterially impactedbyclimate-relatedrisks. 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.Thesematterswere 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 thesematters. Thekeyauditmattersinclude,inadditiontothe matterssetoutbelow,themattersoutlinedinthe ‘BasisfordisclaimerofopinionontheStatementof ComprehensiveIncomeandQualifiedopiniononthe correspondingamountsandNotestotheFinancial Statements’sectionofourreportabove.Thisisnota completelistofallrisksidentifiedbyouraudit. 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2023 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8tothe ConsolidatedFinancial StatementsandNote 5totheCompany 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. Experienceoftheindependentpropertyvaluerand relevanceofitswork • Weobtainedthevaluationreportpreparedbythe independentpropertyvaluer,JonesLangLasalle Limited(‘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. • 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8to theConsolidatedFinancialStatementsonpages 114to116).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. Governance Independent auditor’s report to the members of Home REIT plc—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     83 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. 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. 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UKInvestmentManagement LLP(‘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 84     HomeREITplc | AnnualReport | Fortheyearended31August2023 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solely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8totheConsolidated FinancialStatementsonpages114to116.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  HomeREITplc | AnnualReport | Fortheyearended31August2023     85 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. Weconsideredtheadequacyofthedisclosureswith regardstoinvestmentpropertyvaluations. KeyObservations Basedonourworkwehavenotidentifiedanymaterial instanceswhichmayindicatethattheassumptions adoptedbytheDirectorsinthevaluationwere unreasonableorthatthemethodologyapplied wasinappropriateinrespectofthevaluationsasat 31August2023. 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2023 Key audit matter How the scope of our audit addressed the key audit matter Property acquisition cost,prepaid 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8tothe ConsolidatedFinancial StatementsandNote 5totheCompany 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. 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Director’spaper ontheaccountingfortheacquisitionofinvestment propertiesandchallengedtheconclusions. KeyObservations AsperNote10totheConsolidatedFinancialStatements, allamountsrecognisedhavebeenwrittenoffinthe financialstatementsfortheyearended31August2023 andassuchnoSeller’sWorksremainincludedinthe ConsolidatedStatementofFinancialPositionasat 31August2023. Governance Independent auditor’s report to the members of Home REIT plc—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     87 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4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108to 110,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theexistence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acquisition,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2022and31August2023.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theresultingdifferences. 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. 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ontheConsolidatedStatement ofComprehensiveIncomeandQualifiedopinionon thecorrespondingfiguresandNotestotheFinancial Statements’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2023 Key audit matter How the scope of our audit addressed the key audit matter Management override of controls Thereisevidencefromthe Investigation,andouraudit work,thatcertaincontrols inplaceappeartohavebeen overriddenduringtheperiod from1September2022to 30June2023,whenAlvarium HomeREITAdvisorsLimited (‘AHRA’)ceasedtobeengaged bytheCompany.Asaresult, thereisariskthatcontrols maynothaveprevented ordetectedandcorrected materialmisstatementsin theConsolidatedFinancial Statementsfortheyear ended31August2023. 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. 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analysiswasalsoperformedoverjournalentries withhigherriskcriteriaandasampleofotherjournals thatdidnotmeetour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for disclaimerofopinionontheConsolidatedStatement ofComprehensiveIncomeandQualifiedopinionon thecorrespondingfiguresandNotestotheFinancial Statementssectionabove. Further,weappliedadditionalchallengeandscepticism inallareasoftheaudit.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ontheConsolidatedStatement ofComprehensiveIncomeandQualifiedopinionon thecorrespondingfiguresandNotestotheFinancial Statements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2023     89 Key audit matter How the scope of our audit addressed the key audit matter Tenant receivables RefertoNote10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2023maynot berecoverable. Asdetailed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 AsperNote10totheConsolidatedFinancialStatements, themajorityoftenantreceivableshavebeenwritten offintheyearended31August2023withonlytrivial amountsremainingincludedintheConsolidated StatementofFinancialPositionasat31August2023. Related party transactions RefertoNote18to theConsolidated FinancialStatements Theallegationsmadeinthe ViceroyResearchReport, issuedbyViceroyResearchLLP inNovember2022,includeda claimthattheGroupmayhave paidinflatedacquisitionprices foritsproperties. Furthermore,theInvestigation 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18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ontheConsolidatedStatement ofComprehensiveIncomeandQualifiedopinionon thecorrespondingfiguresandNotestotheFinancial Statementssection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2023 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ontheConsolidatedStatement ofComprehensiveIncome,andQualifiedopinionon thecorrespondingfiguresandNotestotheFinancial Statements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2023     91 Our application of materiality Weapplytheconceptofmaterialitybothinplanningandperformingouraudit,andinevaluatingtheeffectof misstatements.Weconsidermaterialitytobethemagnitudebywhichmisstatements,includingomissions,could influencetheeconomicdecisionsofreasonableusersthataretakenonthebasisofthefinancialstatements. Inordertoreducetoanappropriatelylowleveltheprobabilitythatanymisstatementsexceedmateriality,we usealowermaterialitylevel,performancemateriality,todeterminetheextentoftestingneeded.Importantly, misstatementsbelowtheselevelswillnotnecessarilybeevaluatedasimmaterialaswealsotakeaccountofthe natureofidentifiedmisstatements,andtheparticularcircumstancesoftheiroccurrence,whenevaluatingtheir effectonthefinancialstatementsasawhole. Basedonourprofessionaljudgement,wedeterminedmaterialityforthefinancialstatementsasawholeand performancematerialityasfollows: Groupfinancialstatements £m Companyfinancialstatements £m Materiality 4.3 4.3 Basis for determining materiality MaterialityfortheGroup’sandCompany’sfinancialstatementswassetat2%of netassets.Thisprovidesabasisfordeterminingthenatureandextentofourrisk assessmentprocedures,identifyingandassessingtheriskofmaterialmisstatementand determiningthenatureandextentoffurtherauditprocedures. Rationale for the benchmark applied DuetotheuniquecircumstancesthattheGroupisnowin,theusersofthefinancial statementsprimaryfocuswillbeonthenetassetvalueoftheGroupasshareholders looktorealisetheremainingvalueoftheGroup.Nofurtheracquisitionswillbemadeby theGroupandthustheremainingvalueissolelybaseduponthevalueoftheinvestment properties,lesstheoutstandingborrowingsandliabilities. Performance materiality 2.15 2.15 Basis for determining performance materiality Performancematerialityissetatanamounttoreducetoanappropriatelowlevelthe probabilitythattheaggregateofuncorrectedandundetectedmisstatementsexceeds materiality.Onthebasisofourriskassessment,togetherwithourassessmentofthe Group’soverallcontrolenvironment,ourjudgementwasthatoverallperformance materialityfortheGroupshouldbe50%(Company:50%)ofmateriality. WedeterminedthatthesamemeasureastheGroupwasappropriatefortheCompany. Rationale for the percentage applied forperformance materiality Wedeterminedthat50%ofmaterialitywouldbeappropriatebasedonourrisk assessment,togetherwithourassessmentoftheGroup’sandCompany’soverallcontrol environment,thenumberofaccountswhereamountsaresubjecttoestimationandthe expectedtotalvalueofknownandlikelymisstatementsbasedonpreviousexperience. Reportingthreshold WeagreedwiththeAuditCommitteethatwewouldreporttothemallindividualauditdifferencesinexcessof £86,000.Wealsoagreedtoreportdifferencesbelowthisthresholdthat,inourview,warrantedreportingon qualitativegrounds. . 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2023 Other information TheDirectorsareresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationincluded intheAnnualReportotherthanthefinancialstatementsandourauditor’sreportthereon.Ouropiniononthe financialstatementsdoesnotcovertheotherinformationand,excepttotheextentotherwiseexplicitlystated inourreport,wedonotexpressanyformofassuranceconclusionthereon.Ourresponsibilityistoreadtheother informationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancial statementsorourknowledgeobtainedinthecourseoftheaudit,orotherwiseappearstobemateriallymisstated. Ifweidentifysuchmaterialinconsistenciesorapparentmaterialmisstatements,wearerequiredtodetermine whetherthisgivesrisetoamaterialmisstatementinthefinancialstatementsthemselves.If,basedontheworkwe haveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredto reportthatfact. 