Home REIT reclaims over 600 leases from charity that withheld rent (2024)

Scandal-hit property investor Home REIT has pushed through a deal to recoup hundreds of leases from a major tenant as its turnaround efforts continue.

Liverpool-based charity group Big Help has agreed to give up leases on more than 600 properties, which equates to around 30 per cent of Home REIT’s portfolio.

The pair have been in a major row since the start of last year after the charity withheld rent in protest over housing conditions.

In a statement to the stock market yesterday, Home REIT, which specialises in accommodation for homeless people, said reclaiming leases would allow it to collect rent and open up new opportunities.

The update was a much-needed boost for the former FTSE 250 group, which has faced a series of scandals since 2022 and was suspended from the stock exchange in January last year after it failed to file accounts on time.

Troubles first emerged more than 18 months ago when short seller Viceroy Research raised concerns over the sustainability of its business model.

Viceroy had questioned the group’s ability to collect rent from tenants, most of whom were charities and community interest groups.

Home REIT marketed itself as a way to house vulnerable people, including the homeless, by letting out properties to charities and other groups, which would pay rents from Government housing benefits.

The company floated in London in October 2020 and tapped investors for £850million to build a portfolio of 12,000 beds.

But since Viceroy’s report, it has been buffeted by a series of damning revelations.

These include a probe by forensic accountants Alvarez & Marsal which uncovered transparency and due diligence failings by its former investment adviser Alvarium Home REIT Advisors.

Alvarium was subsequently sacked and another firm, AEW, was brought in to try to steady the ship.

Since then, the group has been scrambling to sell properties in its portfolio, often at a steep discount, in order to raise cash and to keep itself afloat.

Over the past year the company has been able to complete on the sale of 585 properties and exchanged on a further 262 properties.

Several of its major tenants have also collapsed into insolvency after failing to secure Government assistance, leaving the company short of rental income.

In the group’s last trading update in December, it revealed that its 2,473 properties were worth an estimated £412.9million, which was almost 60per cent less than the £977million that it had paid for them.

Its troubles are far from over and in February the Financial Conduct Authority opened an investigation covering the period between September 2020 and January 3 last year.

Home REIT said it would ‘co-operate fully’.

Law firm Harcus Parker has also brought a claim against the company, representing hundreds of shareholders.

‘Investors bought shares based on its claims that it had stringent processes to ensure it acquired properties that would provide safe and secure accommodation for vulnerable residents and would generate robust, sustainable returns,’ Jennifer Morrissey, a partner at Harcus Parker, said.

‘It is now evident, from all the facts widely reported in the press, that Home REIT did nothing of the sort.’

The group has denied the allegations and has said it will defend itself.

Last month it revealed that it was taking legal action against parties it considers to have been ‘responsible for wrongdoing’.