Probe: Home REIT said the FCA has opened an investigation covering the period between September 2020 and January 2023
Troubled Home REIT faces a probe by City regulators over fears it has misled investors.
The landlord, which specialises in accommodation for the homeless, said the Financial Conduct Authority (FCA) has opened an investigation covering the period between September 2020 and January 3 last year.
Home REIT said it would ‘co-operate fully’.
The FCA declined to comment, but its probe is another blow to Home REIT.
It has been mired in crisis since November 2022 when short-seller Viceroy Research questioned its business model and its ability to collect rent from tenants, most of whom were charities and community interest groups.
Despite initially denying the allegations, the debacle triggered the suspension of Home REIT’s shares in January last year and an extended delay to its financial results, which remain unpublished.
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 rent from government housing benefits.
But since Viceroy’s report, the company 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.
The group has been scrambling to sell properties in its portfolio, often at a steep discount, in order to raise cash and keep itself afloat.
Several of its major tenants have also collapsed into insolvency after failing to secure government assistance, leaving the company short of rental income.
Home REIT suffered another blow in December when property group Jones Lang LaSalle (JLL) – which it hired to assess the value of its portfolio – concluded that its properties were worth less than half what they cost to buy.
JLL estimated Home REIT’s estate was worth £412.9million at the end of August, or just 42.3 per cent of the £977million it paid in total for the properties.
The report appeared to be the final nail in the coffin for Home REIT’s beleaguered management.
In January, it announced its chairman Lynne Fennah would step down and that the rest of the board would exit when it finally published its results. These are expected to arrive in the second quarter of this year.
The firm remains in a deep financial hole, reporting earlier this month that it still had a debt pile of £162.8million.