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limitations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theOtherInformationismateriallyconsistentwiththe FinancialStatements. Corporate governance statement TheUK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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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page42. Other Code provisions • Directors’statementonfair,balancedandunderstandablesetoutonpage76; • Directors’confirmationthattheyhavecarriedoutarobustassessmentofthe emergingandprincipalriskssetoutonpage76; • ThesectionoftheAnnualReportthatdescribesthereviewofeffectivenessofrisk managementandinternalcontrolsystemssetoutonpages54to55;and • ThesectiondescribingtheworkoftheAuditCommitteesetoutonpages56to58. Governance Independent auditor’s report to the members of Home REIT plc—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     93 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ontheStatementofComprehensiveIncomeandQualifiedopiniononthe correspondingamountsandNotestotheFinancialStatements’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opinionontheStatementofComprehensive IncomeandQualifiedopiniononthecorrespondingamountsandNotestotheFinancial Statement,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. Corporate governance statement Becauseofthesignificanceofthemattersdescribedinthe‘Basisfordisclaimerof opinionontheStatementofComprehensiveIncomeandQualifiedopiniononthe correspondingamountsandNotestotheFinancialStatement’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aboutinternalcontrolandriskmanagement systemsinrelationtofinancialreportingprocessesandaboutsharecapitalstructures, givenincompliancewithrules7.2.5and7.2.6intheDisclosureGuidanceand TransparencyRulessourcebookmadebytheFinancialConductAuthority(theFCA Rules),isconsistentwiththefinancialstatements. NotwithstandingourdisclaimerofopinionontheStatementofComprehensive IncomeandQualifiedopiniononthecorrespondingamountsandNotestotheFinancial Statement,inouropinion,basedontheworkundertakeninthecourseoftheauditthe informationaboutinternalcontrolandriskmanagementsystemsinrelationtofinancial reportingprocessesandaboutsharecapitalstructures,givenincompliancewithrules 7.2.5and7.2.6intheDisclosureGuidanceandTransparencyRulessourcebookmadeby theFinancialConductAuthority(theFCARules),hasbeenpreparedinaccordancewith applicablelegalrequirements. Becauseofthesignificanceofthemattersdescribedinthe‘Basisfordisclaimerof opinionontheStatementofComprehensiveIncomeandQualifiedopiniononthe correspondingamountsandNotestotheFinancialStatement’sectionofourreport above,wehavebeenunabletoconcludewhetherinthelightoftheknowledgeand understandingoftheGroupandtheCompanyanditsenvironmentobtainedinthe courseoftheaudit,thereareanymaterialmisstatementsinthisinformation. NotwithstandingourdisclaimerofopinionontheStatementofComprehensive IncomeandQualifiedopiniononthecorrespondingamountsandNotestotheFinancial Statement,inouropinion,basedontheworkundertakeninthecourseoftheaudit informationabouttheCompany’scorporategovernancecodeandpracticesandabout itsadministrative,managementandsupervisorybodiesandtheircommitteescomplies withrules7.2.2,7.2.3and7.2.7oftheFCARules. Wealsohavenothingtoreportarisingfromourresponsibilitytoreportifacorporate governancestatementhasnotbeenpreparedbytheCompany. 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2023 Matters on which we arerequiredtoreport byexception Arisingfromthelimitationofourworkreferredtointhe‘Basisfordisclaimerof opinionontheStatementofComprehensiveIncomeandQualifiedopinionon thecorrespondingamountsandNotestotheFinancialStatement’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andthepartoftheDirectors’remuneration reporttobeaudited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objectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrom materialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion. Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordance withISAs(UK)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudor errorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluence theeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements. 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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. 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. Governance Independent auditor’s report to the members of Home REIT plc—continued HomeREITplc | AnnualReport | Fortheyearended31August2023     95 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andAEW(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non-compliance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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 96     HomeREITplc | AnnualReport | Fortheyearended31August2023 Basedonourriskassessment,weconsideredthefollowingareastobemostsusceptibletofraud: 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4totheConsolidatedFinancialStatements),aswell assettlementoftenantreceivablesinnon-traditionalways(asdetailedinNotes3,4and 10totheGroup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. Governance Independent auditor’s report to the members of Home REIT plc—continued HomeREITplc | AnnualReport | Fortheyearended31August2023     97 Going concern Pleaserefertothe“EmphasisofMatter-financialstatementspreparedonabasisother thangoingconcern“sectionabove. 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on theConsolidatedStatementofComprehensiveIncomeandQualifiedopiniononthe correspondingfiguresandNotestotheFinancialStatements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. AfurtherdescriptionofourresponsibilitiesisavailableontheFinancialReportingCouncil’swebsiteat: www.frc.org.uk/auditorsresponsibilities.Thisdescriptionformspartofourauditor’s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 13January2025 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 98     HomeREITplc | AnnualReport | Fortheyearended31August2023 Financial Statements 99 ConsolidatedStatementofComprehensiveIncome 100 ConsolidatedStatementofFinancialPosition 101 ConsolidatedStatementofChangesinShareholders’Equity 102 ConsolidatedStatementofCashFlows 103 NotestotheConsolidatedFinancialStatements 129 CompanyStatementofFinancialPosition 130 CompanyStatementofChangesinShareholders’Equity 131 NotestotheCompanyFinancialStatements  HomeREITplc | AnnualReport | Fortheyearended31August2023     99 Consolidated Statement of Comprehensive Income Note Fortheyearended Fortheyearended 31August2023 31August2022 £’000 £’000 Income Rentalincome 4 5 7,6 3 9 38, 249 Impairmentofleaseinducement 4 (2 2,0 10) (2 8, 3 4 8) Impairmentofrentstraight-lining 4 (9,01 6) (2,92 2) Net rental income 26,61 3 6,979 Operating expenses Propertyoperatingexpenses 5 (754) – Generalandadministrativeexpenses 5 (1 9,1 59) (9,8 6 3) Provisionforexpectedcreditlossesoftradereceivables 10 (49, 5 02) (1 , 850) Otherexpenses 11 – (37 5) Total expenses (69, 41 5) (1 2 ,0 88) Changeinfairvalueofinvestmentproperty 8 (7 1 , 36 0) (452,87 3) Write-offofSeller’sWorksnotinitiatedorcompleted 10 (14 ,178) (11 ,922) Operating loss for the year (1 28 , 34 0) (469, 90 4) Gainonrevaluationofbankborrowings 9 14, 537 – Financeincome 9 2 ,70 6 – Financecosts 6 (7 ,063) (4 ,9 4 0) Loss before taxation (118,16 0) (4 74 , 8 4 4) Taxation 7 – – Loss and total comprehensive loss for the year attributable toshareholders (118,16 0) (4 74 , 8 4 4) Loss per Share – basic and diluted (pence per Share) 21 (14.95) (79.52) Based on the weighted average number of Shares in issue for the years ended 31 August 2023 and 2022. Allitemsintheabovestatementderivefromcontinuingoperations. Thenotesonpages103to128formpartofthesefinancialstatements. Financial Statements Consolidated Financial Statements 100     HomeREITplc | AnnualReport | Fortheyearended31August2023 Consolidated Statement of Financial Position Asat Asat 31August2023 31August2022 Note £’000 £’000 Non-current assets Investmentproperty 8 4 0 7, 9 3 2 41 4, 27 0 Total non-current assets 4 0 7, 9 3 2 414 ,2 70 Current assets Investmentpropertyheldforsale 8 4 ,788 – Tradeandotherreceivables 10 116 16 ,1 39 Restrictedcash 11 17,265 101,8 43 Cashandcashequivalents 11 814 74 , 5 1 4 Total current assets 22 ,983 192 , 496 Total assets 4 30,9 1 5 606 ,766 Current liabilities Bankborrowings 9 199,500 245 ,047 Tradeandotherpayables 12 14, 547 1 5,7 81 Total current liabilities 21 4 ,047 260,828 Total liabilities 21 4 ,047 260,828 Net assets 216,868 345,938 Capital and reserves Sharecapital 14 7 ,906 7 ,906 Sharepremium 15 595,7 33 595,7 33 Specialdistributablereserve 16 1 9 0,1 3 0 2 01 ,0 4 0 Accumulatedlosses (576,901) (458,7 41) Total capital and reserves attributable to equity holders of the company 216,868 345,938 Net asset value per share (pps) 22 2 7. 4 3p 4 3.76p Thenotesonpages103to128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 13 January 2025 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2023     101 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2023 Note £’000 £’000 £’000 £’000 £’000 Openingbalanceat1September2022 7 ,906 595,733 20 1 ,04 0 (458,7 41) 34 5,93 8 Lossandtotalcomprehensivelossforthe yearattributabletoshareholders – – – (1 18 ,16 0) (11 8,1 60) Transaction with owners: Dividenddistribution 16 – – (10,910) – (10,910) Balanceat31August2023 7 ,906 595, 733 190,130 (57 6,901) 216,868 Totalequity Special attributableto Share Share distributable Retained ownersofthe capital premium reserve earnings company Fortheyearended31August2022 Note £’000 £’000 £’000 £’000 £’000 Openingbalanceat1September2021 2,406 – 2 2 9, 36 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 16 – – (28, 320) – (28,320) Sharecapitalissued 14,15 5, 50 0 6 0 7, 7 3 4 – – 61 3, 2 34 Shareissuecosts 15 – (12,001) – – (12,001) Balanceat31August2022 7 ,906  595 ,733 20 1 ,04 0 (458,7 41) 345,938 Thenotesonpages103to128formpartofthesefinancialstatements. Financial Statements Consolidated Financial Statements—continued 102     HomeREITplc | AnnualReport | Fortheyearended31August2023 Consolidated Statement of Cash Flows Fortheyearended Fortheyearended 31August2023 31August2022 Note £’000 £’000 Cashflowsfromoperatingactivities Lossfortheyear (11 8,1 60) (4 74 , 8 4 4) Changeinfairvalueofinvestmentproperty 8 7 1, 360 452,873 Gainonrevaluationofbankborrowings 9 (14,537) – Financeincome 9 (2 ,706) – Financecosts 6 7, 0 6 3 4,940 Effectofstraightlining,leaseinducementsandimpairments 4 2 5,93 3 2 9, 2 5 8 Otherexpenses–Escrowaccount – 375 Operating result before working capital changes (31,047)  12 ,6 02 Decreaseintradeandotherreceivables 10 2 7, 7 4 5 2,1 35 (Decrease)/increaseintradeandotherpayables 12 (2, 33 4) 10,92 5 Netcashflows(usedin)/generatedfromoperatingactivities (5, 636)  2 5,66 2 Cashflowsfrominvestingactivities Purchaseofinvestmentproperties 8 (85,865) (5 97 ,420) RetentionsreleasedtotheGroupbysolicitors 11 1,95 1 – Receiptsrelatingtobuildingsconsideredasunhabitable 8 548 – Transfertosolicitorsforfutureacquisitions 11 – (18, 260) Net cash used in investing activities (83,366)  (61 5,6 8 0) Cashflowsfromfinancingactivities Proceedsfromissueofsharecapitalandsharepremium 14,15 – 61 3, 2 34 Shareissuecosts 15 – (12,001) Dividenddistribution 16 (10,910) (28,320) Interestpaid (5 , 394) (4,4 7 2) Loanarrangementfeepaid 19 (1, 56 7) (2 , 74 3) Non-utilisationfee 6 – (141) Breakgainonloanrepayment 9 2 ,70 6 – Cashreleasedfromrestrictedcashaccount 19 30, 4 67 92,7 57 Netcashgeneratedfromfinancingactivities 1 5, 302 658,314 Net(decrease)/increaseincashandcashequivalents (7 3,70 0) 68, 296 Cashandcashequivalentsatbeginningoftheyear 74 , 5 1 4 6, 21 8 Cash and cash equivalents at end of the year 11 81 4 74 , 5 1 4 Thenotesonpages103to128formpartofthesefinancialstatements. Financial Statements Consolidated Financial Statements—continued HomeREITplc | AnnualReport | Fortheyearended31August2023     103 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. The Directors approved the Consolidated Annual Report and Accounts for the year ended 31 August 2022 on 10 October 2024. 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 or 2024 annual reports within four months of its 2023 and 2024 year ends. 