In the first monthly update since its stabilisation period began, a REIT (Real Estate Investment Trust) announced that the majority of its board members will be replaced over the next 12 months. The current board, including Lynne Fennah, Simon Moore, Peter Cardwell, and Marlene Wood, oversaw a period of wrongdoing at the REIT’s former investment manager since its inception in 2020. The REIT has appointed AEW as its new manager and implemented a new investment strategy. As part of its commitment to shareholders, the company will provide monthly updates on progress and quarterly presentations.
The board stated that it has initiated a formal and phased succession process and is considering an individual with significant experience in listed companies for the role of senior independent director. The board expects this individual to join the board in the coming weeks and lead the succession process. The transition of the board is expected to be completed within 12 months, allowing for a period of handover.
In addition to the board updates, the company hopes to publish its accounts for the year to August 2022 by the end of 2023. It has appointed JLL as the company’s valuer and Vibrant and Countrywide to provide condition reports and quantification of capital expenditure required for property improvements. Independent valuations will be reported for August 2022, February 2023, and August 2023. The board and AEW have also identified the need for revised accounting policies for revenue recognition and acquisition accounting, which may result in the restatement of the 2021 accounts.
The REIT’s engagement with its tenants has been challenging, as it collected only 7% of rent for the quarter ending in August 2023. Some tenants have entered liquidation, and AEW expects more to follow. AEW plans to re-tenant these properties and seek quality providers with local authority support. The removal of lease length and index-linked restrictions during the stabilisation period allows AEW to consider tenants from the private rental sector and other social housing occupier groups. Stringent covenant analysis and due diligence will be conducted on all proposed tenants, and those who meet the criteria will remain in the portfolio.
The company also announced that it has exchanged on the sale of 40 properties at auction, representing 1.6% of the portfolio, for £4.8m. The average sale price reflects the vacant status and condition of the properties. AEW is assessing the remaining portfolio, which is expected to vary in terms of overall condition and suitability.
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– Glossary terms: REIT, Board, Investment Manager, Shareholders, Listed, Auditor, LLP
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