Home REIT hits back at mismanagement accusations

Housing provider for homeless people Home REIT has hit back at serious accusations of financial mismanagement by a US research house that caused it to delay publication of its results at the end of last week.

The £11.7m-turnover investor in existing and new build housing for the homeless was accused last week by Viceroy Research of not bringing in cash and of letting its properties to tenants that “cannot afford rent, have not been paying rent, are in administration, are run by bad actors, or simply do not provide social housing services.”

Home REIT, which on Friday said it was delaying publication of its accounts in order to subject them to further detailed scrutiny following the allegations, said all of the firm’s tenants provided social housing services, and that there were no overdue rent arrears.

Lynne Fennah, chair of Home REIT, said: “This is a business whose sole focus is on providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value.

“It is with deep frustration that the board is having to spend time and resources responding to these baseless and misleading allegations.”

A research note published by Viceroy on November 23 said Home REIT’s accounts showed it took more than 70 days to receive payments, but recorded no impairment, despite a review of its leases showing payment terms were 30 days. “We do not believe these amounts are collectable”, it said, alleging a significant write-down of the valuation of its properties, of up to £196m, was necessary.

Home REIT was set up in August 2020 as a vehicle to invest in properties that provide accommodation for homeless people, raising £240m in an initial stock market listing in October 2020, and a further £500m in two subsequent placings since then. It says it has a portfolio of nearly 11,000 homes under management.

The business said today that its rental income was “supported by central government funding and local authorities’ statutory duty to house homeless people. There are no overdue arrears in relation to amounts billed to 31 August 2022, supporting the independent valuations of the Company’s portfolio carried out by Knight Frank”.

It added that it undertook due diligence on its tenants – the providers of accommodation for homeless people – and would investigate any suspected fraud.

It also said that the average valuation increase of properties on its balance sheet was just 6.4% - and had been “established by the external valuation process undertaken by Knight Frank as per the RICS Valuation” – in response to Viceroy’s accusation that “properties are bought and re-sold between parties in a matter of days”, with some “flipped between tenants in a short space for immense profits”.

Home REIT said: “The statements made by Viceroy misunderstand the process by which the Company acquires its assets, misinterprets figures derived from underlying SPVs and relies on misleading HM Land Registry data.”

However, while publication of the rebuttal statement saw Home REIT’s share price initially recover from recent sharp falls in values, the price fell back again shortly after opening and by mid-morning was trading around 7% below its opening price, a full 30% below its value prior to Viceroy’s accusations emerging.

Home REIT buys up existing houses as well as working with developers to create new build homes to house homeless people.