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 24. The principal activities of the Group and the nature of the Group’s operations are set out in the Strategic Report on pages 29 to 42. As discussed more fully in Note 18, 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 23 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 have 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 25, on 16 September 2024 shareholders approved a new investment policy for a Managed Wind-Down of the Group’s operations. Part of that strategy was to sell enough properties through auctions to repay all amounts outstanding to Scottish Widows Limited (“Scottish Widows” or the “Lender”). On 27 November 2024, the Group repaid the loans and in December 2024, the Group paid the Deferred Fees of £9.0 million and Scottish Widows released its charge over the Group’s assets. Pursuant to the Managed Wind-Down, the Group will sell its remaining portfolio of investment properties and will not make any further real estate acquisitions. No further investment will be made unless such expenditure is necessary to protect or enhance an asset’s net realisable value or in order to comply with statutory obligations. Cashflow projections for the Group have been prepared by AEW and agreed with the Board which consider: 1. The disposal of all remaining properties in a sale of the portfolio in one or more transactions. Such transactions are expected to complete in the second quarter 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 Group annual report and accounts for the year ended 31 August 2025 are required to be filed. As of the date of these financial statements, the Group has approximately £13.2 million (including £0.8 million of cash in transit from completed property sales) of free cash and expects a further £4.3 million of net proceeds  Financial Statements Notes to the Consolidated Financial Statements 104     HomeREITplc | AnnualReport | Fortheyearended31August2023 Financial Statements Notes to the Consolidated Financial Statements—continued from exchanged but not completed property sales. For purposes of the going concern analysis the Directors have assumed nil cash rent net of property expenses until the properties are sold. The Directors have forecast expenditures over the next twelve months and are comfortable that the cash on hand plus the net proceeds on exchanged but not completed property sales will be adequate to cover those expenses. In the event that expenditures exceed those estimates, the Group can sell additional properties to cover any unforeseen expenses. 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 amounts will be required to settle these matters. When the Directors are able to estimate the range of exposure, the Company may 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 the threatened litigation, the FCA investigation and 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 the Consolidated Statement of Comprehensive Income. 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 the entry 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 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. 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 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. 1.Generalinformation—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     105 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 presented to the Board as being high quality properties suitable for homeless accommodation in line with the Original Investment Policy (as defined on page 34 of The Company’s prospectus for the Initial Public Offering dated 22 September 2020). However, 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”). As more fully described in Note 3, because the acquisition price was paid in full on completion except where a retention was retained, 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 was not possible to estimate the value of the Seller’s Works the Group recorded 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 £14,178,000 and £11,922,000 during the years ending 31 August 2023 and 2022 respectively of prepaid capital expenditures 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 solicitor would generally release the retention upon receipt of the Practical Completion Statement or otherwise at the direction of the Investment Adviser. If the requirements were not met by the SWLD, the cash should have been released back to the Group. However, because certificates of practical completion were not obtained or retained by AHRA, retentions have been recorded on a cash basis. 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 Assets 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. 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. Properties Held for Sale The Group presents investment properties as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use as a rental property. For this to be the case, the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, have received Board approval and Lender consent for sale and its sale must be highly probable. The sale would be expected to complete within one year of the balance sheet date. Financial Instruments The Group’s accounting policy for each type of financial instrument is as follows: 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2023 a) Financial assets The Group’s financial assets comprise tenant 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 (ECLs) 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 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. c) Embedded derivatives The Company evaluates financial and non-financial instruments for embedded derivatives at origination. If an embedded derivative is identified, the Directors consider whether it is closely related to the host contract (ie the loan agreements) to determine whether it should be accounted for separately from the host contract. If the embedded derivative requires separation, the Group would mark the instrument to market at each balance sheet date. The Group evaluated whether the prepayment options embedded in the loans should be considered embedded derivatives and concluded that they should not. d) Loan modifications and revisions to estimates of cash flows Where a modification or exchange of a financial liability does not result in the derecognition of the financial liability or the group revises its estimates as to the amounts or timings of cash flows in respect of the financial liability, the Group recalculates the amortised cost of the modified financial liability by discounting the modified contractual cash flows using the original effective interest rate. Any adjustment to the amortised cost of the financial liability is recognised in the Consolidated Statement of Comprehensive Income at the date of the modification or exchange. 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. • The ‘Required Interest Amount’ which represents nine months of interest to be held by the Lender as agreed in the 19 June 2023 waiver letters. 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 Financial Statements Notes to the Consolidated Financial Statements—continued 2.Accountingpolicies—continued HomeREITplc | AnnualReport | Fortheyearended31August2023     107 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. 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 4, Rental Income, the Company 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. As discussed in Note 4, impairment charges of £31,026,000 and £31,270,000 were recognised during the years ended 31 August 2023 and 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 Group has 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 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 and IFRS 9 1 January 2026 Amendment to IFRS 18 presentation the 1 January disclosure of information in the primary 2027 financial statements There are several new standards and interpretations which were effective for the first time for periods beginning on or after 1 September 2022. The new standards impacting the Group are: Onerous Contracts – Costs of Fulfilling a Contract, an amendment of IAS 37 clarified the requirements of costs to be considered when assessing whether they are associated with fulfilling a contract. The Group does not assess that any of its contracts are onerous. Reference to Contractual Framework (Amendments to IFRS 3) – provides clarifying guidance to the recognition of contingent assets and liabilities in the application of the acquisition method of IFRS 3. The Group has only acquired assets and not applied acquisition accounting since inception and does not expect to do so. Financial Statements Notes to the Consolidated Financial Statements—continued 2.Accountingpolicies—continued 108     HomeREITplc | AnnualReport | Fortheyearended31August2023 Property, Plant and Equipment – Proceeds before Intended Use – requires that proceeds from selling items generated from assets not yet fully in operations to be recognised, along with the associated expense in profit and loss. The Group holds investment property and no property, plant and equipment so the standard is not applicable. Classification of Liabilities as Current or non-current – clarifies when a liability should be presented as current. The Group complies with the requirements of the standard in the presentation of its liabilities. 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. 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 and the recoverability of tenant related receivables, valuation of investment property, purchase price allocation related to the acquisition of investment property, and the value and timing of recording loan modifications. 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 Original Investment Policy. 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 on completion except as discussed below under Retentions. 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 is presented as a prepayment until the works are complete and then reclassified into Investment Property. If the Seller’s Works are not completed by the Seller’s Works Longstop Date, the prepayment is written off to the Consolidated Statement of Comprehensive Income. AHRA was required to obtain a building condition report at 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 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 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). Financial Statements Notes to the Consolidated Financial Statements—continued 2.Accountingpolicies—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     109 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 as a Conversion or Boarded-up as unhabitable. 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 is 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 (2023 – 38 and 2022 – 542). 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 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. If the contracts were to be considered a single contract, the portion of 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 in lieu of a lease inducement asset for an unhabitable property. 