Home Reit has had its shares temporarily suspended due to being unable to publish its year-end results on time.
The FCA requires that firms publish an annual financial report no later than four months after the end of their financial year. For Home Reit, that deadline was the end of 2022.
The investment trust was unable to publish its results due to an ongoing enhanced auditing process it announced in December. This came as a result of allegations made by law firm Harcus Parker on behalf of shareholders that the firm had not followed its original 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.
Home Reit had also faced similar allegations in a November report from Viceroy Research, which argued the firm continues to invest in “bad assets”.
In an announcement to the stock exchange, the trust’s board said it would request a lifting of the suspension once the year-end results were published, which would be “as soon as practicable”.
Oli Creasey, equity research analyst at Quilter Cheviot, said: “In principle, this is a technical breach of rules, and one that should be able to be remedied fairly quickly. We would expect the results will be published in January 2023, and trading in the shares to resume promptly after that. As such, the suspension may only last a few days. We also note that this risk was flagged by the company late in 2022, and so has not come as a big surprise.
“The [Viceroy] short-selling report makes a raft of allegations against the company, some of which don’t hold water, but others which could be very damaging. The full-year release was delayed to enable a more thorough audit by the auditors, BDO – standard practice when such allegations have been made. The timing of the short report is unlikely to have been a coincidence – delaying the results and audit into December and the run-up to Christmas was probably one of the goals of the short sellers to maximise the impact of their report.
“The reaction to the full-year results, when it comes, is going to be highly dependent on the auditors’ statement, as well as the Reit management’s response to the allegations – for once analysts will not be focusing on the financial data. Home Reit has already offered a rebuttal to the short report, but will likely need to provide investors with further detail to shore up confidence in the company. Shares last traded at 38p – a substantial discount to the expected net asset value, and well below the peak of 130p early last year.”