Home Reit’s board has announced a range of proposals as the embattled trust seeks to turn its fortunes around.
If approved by shareholders, the trust will no longer focus solely on social housing but instead invest in properties for ‘any form of residential use’ as it attempts to return value to shareholders.
In a stock exchange announcement on Friday (28 July), Home Reit directors also proposed the introduction of a ‘stabilisation period’ in which it will take steps to balance its finances and “maximise the income and capital returns” of its portfolio.
During the stabilisation period, which will last until 22 August 2025 if approved, investment manager AEW will not be restricted by the trust’s commitment to invest in social housing.
Once the period is over, Home Reit will then invest in ‘predominantly homeless accommodation assets’.
See also: Home REIT saga raises doubt over the viability of investing in social housing
The firm was able to collect just 7% of the £8.8m rent it demanded in May and June.
However, the move has been criticised by law firm Harcus Parker, who has launched a compensation claim against the trust on behalf of shareholders.
Jennifer Morrissey, partner at Harcus Parker, said: “The board’s announcement today indicates how little knowledge the board had of properties within its portfolio, their condition, underlying occupancy, the tenants’ abilities to meet rental payments, the standards of quality, safety and compliance despite confirming the opposite to shareholders in a number of previous market-facing statements.
“Today’s update proposes an immediate pivot away from a focus on social housing. We learn that the capital invested by shareholders to support homeless and vulnerable people will now be used on ‘any form of residential use’.
“In the meantime, the company is continuing to delay the publication of its accounts and has provided no adequate explanation as to what happened behind the scenes, who is responsible, and how the shareholders will be compensated for their losses. The board is avoiding answering these questions, which is why shareholders are continuing to join our claim against Home Reit.”
Home Reit’s board warned that if the proposals are rejected by shareholders, the recent appointment of AEW as its investment manager will not take place.
Annual report delay
Home Reit was one of the largest investment trust initial public offerings of 2020, raising £240m.
However, uncertainty over the trust’s future has intensified following a series of issues over the last year, including the collapse of its rent roll, delayed annual results leading to de-listing from FTSE indexes, and accusations from shareholders over a lack of adherence to its investment policy.
In its latest update, the firm said its audited results for the period ending 31 August 2022 until “late 2023 at the earliest”.
Jones Lang Lasalle has been appointed as the trust’s new property valuer, while a third party will inspect the entire Home Reit portfolio in a process expected to take a number of months to complete.