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. Retentions are recorded as a restricted cash asset with an equal and offsetting 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  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2023 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 8, 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 2023 and 2022; and • For properties valued on investment basis at 31 August 2023, rents were capped at five years and overall value was capped at 110% to 150% (2022: 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 not habitable 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 and did not recognise any rental revenue for the year ended 31 August 2023 and 2022. The Directors 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. The Recoverability of Tenant Related Receivables Because the Group considered that 28 of its 29 tenants were a poor financial covenant and non-performing, amounts outstanding in relation to these tenants at 31 August 2023 were provided for in full. Any recoveries made of tenant and tenant related receivables after 1 September 2023 will be recognised as received. As discussed more fully in Notes 4 and 10, 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. Any outstanding debtors at 31 August 2022 after making the above cash applications were provided for in full. Loan Modifications The Group has adjusted the carrying value of its third party loans using revised estimated cash flows discounted at the original effective interest rate. The estimated cash flows used were variable principal payments through to the revised expected repayment date of 30 June 2024 which the Group considered reasonable as at 31 August 2023 based on potential property sales through auction as well as the expected refinancing of the remaining balance of £100,000,000 (after property sales) at the end of the second quarter which was the assumption at the time. Assumptions were made regarding the estimated break gains as this impacts the quantum and timing of principal payments. The Group also considered other fees and charges which might be levied in preparing its estimate. The estimated cash flows used in our estimates assumed the timing and quantum of principal payments through to 30 June 2024 when the loan was assumed to have been refinanced and paid off. As noted elsewhere, we did not complete a refinancing and the principal payments varied from our expectations with auctions carried out from August 2023 to November 2024 in order to ensure adequate proceeds to repay the Lender before 31 December 2024. Estimated break gains also varied from our expectation because of the variation in the principal payments and movements in interest rates from the date the original forecast was prepared. 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2023     111 4. Income For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 Amounts invoiced in accordance with lease agreements 56,501 38,336 Income from properties under management agreements 366 – Effect of straight-lining rent 7,1 35 3,753 Rent not recognised because properties were unhabitable (4,832) (2,099) Lease inducement amortisation (1,531) (1,741) Rental income 57,639 38,249 Impairment of lease inducement (22,010) (28,348) Impairment of rent straight-lining (9,016) (2,922) Net rental income 26,613 6,979 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 the Acquisition of Investment Property section of Note 3. During the years ended 31 August 2023 and 2022, the Group purchased 26 and 120 properties, respectively, which have retrospectively been deemed unhabitable at acquisition. Payments received of £1,195,000 and £2,169,000 in 2023 and 2022 respectively associated with the in-place leases for unhabitable properties have been applied against the debtor established at acquisition in the years ended 31 August 2023 and 2022. During the years ended 31 August 2023 and 2022, no unhabitable properties were improved to a state which the Group considered habitable. Between 29 September 2022 and 4 October 2022, AHRA entered into deeds of variation on behalf of the Group with N-Trust Homes CIC, ICDE Homes CIC and Select Social Housing CIC (without Board knowledge) such that all leases with these tenants received a rent- free period with retrospective effect from 1 March 2022 to 31 August 2023 in exchange for changing the lease extension agreement from five years to ten years. In accordance with the Group’s accounting policy, rent amounts outstanding at the modification date were written off. All leases associated with these tenants were accounted for as lease modifications from the agreement date. 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 to improve the properties. 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 receipts of cash were used to settle specific debtors from specific tenants in relation to rents invoiced during the year ended 31 August 2022 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 112     HomeREITplc | AnnualReport | Fortheyearended31August2023 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 £31,026,000 and £31,270,000 were recognised during the years ended 31 August 2023 and 2022 respectively. The future minimum rents receivable under non- cancellable operating leases related to habitable properties are: As at As at Future minimum rents receivable 31 August 2023 31 August 2022 in the period: £’000 £’000 Year 1 49,66 4 49,824 Year 2 5 0,184 50,323 Year 3 50, 703 5 0,826 Year 4 5 1,224 51,334 Year 5 51,749 51,848 > 5 years 7 16,844 806, 460 Total 970,368 1,060,615 Because only one tenant representing four leases was considered performing, we have included rents associated with unhabitable properties in the above table. 5. Operating expenses Property operating expenses For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 Operating expenses relating to properties under management agreements 502 – Property consultancy fees 200 – Other property expenses 52 – Total 754 – The Group has begun to take control of properties previously let to non-performing tenants. If the property is PRS, a property manager is appointed which manages the occupants and day to day operations. Under this type of arrangement, the property manager is paid a fee and the Group is responsible for the operating expenses including council taxes, repairs and utilities. General and administrative expenses For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 AHRA investment advisory fees (Note 18) 5,094 5,322 Legal fees 3,502 20 Professional fees 3,395 276 Valuation and survey fees 2,165 764 Aggregator and tenant settlement agreements 1,419 – AEW property and investment management fees (Note 18) 1,085 – Fees paid to the Group’s Independent Auditor 1,076 2,280 Directors’ fees 176 176 Other administrative expenses 1,247 1,025 Total 19,159 9,863 On 13 February 2023, the Company appointed Smith Square Partners as financial advisor and the relationship was terminated on 24 August 2023 with effect from 24 November 2023. The Company expensed £2,537,000 during the year ended 31 August 2023 associated with the Smith Square Partners contract which are included in professional fees. On 8 December 2022, a representative of AHRA, without the knowledge or authority of the Board, entered into a settlement agreement between the Group and various property vendors (the “Aggregators”) whereby the Group would pay £675,000 and purportedly waive any refurbishment claims against the Aggregators in relation to 488 properties held by the Group. The Group settled a dispute with a tenant which required an initial payment of £680,000 and an additional amount of £45,000 payable after the tenant meets certain conditions expected in February 2025. Financial Statements Notes to the Consolidated Financial Statements—continued 4.Income—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     113 Fees paid to the Group’s Independent Auditor, BDO LLP, include the following (all fees are inclusive of VAT): For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 Fees payable to the company’s auditor for the audit of the company’s annual accounts 1,004 2,164 Fees payable to the company’s auditor: Audit of the accounts of subsidiaries 72 72 Audit-related assurance services: –Interim review – 44 Total 1,076 2,280 * The FY22 audit fee is £1,906,000 in excess of the original audit fee agreed as a result of additional audit procedures. 6. Finance costs For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 Loan interest 5,462 4,481 Deferred Fees 1,100 – Non-utilisation fees – 141 Amortisation of loan arrangement fees 501 318 Total 7,063 4,940 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 9) at each of 31 August 2023 and 30 November 2023, payable on the full and final repayment of the loan. As discussed more fully in Note 25, the loans and the Deferred Fee were repaid in November and December 2024 respectively. 7. 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 blended main rate of 21.5% (being 7 months at 19% and 5 months at 25%) for the year. For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 Current tax – – Origination and reversal of temporary differences – – Total deferred tax – – Tax charge – – The Company did not make any distributions for the 2023 financial year. The Company made distributions for the 2022 financial year based on internally reported profit and loss data produced by AHRA and as documented in its PID tracker as submitted to HM Revenue & Customs (‘HMRC’). To the extent that the Group reports Property Income, it is required to distribute no less than 90% of it in order to maintain its REIT status. As a result of significant adjustments made to Property Income for FY22 after the end of the financial year, the result for 2022 is now a comprehensive loss. The Company has agreed with HMRC that it will revise it’s original PID tracker, but it will not recall past PIDs and reissue ordinary dividends. Because PIDs are assessed annually, this overpayment of PID for FY22 is not expected to impact future periods. Reconciliation of the total tax charge The reconciliation of loss before taxation multiplied by a blended standard rate of corporation tax for the year of 21.5% (being 7 months at 19% and 5 months at 25%) to the total tax charge in the Consolidated Statement of Comprehensive Income is as follows: For the year For the year ended 31 August ended 31 August 2023 2022 £’000 £’000 Loss before tax (118,160) (474,844) Tax at the standard rate of UK corporation tax 25,404 90,220 Effect of: Revaluation of investment properties (15,342) (86,046) Losses not taxed for which no benefit can be recognised (10,062) (4,174) Tax charge – – Financial Statements Notes to the Consolidated Financial Statements—continued 5.Operatingexpenses—continued 114     HomeREITplc | AnnualReport | Fortheyearended31August2023 8. Investment property (non-current) and investment property held for sale (current) As at As at 31 August 2023 31 August 2022 £’000 £’000 Freehold investment property at the beginning year 414,270 320,932 Property acquisitions in the year 104,125 597,420 Reclassification of first year inducement where building is considered as habitable (5,408) (32,001) Reclassification of first year inducement where building is considered as unhabitable (588) (2,918) Receipts relating to buildings considered as unhabitable (548) – Prepaid Seller's Works recognised as receivable (5,883) (19,034) Rent straight lining and lease inducement 11,089 34,014 Impairment of rent straight lining and lease inducement (31,026) (31,270) Retentions received during the year (1,951) – Decrease in fair value of investment property (71,360) (452,873) Total investment property 412,720 414,270 Presented in the Consolidated Statement of Financial Position as: Investment property held for sale – current 4,788 – Fair value at the end of the year – non current 407,932 414,270 * Included within the carrying value of investment property is £96,000 (2022 £20,034,000) 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. 