Home REIT moves to reassure shareholders

Home REIT is taking steps to “maintain and enhance shareholder confidence”, refuting all allegations made against it by a law firm seeking to pull together a shareholder group action. Last week, law firm Harcus Parker said it would seek compensation from the REIT on behalf of shareholders, claiming that significant losses had arisen because Home REIT had “used investors’ money in a way which runs contrary to what investors were told”. That followed criticism from short-seller Viceroy Research. This morning (12 December), the REIT, which owns a portfolio of 2,473 properties used to house the homeless, said that “all allegations [from the Viceroy report] are without substance”. It also announced an interim dividend of 1.38p per ordinary share. However, the REIT added that it would be taking steps to “maintain and enhance shareholder confidence”, including bringing its senior investment adviser back from maternity leave early and hiring a property management firm to handle the portfolio. “While the company remains of the view that the allegations made in the report and subsequent publications are without foundation and have caused unnecessary and significant disruption and losses to the company and its shareholders, the board has taken steps to maintain and enhance shareholder confidence,” it said. As a first step, senior fund manager Charlotte Fletcher has reduced her maternity leave and will now return in January. Additional senior-level investment staff are being hired to work alongside her and fellow senior fund manager Alex Baker. An additional non-executive director “with a particular focus on direct experience in property and ESG matters” is also being sought, with a further announcement expected in January. Home REIT said it would seek “an experienced and specialist national property management firm, to carry out a full suite of property management services, including rent invoicing and collection and tenant liaison and monitoring”, adding that this would be “at the sole cost of the investment adviser”, Alvarium. In addition, the REIT said it would enhance its due diligence on new properties, even though “the procedures adopted to date represent normal market practice”. It also promised to hand over more information about the location of assets and its development partners. Home REIT said it now expected its full-year results, originally due on 28 November, to be published “no later than 31 January 2023”, stating that it “continues to work tirelessly alongside its auditors to reduce this timeline”. The current deadline is 31 December. It originally delayed publishing its results following the publication of the Viceroy report on 23 November. Viceroy had built a 0.82% short position, which equates to a £5m bet that the REIT’s stock will fall. The report raised doubts about tenants’ ability to pay rent, the prices Home REIT paid for some of its houses and the structure which determines how much the fund managers receive in fees. Home REIT said at the time that Viceroy’s claims were “inaccurate and misleading… based on mistaken assumptions, misinformed comments and disputable allegations”. However, its 12,000-word rebuttal, released on 30 November, has failed to soothe investors. Home REIT’s share price has fallen from 77.4p before the publication of the Viceroy report to just 42.4p today (12 December). It is set to fall out of the FTSE 250 on 16 December. To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Photo © Home REIT