Home Reit has refuted accusations from shareholders that it invests in assets inconsistent with its investment philosophy. The trust aims to invest in the provision of social housing for vulnerable people while targeting “inflation-protected income and capital return” for its shareholders.
Last week, law firm Harcus Parker said it was launching a compensation claim on behalf of Home Reit shareholders, who alleged the firm had not followed its original investment philosophy while suffering significant losses.
The firm also faced allegations in a November report from US financial research group Viceroy Research, which accused Home Reit of continuing to invest in “bad assets”.
Viceroy said: “We strongly believe that [Home Reit] are not the people who should be entrusted to look after the vulnerable, nor should they be entrusted with your taxes to do so.”
In an announcement to the stock exchange, the trust rejected the allegations, stating that following an internal investigation “the board reaffirms that the company’s portfolio fulfils its sole focus of providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value”.
The Home Reit board also outlined a range of measures in an attempt to provide clarity to shareholders, including appointing a specialist property management firm to carry out services to the trust’s portfolio.
The firm’s share price has tumbled since Viceroy’s report was released on 23 November, falling 35% as of 7 December.
The board said, in view of the allegations, the trust’s auditor is carrying out “enhanced audit procedures, which include a detailed review of the material allegations made against the company and its advisers”.
It also committed to building out its in-house team by hiring senior investment staff to work alongside current senior fund managers Alex Baker and Charlotte Fletcher, while a non-executive director with a particular focus on ESG will be appointed to the board.
Home Reit will also launch a review of its due diligence procedures going forward.
In addition to refuting the allegations made against it, the company confirmed, in light of the “robust rental income” it reported on 30 November, “as well as its strong balance sheet and conservative leverage position”, that it will pay an interim dividend of 1.38 pence per ordinary share.
The dividend will be paid as a property income distribution “in respect of the company’s tax-exempt property rental business”.
It takes the total dividends paid and declared during the financial year to 5.5 pence per ordinary share.