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 2023 and 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 JLL have 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 valuation dates. Financial Statements Notes to the Consolidated Financial Statements—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     115 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); • HMO’s (properties with individual bedrooms but common kitchen and other facilities); • Residential Investments (properties with individual flats for occupation); and • Development properties (properties which are considered derelict and require substantial re-development). As discussed in Note 3, not all leases were deemed to have commenced (for the purposes of recognising revenue) as some of the associated 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 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 between 110% and 150% of MV-VP, depending on the tenant (2022: 150%). 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 2023 £’000 £’000 £’000 £’000 Assets measured at fair value: Investment property 412,720 1 – – 412,720 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 2 – – 414,270 1. Total acquisition cost including lease inducements for habitable and unhabitable properties and Seller’s Works of £1,014,300,000. 2. Total acquisition cost including lease inducements for habitable and unhabitable properties and Seller’s Works of £910,200,000. Financial Statements Notes to the Consolidated Financial Statements—continued 8.Investmentproperty(non-current)andinvestment propertyheldforsale(current)—continued 116     HomeREITplc | AnnualReport | Fortheyearended31August2023 The fair value of investment property at 31 August 2023 and 2022 was split between the following valuation techniques: As at As at 31 August 2023 31 August 2022 £’000 £’000 Investment valuation approach 48,160 222,380 Market value – vacant possession approach 364,560 191,890 Fair value at the end of the year 412,720 414,270 For the years ended 31 August 2023 and 2022, 1,080 and 182 properties were valued using the MV-VP valuation technique, having previously been valued using the investment method. JLL considered the change appropriate after re-evaluating the credit strength of the underlying tenant. For those properties valued using the investment approach, unobservable inputs used in the valuations are as follows: Passing rent and yield range Passing rent pa Passing Valuation Valuation 31 August 2023 rent pa range 31 August 2023 yield range Sector £’000 £’000 £’000 % Residential 6,076 6-178 48,160 7.7-29.7 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 For those properties valued using the investment approach, the average passing rent per annum was £21,000 and £17,000 and the average valuation yield was 13% and 11% for the years ended 31 August 2023 and 2022 respectively. 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 2,184 of 2,473 and 876 of 2,239 properties (88% and 39% of properties respectively) are valued using the MV-VP approach at 31 August 2023 and 2022 respectively, and those valued under the investment approach are capped at between 110% and 150% of MV-VP (depending on the underlying tenant), 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 (sensitivities exclude 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 2023 £’000 £’000 £’000 £’000 Investment property (300) 200 (1,100) 600 -5%inpassing +5% in passing +25bps in net -25bps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 For 2023 and 2022 a 5% increase/decrease in MV-VP (for all properties) would increase/decrease the overall value of investment property by approximately £20,300,000 and £16,500,000 respectively. As described in the Lease Inducement Payments section of Note 3, lease incentives of £5,408,000 and £32,001,000 were allocated at each acquisition totalling 208 and 1,408 leases to acquired properties in the years ended 31 August 2023 and 2022, respectively. Financial Statements Notes to the Consolidated Financial Statements—continued 8.Investmentproperty(non-current)andinvestmentpropertyheldforsale(current)—continued HomeREITplc | AnnualReport | Fortheyearended31August2023     117 9. Financial instruments Set out below is a comparison of the carrying 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 carrying value. As at 31 August 2023 As at 31 August 2022 Carrying value Fair value Carrying value Fair value Bank borrowings £’000 £’000 £’000 £’000 Bank borrowings 199,500 184,940 245,047 231,746 * The outstanding amount of bank borrowings is £220,000,000, see below for further discussion of carrying value. 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 2023 184,940 – – 184,940 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 The Group’s borrowings comprise two fixed term loan facilities, one for £120 million and the other for £130 million (£100 million after principal repayment of £30,000,000 in April 2023). Both facilities are with Scottish Widows. 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 (£100 million at 31 August 2023) 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 waiving certain breaches, new waiver letters have been issued on the expiry of each previous waiver period. The waiver letters related 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. As discussed in Note 25, the term loans have been repaid in full in Septemberand November 2024. 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 settlement of the loan. As discussed in Note 25, the Deferred Fees have been fully paid in December 2024. The agreements provide that if the Borrower repays outstanding principal early, the Borrower pays or benefits from a Net Break Gain. The Net Break Gain is the net amount between the make whole amount on the margin of the loan (Spens Costs) and the synthetic interest rate break value which is the difference between the current swap rate and the fixed rate embedded in the loan. During the year ended 31 August 2023, the Company recognised £2,706,000 in Net Break Gains which were received in cash at the date of the early repayment in April 2023. On 31 August 2023, as part of the periodic waiver update and in response to a request by the Lender, the Directors agreed to focus on repayment of both loans as soon as possible with a target repayment date of 30 June 2024. While not a technical amendment to the loans, the change in the estimated timing and amount of cash payments, required the Group to recalculate the carrying value of the loans using new estimated cash flows and as discounted using the original effective interest rate. The change in value resulted in a gain of £14,537,000 which has been recorded in the Consolidated Statement of Comprehensive Income in the year ended 31 August 2023. The Group utilises the income method to value its bank borrowings. The income approach estimates the fair value of a debt instrument by estimating the difference between contractual and market debt service payments discounted at an equity yield reflective of the risks inherent in the loan. The Group estimated the market replacement rate to be 6.27% (2022: 4.78%) for Home Holdings 1 and 6.46% (2022: 4.97%) for Home Holdings 2, as at 31 August 2023. 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 fair value adjustment of £6,526,000 and £9,576,000 respectively (2022: £10,939,000 and £12,757,000 respectively). Financial Statements Notes to the Consolidated Financial Statements—continued 118     HomeREITplc | AnnualReport | Fortheyearended31August2023 10. Trade and other receivables As at As at 31 August 2023 31 August 2022 £’000 £’000 Tenant receivables in accordance with lease agreements 55,627 9,916 Rent not recognised because properties were unhabitable (4,832) (2,099) Tenant receivables 50,795 7,817 Other receivables 45 426 Prepaid expenses 23 40 Tenant receivables and other financial assets 50,863 8,283 Provision for doubtful debts (50,747) (1,850) Net tenant receivables and other financial assets 116 6,433 Lease inducement receivable for unhabitable properties – 1,411 Prepaid Seller’s Works – 8,295 Trade and other receivables 116 16,139 Debtors All 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. As discussed more fully in Note 3, the Directors analysed the expected credit loss and concluded that collection of debtors of £50,747,000 and £1,850,000 was doubtful and provided for such amounts at 31 August 2023 and 2022. During the period from September 2021 to October 2022, without the knowledge or authority of the Board, debtors outstanding as at 31 August 2022 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 to improve the properties. 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 receipts of cash were used to settle specific debtors from specific tenants in relation to rents invoiced during the year ended 31 August 2022 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. As the Group judged 28 of its 29 tenants as having a poor financial covenant and non-performing due to low or no cash received for rents, outstanding debtors at 31 August 2023 (and 31 August 2022 after making the above cash applications) were provided for in full. Any recoveries made of tenant receivables after 1 September 2023 will be recognised as received. The following table sets out the ageing profile of trade and other receivables that are financial assets: As at As at 31 August 2023 31 August 2022 £’000 £’000 30 days or fewer 4,216 2,839 31 to 60 days 4,186 1,140 61 to 90 days 4,137 3,146 91 to 120 days 4,123 831 Over 120 days 34,201 327 50,863 8,283 Prepaid Seller’s Works As discussed more fully in Note 3, a portion of the purchase price in the amount of £5,883,000 and £19,034,000 were allocated to Seller’s Works in the years ended 31 August 2023 and 2022, respectively. This is the estimated amount of capital expenditures to improve the property to a lettable standard. In the years ended 31 August 2023 and 2022 £14,178,000 and £11,922,000 respectively were 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2023     119 Movement in the Prepaid Seller’s Works account during 2023 and 2022 was as follows: As at As at 31 August 2023 31 August 2022 £’000 £’000 Prepaid Seller's Works at beginning of the year 8,295 1,183 Prepaid Seller's Works recognised as receivable during the year 5,883 19,034 Write-off of Seller’s Works not initiated or completed (14,178) (11,922) Prepaid Seller's Works at the end of the year – 8,295 Lease Inducement for unhabitable properties As discussed more fully in Note 3, a portion of the purchase price in the amount of £588,000 and £2,918,000 in the years ended 31 August 2023 and 2022, respectively were allocated to a receivable for non-habitable properties in lieu of a lease inducement because the associated properties were not considered habitable at acquisition. In the years ended 31 August 2023 and 2022, £647,000 and £2,169,000, respectively of cash was received associated with all leases associated with unhabitable properties. The balance of £1,352,000 was considered impaired and written off in the year ended 31 August 2023. 