Law firm Harcus Parker has called the £474.8m loss revealed in Home Reit’s overdue annual results for the 2022 financial year an ‘unjustifiable destruction of shareholder value’.
Overall, net asset value (NAV) increased to £345.9m from £247.9m over the year to 31 August 2022. However, once a £601.2m share issuance during the year is considered, NAV actually fell by £503.2m from the restated 2021 results.
Some £452.9m of the NAV losses were attributed to a write down in the fair value of Home Reit’s property portfolio.
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Law firm Harcus Parker are currently pursuing a compensation claim on behalf of Home Reit shareholders.
Jennifer Morrissey, partner at Harcus Parker, said: “The results of Home Reit’s trading are clear – a unjustifiable destruction of shareholder value and significant damage to the sector providing accommodation for vulnerable individuals. Even after the long delay in the publication of the accounts, the company’s auditor has been unable to express an opinion on the financial statements.
“Boards of listed investment trusts cannot wash their hands of failures which have allowed misconduct to take place affecting so many people – both investors and the vulnerable individuals that the company claimed to provision for. If they can get away with it, anyone investing in similar entities should be seriously concerned.
“This is why we are progressing the claim on behalf of our clients to hold the company and a number of Alvarium entities – some of which are now part of AlTi Global – to account on behalf of investors. Our focus and that of our clients is on recovering the value that has been lost, and our clients stand the best chance of getting redress by being part of the claim.”
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Michael O’Donnell, chair of Home Reit, said the board “shares shareholders’ frustrations” over the progress of the trust.
Since a short-seller report in November 2022, the trust has faced a number of issues including investigations into allegations of wrongdoing, the collapse of its rent roll and tenant liquidations.
The results were initially delayed to allow the trust’s auditor to undertake an additional audit in the wake of the short-selling report.
“Our priority now is to optimise the value of the portfolio and maximise returns to shareholders, while keeping any disruption to residents to an absolute minimum,” O’Donnell said.
“Despite the challenges faced by the company, the work undertaken over the past 12 months by AEW, including asset management initiatives to enhance value, regaining control of most properties and rolling out a re-tenanting programme, has created a portfolio that, while subscale to continue as a standalone quoted entity, represents an attractive investment opportunity for investors seeking to enter the supported living and private rented sectors.”
“It should be noted however that the fees incurred in defending the company against threatened litigation from a group of current and past shareholders will directly reduce the amount of capital ultimately returned to all shareholders and may impact the timing of any distribution to shareholders.”
