According to a regulatory filing, the move will allow Home REIT to receive a higher rent collection than had been received from Redemption Project over its tenure as tenant.
The firm has not paid rent to the trust over the course of 2023.
Mears Limited, which had been occupying 77 of these properties on sub-leases from Redemption Project, will become a direct tenant for the remaining lease term of 8 years, with an initial contracted rental income of £732,720 per annum, a 36% markdown from the annual contracted rent of £1,139,151 due from Redemption Project, as of 31 August 2023.
This brings Home REIT's direct exposure to Mears Limited to 177 properties and £1,623,875 per annum of contracted rent.
For the remaining 69 properties, Home REIT has agreed "flexible leases" with Community Accommodation Group for a term of 5 years.
Myshon Limited has been appointed to manage the properties, also on a flexible agreement, which marks a continuation of the previous management services provided in relation to these properties.
The surrender of these leases equates to roughly 6% of the company's portfolio by number of properties and marks the end of Home REIT's exposure to Redemption Project, which had accounted for 11% of the trust's annual contracted rent as of 31 August 2023.