11. Cash reserves As at As at 31 August 2023 31 August 2022 £’000 £’000 Cash held in Lockbox accounts 8,881 73,115 Cash held by solicitors for property acquisitions – 18,260 Retentions held by solicitors 4,616 10,468 Required Interest Amount held in rent accounts classified as restricted 3,768 – Restricted cash held by third parties 17,265 101,843 Cash and cash equivalents 814 74,514 Total cash reserves 18,079 176,357 Of the cash held in Lockbox accounts as at 31 August 2022, £34,234,000 was released to the Group when approved security was provided to the Lender. Of the remainder, £30,000,000 was applied against the outstanding principal balance of the loans in April 2023 and the balance of £8,881,000 was applied against the outstanding principal balance in December 2023. Cash of £18,260,000 held by the Group’s solicitors at 31 August 2022 was used to complete investment property acquisitions during the year ended 31 August 2023. A new condition in the waiver letter agreed on 19 June 2023 allowed the Lender to hold back an amount of up to nine months of interest in the Lender- controlled rent accounts (“Required Interest Amount”). Retentions of £1,465,000 and £12,089,000 were withheld from the acquisition of properties in the year ended 31 August 2023 and 2022, respectively. AHRA authorised the release of £5,364,000 and £5,282,000 retentions to vendors in the year ended 31 August 2023 and 2022, respectively and £1,951,000 was released to the Group during the year ended 31 August 2023 (2022: none). As at As at 31 August 2023 31 August 2022 £’000 £’000 At beginning of the year 10,468 3,661 New retentions on acquisitions in the year 1,464 12,089 Retentions released to vendors (5,365) (5,282) Retentions released to Home REIT plc (1,951) – Retentions at the end of the year 4,616 10,468 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. During each of the years ended 31 August 2022 and 2021, £375,000 was distributed to the tenants. Financial Statements Notes to the Consolidated Financial Statements—continued 10.Tradeandotherreceivables—continued 120     HomeREITplc | AnnualReport | Fortheyearended31August2023 12. Trade and other payables As at As at 31 August 2023 31 August 2022 £’000 £’000 Trade creditors 1,340 375 Accrued expenses 8,591 4,938 Retentions payable 4,616 10,468 Total trade creditors and accrued expenses 14,547 15,781 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 11 for more information on retentions. 13. Financial risk management The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and interest rate risk. AEW, and prior to AEW’s appointment on 21 August 2023, 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. 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 was 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 have been working to surrender the leases to take back control of the underlying properties to either let directly as PRS (through a property manager) or re-let to a housing provider for Supported Housing. Where lease surrenders could not be agreed commercially, AEW is taking 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 are 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 2023 31 August 2022 £’000 £’000 Cash and cash equivalents 814 74,514 Restricted cash 17,265 101,843 Tenant receivables and other financial assets 116 6,433 18,195 182,790 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2023     121 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 contractual terms): 3-12 1-5 < 3 months months years 5 years + Total 31 August 2023 £’000 £’000 £’000 £’000 £’000 Bank borrowings and interest 1,251 3,767 20,099 251,560 276,677 Deferred loan fees – 1,100 – – 1,100 Retentions payable 1 4,616 – – – 4,616 Trade and other payables 8,106 – 725 – 8,831 13,973 4,867 20,824 251,560 291,224 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 1. As discussed in Note 3, 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 25 and below, the Group has fully repaid the loans and the Deferred Fees. 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 losses on investment property of £71,360,000 and £452,873,000 in the years to 31 August 2023 and 2022, the LTV has risen above 50%. As noted above, the Group has fully repaid the loans and the Deferred Fees. The dividend policy of the Group is to distribute up to 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 waiving certain breaches, new waiver letters have been issued on the expiry of each previous waiver period. The waiver letters related 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 Group has evaluated the covenant compliance for both fixed term loans (referred to in Note 9 above) and concluded that the loan-to-value, historic interest cover and projected interest cover covenants were breached as of 31 August 2023 (2022: re-evaluated based on restated financial information). The Lender had waived the breaches on 31 July 2023 but because the waiver was only for a 45-day period, the 2023 loan payable is presented as current. The 2022 bank borrowings balance is also presented as current after considering the retrospective covenant compliance position. Financial Statements Notes to the Consolidated Financial Statements—continued 13.Financialriskmanagement—continued 122     HomeREITplc | AnnualReport | Fortheyearended31August2023 14. Share Capital As at As at 31 August 2023 31 August 2022 Ordinary Shares of £0.01 each Balance at the Number Number beginning of the year 790,570,465 240,570,465 Further shares issued during the year – 550,000,000 Balance at end of year 790,570,465 790,570,465 Share capital is the nominal amount of the Company’s shares in issue. 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. 15. Share premium account As at As at 31 August 2023 31 August 2022 £’000 £’000 Balance at the beginning of the year 595,733 – Share premium arising on equity issuance – 607,734 Share issue costs – (12,001) Balance at end of year 595,733 595,733 The share premium relates to amounts subscribed for share capital in excess of nominal value less associated issue costs of the subscriptions. 16. Special distributable reserve As at As at 31 August 2023 31 August 2022 £’000 £’000 Balance at beginning of year 201,040 229,360 Dividends distribution (10,910) (28,320) Balance at end of year 190,130 201,040 The special distributable reserve represents the cancelled share premium (from the initial share issuance) less dividends paid from this reserve. This is a distributable reserve. 17. Dividends 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. On 12 December 2022, the Company declared an 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 4 August 2022, the Group declared a dividend 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 Group’s accounting policy is that interim dividends should be recorded as paid so the dividend should have been presented in the 2023 and not the 2022 Consolidated Financial Statements. While the amount is quantitatively material, the Directors consider that the NAV as at 31 August 2023 is most important to users of the financial statements, and correcting for this error would have no impact on the NAV as at 31 August 2023. There was no impact on compliance with debt covenants (see Note 9) or other rules or regulations, or compensation to any party. Accordingly, the Directors have not corrected this error by posting a prior period adjustment in these financial statements. 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. 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 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. 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 16) which could cover any imprecision in AHRA’s estimates. However, had the full, accurate information regarding the material corrections made to the 2022 financial statements been provided to the Board at the time of approving the distributions, the Board would not have approved the distributions. Financial Statements Notes to the Consolidated Financial Statements—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     123 18. Related party transactions Investment Adviser AHRA was originally 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’)). 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. 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. Under the IAA, the investment advisory fees were 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 2023, the Group incurred fees with AHRA under the IAA of £5,822,000 (2022: £5,322,000), offset by credits negotiated by the Directors of £728,000 for a net expense of £5,094,000. At 31 August 2023 no amount of the fee was unpaid (2022: £582,000). Investment Manager 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). 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; and 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 Company 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.) During the year ending 31 August 2023, the Group incurred fees under the agreement with AEW of £1,085,000 (2022: nil). At 31 August 2023, all of this fee was unpaid (2022: nil). AIFM 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. Under the terms of the IMA, Alvarium FM was appointed as the AIFM of the Company. 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 2023 or 2022. 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. Corporate Broker Alvarium Securities Limited (now called Ellora Partners Limited) (’Alvarium Securities’) was appointed on 22 September 2020 as corporate broker 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 from Alvarium Securities in relation to equity raises in September 2021 and May 2022. No additional fees were paid in 2023. These costs have been treated as a reduction in equity as share issue costs. The corporate broking agreement with Alvarium Securities was terminated on 8 February 2023. Financial Statements Notes to the Consolidated Financial Statements—continued 124     HomeREITplc | AnnualReport | Fortheyearended31August2023 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 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 2023, Directors’ fees of £176,000 (31 August 2022: £176,000) were paid, of which none was payable at the 31 August 2023 and 2022. As at 31 August 2023 and 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 19. Reconciliation of liabilities to cash flows from financing activities As at As at 31 August 2023 31 August 2022 Borrowing Borrowing (£’000) (£’000) Balance at beginning of year 24 5,047 117,528 Cash flows from financing activities Net bank borrowings drawn down 30,467 92,757 Bank borrowing held in restricted account 8,881 73,115 Restricted cash transferred to unrestricted account (39,348) (35,872) Loan arrangement fees paid (1,567) (2,743) Non-cash movements Amortisation of loan arrangement fees 501 318 Gain on revaluation of bank borrowings (14,537) – Restricted cash balance used to repay borrowings (30,000) – Loan arrangement fees accrual movement 56 (56) Balance at end of the year 199,500 245,047 Financial Statements Notes to the Consolidated Financial Statements—continued 18.Relatedpartytransactions—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     125 20. 