An internal report has revealed Home REIT’s former investment adviser Alvarium handed over inaccurate information to an ESG inspector while “undeclared potential conflicts of interest” were discovered between individuals associated with the firm.
Forensic accountants Alvarez & Marsal (A&M) found Alvarium Home Reit Advisors provided ESG consultancy The Good Economy with inaccurate information which contributed to annual impact reports in 2021 and 2022 without the knowledge of Home REIT’s board.
Home Reit said the matter was likely to have had an impact on the conclusions reached by The Good Economy.
The findings come after Home REIT called in forensic accountants at A&M in January following allegations of wrongdoing in some of its property deals.
A&M identified the existence of “undisclosed potential outside business interests” and “undeclared potential conflicts of interest” between individuals associated with Alvarium and third parties.
Monitoring of tenants ‘limited’
In a damning report on Alvarium’s handling of the trust’s portfolio, A&M also found that while no rent was overdue to the end of August 2022, the investment adviser had used a variety of methods to give “the appearance that rents were being settled in the normal course by tenants, but which were not from sustainable cashflow sources and were not paid or collected in the form of rent”.
Since then, rent collection has plummeted to 13.1%.
This included the retention of funds due to be paid to developers to offset against rent arrears from tenants. The report also found monitoring of tenants was limited by Alvarium.
Jennifer Morrissey, partner at Harcus Parker, said: “Home REIT’s admissions confirm some of the findings from our own investigations, which will form the basis of our legal case against the company and its investment adviser. The statement confirms that the information disclosed by and on behalf of the company misrepresented how it was operating its business and how it was performing in respect of certain significant matters.
“Shareholders suffered losses because they were presented with a false picture of the state that the properties were in, how much rent was being collected, and how the portfolio was monitored. It is now up to investors to hold both the company and its adviser to account.”
Home Reit said: “The board is still considering the conclusions and implications of the A&M Report with its advisers, and what actions it may take in response to the matters raised by the A&M Report.”
Last week, AEW UK Investment Management was appointed as the trust’s investment manager and property adviser after the firm revealed rent collection had plummeted to 13.1%.
In January, Alvarium Home Reit Advisors was sold by parent company Alvarium.