Harcus Parker has initiated the formal stages of a compensation claim against Home Reit on behalf of the trust’s shareholders.
The law firm said it has sent a letter of claim to Home Reit, as well as its former advisor Alvarium, representing over 250 claimants which includes institutional shareholders.
In a statement, Harcus Parker said: “Over the last year, Home Reit, which had previously positioned itself as a vehicle to deliver tackle homelessness, has continued to sell off its properties at sizeable discounts to their purchase price.
“The company has repeatedly admitted that the board had little knowledge of the company’s property portfolio, their condition, underlying occupancy, the tenants’ abilities to meet rental payments, the standards of quality, safety and compliance.”
Yesterday, the trust revealed a property revaluation which reduced the estimated value of its portfolio by £564.1m compared to the price paid at acquisition.
Jennifer Morrissey, Partner at Harcus Parker, added: “Home Reit now acknowledges that its property portfolio has been vastly overvalued due to failures to properly understand tenant covenant strength and the quality of the property assets.
“Despite it now being more than a year since many of these issues were raised, the company still does not appear to understand precisely where its rent is (or should be) coming from. A year on, the company is unable to tell what portion of their tenants qualify for social housing benefit, and has provided no clarity whatsoever on how the investors will be compensated for their losses.
“While the shareholders’ questions remain unanswered, we are now awaiting a response from the company and its former advisors to the Letter of Claim that we have sent on behalf of a growing body of investors that have joined our claim.”