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. 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. 21. Loss per Share Loss per share per IFRS is calculated by dividing the loss attributable to ordinary equity holders of the Group by the weighted average number of Shares in issue for the years ended 31 August 2023 and 2022. Amounts shown below are both basic and diluted measures as there were no dilutive instruments in issue throughout the period. Year ended Year ended 31 August 2023 31 August 2022 Loss (£’000) (118,160) (474,844) Weighted average number of Shares in issue during year (‘000) 790,570 597,121 Loss per share (pence) (14.95) (79.52) Financial Statements Notes to the Consolidated Financial Statements—continued 126     HomeREITplc | AnnualReport | Fortheyearended31August2023 22. 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. Year ended Year ended 31 August 2023 31 August 2022 NAV (£’000) 216,868 345,938 Number of Shares at year end (‘000) 7 90,570 790,570 NAV per Share 27.43p 43.76p 23. 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 three 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. The Group has not aggregated the tenants with common directors in this disclosure. For the year ended 31 August 2023 For the year ended 31 August 2022 % of total £’000 % of total £’000 One CIC 11.9% 6,400 – – Redemption Project CIC 11.1% 6,000 – – Supportive Homes CIC 11.0% 6,000 10.4% 5,585 Lotus Sanctuary CIC – – 12.2% 6,593 Other tenants (eachlessthan 10%) 66.0% 3 5,700 77.4% 41,737 Contracted annual passing rent 100.0% 54,100 100.0% 53,91 5 * In the prior period One CIC and Redemption Project CIC annual rent was shown as a part of other tenant’s balance (as less than 10%). ** In the current period, Lotus Sanctuary CIC annual rent is shown as a part of other tenant’s balance (as less than 10%). Financial Statements Notes to the Consolidated Financial Statements—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     127 24. Consolidated entities The Company owns 100% of the equity shares of all subsidiaries listed below and has the power to appoint and remove 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% The registered office of the Company and its subsidiaries is 4 th Floor, 140 Aldergate Street, London EC1A 4HY On 25 May 2022 the below subsidiary entities were put into a members voluntary liquidation. The net assets of these entities were transferred to Home Holdings 1 Limited. The entities were subsequently dissolved on the date noted. 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) Financial Statements Notes to the Consolidated Financial Statements—continued 128     HomeREITplc | AnnualReport | Fortheyearended31August2023 25. Post balance sheet events Change in strategy On 16 September 2024, Shareholders approved the New Investment Policy which is intended to allow the Company to realise all the assets in the property portfolio in an orderly manner. 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. Disposals From 1 September 2023 to 13 January 2025, the Group exchanged on the sale of 1,582 properties for gross sales proceeds of £239,295,000. Together with the 40 properties exchanged in the year to 31 August 2023 (of which none had completed as at that date), 1,606 properties have completed for total gross proceeds of £239,816,000. Properties exchanged since 31 August 2023 were presented in the Consolidated Statement of Financial Position as at 31 August 2023 at £243,947,000. Of the proceeds received on completions, £182,729,000 was applied against the outstanding loan balances. As of 13 January 2025, 16 properties have exchanged but not completed with a total sales value of £4,327,000. Restricted cash Of the retentions held by solicitors at 31 August 2023, £3,303,000 has been released to the Company, £686,000 has been released to vendors and £627,000 is still held with solicitors as at 31 December 2024. Tenant updates A number of tenants have surrendered leases or gone into creditors voluntary liquidation. Of leases associated with the tenants in place in the 2,473 properties owned by the Group on 31 August 2023, 52 are still in place, 371 properties have been turned over to a property manager and the Group has direct leases with the occupants, 447 are re-tenanted, and 1,603 have been sold. Lender discussions 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. As a result of the property sales discussed above and application of lockbox amounts against the loan balance, the £120,000,000 loan was fully repaid on 25 September 2024, the £130,000,000 loan was fully repaid on 27 November 2024. The Deferred Fee was paid on 16 December 2024. 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. 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 Pathway Homes Group (Morecambe) Limited was dissolved on 10 January 2024. 26. Controlling parties There is no ultimate controlling party of the Group. Financial Statements Notes to the Consolidated Financial Statements—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     129 Company Statement of Financial Position Companynumber:12822709 Note Asat 31August2023 £’000 Asat 31August2022 £’000 Non-current assets Investmentinsubsidiaries 4 – – Investmentproperty 5 2,250 3,447 Amountsduefromsubsidiaries 6 218,930 329,499 Total non-current assets 221,180 332,946 Current assets Amountsduefromsubsidiaries 6 – 13 Investmentpropertyheldforsale 5 1,060 – Tradeandotherreceivables 6 23 161 Cashandcashequivalents 7 308 16,581 Total current assets 1,391 16,755 Total assets 222,571 349,701 Non-current liabilities Amountsduetosubsidiaries 8 – – Total non-current liabilities – – Current liabilities Tradeandotherpayables 8 5,703 3,796 Total current liabilities 5,703 3,796 Total liabilities 5,703 3,796 Net assets 216,868 345,905 Capital and reserves Sharecapital 9 7,906 7,906 Sharepremium 10 595,733 595,733 Specialdistributablereserve 11 190,130 201,040 Accumulatedlosses (576,901) (458,774) Total capital and reserves attributable to equity holders of the company 216,868 345,905 Thelossandtotalcomprehensivelossattributable totheshareholdersoftheparentCompanyforthe yearended31August2023amountedto£118,127,000 (2022:£456,353,000). Thenotesonpages131to136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13January2025andsignedon itsbehalfby: Michael O’Donnell Chair Financial Statements Company Financial Statements 130     HomeREITplc | AnnualReport | Fortheyearended31August2023 Company Statement of Changes in Shareholders’ Equity Fortheyearended31August2023 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 7,906 595,733 201,040 (458,774) 345,905 Lossfortheyear – – – (118,127) (118,127) Transaction with owners: Dividenddistribution 11 – – (10,910) – (10,910) Balanceat31August2023 7,906 595,733 190,130 (576,901) 216,868 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 11 – – (28,320) – (28,320) Sharecapitalissued 9,10 5,500 607,734 – – 613,234 Shareissuecosts 10 – (12,001) – – (12,001) Balanceat31August2022 7,906 595,733 201,040 (458,774) 345,905 Thenotesonpages131to136formpartofthesefinancialstatements. Financial Statements Company Financial Statements—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     131 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24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. Goingconcern AsdiscussedinmoredetailinNote1tothe ConsolidatedFinancialStatements,theDirectors consideritappropriatetoadoptabasisofaccounting otherthanasagoingconcerninpreparingthese financialstatements. 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8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. b Guarantor TheCompanyactsasaguarantortotheloanfacilities oftwoofitssubsidiariesasdescribedinNote9to theConsolidatedFinancialStatements.Atinception, theCompanyrecognisestheguaranteeatcostand subsequentlymeasurestheliabilityatthehigherof: Financial Statements Notes to the Company Financial Statements 132     HomeREITplc | AnnualReport | Fortheyearended31August2023 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. Investmentinsubsidiaries Investmentinsubsidiariesisincludedinthe statementoffinancialpositionatcostlessprovision forimpairment. Asat 31August2023 £’000 Asat 31August2022 £’000 Balanceatbeginningofyear – 10,390 Impairmentofbalance – (10,390) Balance at end of year – – Afterconsideringtherecoverabilityofitsinvestments insubsidiaries,theCompanyhasfullyimpairedthe balanceasat31August2023and2022. AlistoftheCompany’ssubsidiaryundertakings isincludedinNote24totheConsolidated FinancialStatements. 5.InvestmentProperty Asat 31August2023 £’000 Asat 31August2022 £’000 Freeholdinvestment propertyatthe beginningyear 3,447 8,793 Receiptsrelatingtobuildings consideredunhabitable (53) – Rentstraightliningand leaseinducement 101 35 Impairmentofrentstraight liningandleaseinducement – (238) Decreaseinfairvalueof investmentproperty (185) (5,143) Fairvalueatthe endoftheyear 3,310 3,447 PresentedintheStatement ofFinancialPositionas: Investmentproperty non-current 2,250 3,447 Investmentproperty heldforsale–current 1,060 – At31August2023and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Companyinvests. Detailedinformationaboutthevaluationofinvestment propertyisincludedinNote8totheConsolidated FinancialStatements. 6.Tradeandotherreceivables Asat 31August2023 £’000 Asat 31August2022 £’000 Tenantreceivables inaccordancewith leaseagreements 456 148 Rentnotrecognisedbecause propertieswereunhabitable (156) (27) Tenantreceivables,net 300 121 Otherreceivables 45 – Prepaidexpenses 23 40 Tenant receivables and otherfinancialassets 368 161 Provisionfordoubtfuldebts (345) – Trade and other receivables 23 161 Amountsdue fromsubsidiaries repayableondemand 102,598 47,675 Provisionfordoubtfuldebts (102,598) (47,662) Amounts due from subsidiaries (net of provision) – 13 Trade and other receivables – current 23 174 Amountsduefrom subsidiaries–non-current 651,339 713,909 Provisionfordoubtfuldebts (432,409) (384,410) Amounts due from subsidiaries (net of provision) – non current 218,930 329,499 Trade and other receivables – non-current 218,930 329,499 Total trade and other receivables 218,953 329,673 Financial Statements Notes to the Company Financial Statements—continued 3. Principalaccountingpolicies—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     133 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£535,007,000asat 31August2023(asat31August2022:£432,072,000). TheDirectorsconsiderthattheremaining carryingamountoftradeandotherreceivables approximatesfairvalue. 7.Cashandcashequivalents Asat 31August2023 £’000 Asat 31August2022 £’000 Cashheldatbank 308 16,581 Total cash and cash equivalents 308 16,581 8.Tradeandotherpayables Asat 31August2023 £’000 Asat 31August2022 £’000 Amountsduetosubsidiaries – – Non-current liabilities – – Asat 31August2023 £’000 Asat 31August2022 £’000 Tradeandotherpayables 5,703 3,796 Current liabilities 5,703 3,796 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. 9.Sharecapital OrdinarySharesof£0.01each Asat 31August2023 Number Asat 31August2022 Number Atthebeginning oftheyear 790,570,465 240,570,465 FurtherSharesissued duringtheyear – 550,000,000 Issuedandfully paidatyearend 790,570,465 790,570,465 Detailedinformationaboutthesharecapitalofthe CompanyisincludedinNote14totheConsolidated FinancialStatements. 10.Sharepremium Asat 31August2023 £’000 Asat 31August2022 £’000 Balanceatthe beginningofyear 595,733 – Sharepremiumarisingon equityissuance – 607,734 Shareissuecosts – (12,001) Balance at the end of year 595,733 595,733 Thesharepremiumrelatestoamountssubscribedfor sharecapitalinexcessofnominalvaluelessassociated issuecostsofthesubscriptions. 11.Specialdistributablereserve Asat 31August2023 £’000 Asat 31August2022 £’000 Balanceatthe beginningofyear 201,040 229,360 Dividenddistribution (10,910) (28,320) Balance at the end of year 190,130 201,040 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. Financial Statements Notes to the Company Financial Statements—continued 6.Tradeandotherreceivables—continued 134     HomeREITplc | AnnualReport | Fortheyearended31August2023 12.Dividends 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. On12December2022,theCompanydeclaredan 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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.Thisdividendwaspaidasa propertyincomedistribution.TheGroup’saccounting policyisthatinterimdividendsshouldberecorded aspaidsothedividendshouldhavebeenpresented inthe2023andnotthe2022ConsolidatedFinancial Statements.Whiletheamountisquantitatively material,theDirectorsconsiderthattheNAVasat 31August2023ismostimportanttousersofthe financialstatements,andcorrectingforthiserror wouldhavenoimpactontheNAVasat31August2023. TherewasnoimpactoncompliancewithGroup debtcovenants(seeNote9totheConsolidated FinancialStatements)orotherrulesorregulations,or compensationtoanyparty.Accordingly,theDirectors havenotcorrectedthiserrorbypostingapriorperiod adjustmentinthesefinancialstatements. 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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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. 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11) 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. 13.Guaranteeofsubsidiarydebt AsdescribedinNote9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.On27November2024,theGroup madeitsfinalpaymentontheloansoutstandingto ScottishWidows.TheGrouppaidtheDeferredFee of£9.0millionon16December2024. 14.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. 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 Financial Statements Notes to the Company Financial Statements—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     135 subsequentlyfiledaclaimincourtagainst8different parties,includingtheCompanyandtwosubsidiaries. TheclaimhasbeenissuedbyCourtandthetenant hasservedtheproceedingsontheCompanyand subsidiaries.Theotherdefendantsincludeother companiesandindividuals,oneofwhichisaformer directorofthe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. 15.Relatedpartytransactions InvestmentAdviser AHRAwasappointedastheinvestmentadviser totheCompanybyenteringintotheInvestment AdvisoryAgreementwiththeCompany.Under thisagreement,theInvestmentAdviseradvised theCompanyinrelationtothemanagement, investmentandreinvestmentoftheassetsofthe Company.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Company. 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. 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. TheinvestmentadvisoryfeespayabletoAHRAwere 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2023,theCompany incurredfeeswithAHRAundertheIAAof£5,822,000 (2022:£5,322,000),offsetbycreditsnegotiatedbythe Directorsof£728,000foranetexpenseof£5,094,000. At31August2023,noamountofthefeewasunpaid (2022:£582,000). InvestmentManager 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).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wouldhavecommenced.Phase1 commencedwhenthefollowingoccurred: 1. TheadoptionoftheAmendedInvestmentPolicy, 2. AlvariumFMandAHRAceasingtoactfortheGroup, 3. FCAapprovaloftheappointmentofAEWasAIFM fortheCompany. Financial Statements Notes to the Company Financial Statements—continued 14.Contingentliabilities—continued 136     HomeREITplc | AnnualReport | Fortheyearended31August2023 DuringtheTransitionPeriod,AEWwaspaid£3,000,000 perannum.AEWispaidanannualfeeinPhase1of theagreement: 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.) Duringtheyearending31August2023,theCompany incurredfeesundertheagreementwithAEWof £1,085,000(2022:nil).At31August2023,allofthisfee wasunpaid(2022:nil). 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(nowAITiAssetManagement Holdings2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2023and2022.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(nowcalledElloraPartners Limited)(’AlvariumSecurities’)wasappointedon 22September2020ascorporatebrokertothe Company.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Company.Duringtheyearending 31August2022,theCompanyincurredadditionalfees of£10,413,000fromAlvariumSecuritiesinrelationto equityraisesinSeptember2021andMay2022(none in2023).Thesecostshavebeentreatedasareduction inequityasshareissuecosts.Thecorporatebroking agreementwithAlvariumSecuritieswasterminatedon 8February2023. Directors TheDirectorsareentitledtoreceiveafeefrom theCompanyatsuchrateasmaybedeterminedin accordancewiththeArticlesofAssociation.The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2023,Directors’feesof£176,000 (31August2022:£176,000)werepaid,ofwhichnonewas payableatthe31August2023and2022. Asat31August2022,theDirectorshadthefollowing shareholdingsintheCompany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 16.Postbalancesheetevents PostbalancesheeteventsoftheCompanyareincluded inNote25totheConsolidatedFinancialStatements. 17.Ultimatecontrollingparty ThereisnoultimatecontrollingpartyoftheCompany. Financial Statements Notes to the Company Financial Statements—continued 15.Relatedpartytransactions—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     137 Additional information 138 Appendix1–KeyRegulatoryNewsServicesAnnouncements 1September2022to13January2025 144 Appendix2–GovernanceandInternalControl 147 Glossary 152 Companyinformation 138     HomeREITplc | AnnualReport | Fortheyearended31August2023 Regulatory News Service Announcements 1 September 2022 to 13 January 2025 Date Title Key 13-Sep-22 Home REIT acquires 158 properties for £57.4m Acquired158propertiesforanaggregatepurchasepriceof£57.4m. PROP 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 Additional information Appendix 1  HomeREITplc | AnnualReport | Fortheyearended31August2023     139 Date Title Key 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 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 Additional information Appendix1—continued 140     HomeREITplc | AnnualReport | Fortheyearended31August2023 Date Title Key 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 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 Additional information Appendix1—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     141 Date Title Key 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 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 Additional information Appendix1—continued 142     HomeREITplc | AnnualReport | Fortheyearended31August2023 Date Title Key 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 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 Additional information Appendix1—continued  HomeREITplc | AnnualReport | Fortheyearended31August2023     143 Date Title Key 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 11-Oct-24 2022 Annual Report and Accounts The2022resultsreflectasubstantiallossanddecreaseinNAVfortheperiod.NAVper sharereducedby57.5%to43.76pence(2021restated:103.03pence)Lossbeforetaxof £474.8m(restated2021:£16.1mprofitbeforetax). RES 14-Oct-24 Monthly Update Repaymentof£21.8mofdebt. F 23-Oct-24 Property Sales and Debt Repayment Update Exchangedonthesaleof152propertiesforthegrossproceedsof£26.8million. PROP 8-Nov-24 Notice of General Meeting TheCompanyhaspublishedaNoticeofGeneralMeetingtobeheldattheofficesof PanmureLiberum,Level12RopemakerPlace,25RopemakerStreet,LondonEC2Y9LY on5December2024at10:00am. SN 18-Nov-24 Change in Registered Office Registeredofficewillbe4thFloor,140AAldersgateStreet,London,EC1A4HYwith effectfrom18November2024. SN 28-Nov-24 Repayment Debt FollowingcompletionofpropertysalesinNovember,theGroupmadeafinalrepayment ofdebtintheamountof£28.6million. F 4-Dec-24 Response to announcement from Southey Capital Ltd. TheCompanyacknowledgedtheannouncementofSoutheyCapitalLtd.concerninga tenderofferfortheCompany’sSharesat4penceperShare. RTP 5-Dec-24 Result of General Meeting Shareholdersvotedagainsttheapprovalofthe2022AnnualReportandAccountsandin favouroftheDirectors’RemunerationReport. SN 24-Dec-24 Debt Repayment, Tenant and Accounts Update TheCompanyannouncedthatallDeferredFeeshadbeenpaidandremaining propertiesreleasedascollateralbytheLenderandthatithadagreedasurrenderon 171propertieswithLTGVision.TheCompanyalsoannouncedthatitwouldfilethis2023 AnnualReportandAccountsinJanuary2025. F,T,RES * 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 144     HomeREITplc | AnnualReport | Fortheyearended31August2023 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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2023     145 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December2024)withrespectto theManagedWind-Downandtherepaymentofthe Group’sborrowings. Duetoinformationthatcametolight,asdetailed onpages7and8,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 146     HomeREITplc | AnnualReport | Fortheyearended31August2023 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2023     147 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 148     HomeREITplc | AnnualReport | Fortheyearended31August2023 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2023     149 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 150     HomeREITplc | AnnualReport | Fortheyearended31August2023 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2023     151 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 152     HomeREITplc | AnnualReport | Fortheyearended31August2023 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 4th Floor 140 Aldersgate Street London EC1A 4HY InvestmentManager&AIFM AEWUKInvestmentManagementLLP 8Bishopsgate London EC2N4BQ CompanySecretaryandAdministrator ApexFundandCorporateServices(UK)Limited 4thFloor 140AldersgateStreet London EC1A4HY 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 4thFloor 140AldersgateStreet London EC1A4HY 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 2023