Exclusive: Phoenix-backed homeless housing firm in turmoil after rental collapse
The future of a homeless housing investment firm set up in the mould of scandal-hit Home REIT and backed by Phoenix Group is hanging in the balance after a slew of its tenants went bankrupt or stopped paying rent, City A.M. can reveal.
Domus Social Housing, owned by Canadian investment behemoth Fiera Capital and backed by a £62.9m loan from Phoenix, the UK’s biggest pension firm, saw its rental take evaporate last year after two of its biggest tenants went under, another stopped paying rent and a fourth fell under investigation from the charities regulator, City A.M. has learned.
Like the now-failed fund Home REIT, Domus touted itself as a company working to alleviate homelessness in the UK by buying property and leasing it to social housing providers.
The structure of the firm saw Fiera’s infrastructure arm, which manages about $3bn in assets, provide funding, while Manchester-based property group HSPG supported the “acquisition, management and expansion” of the company, according to a press release announcing its launch in 2021.
However, HSPG sold tens of millions of pounds of property to Home REIT and introduced Domus to a number of the same tenants as the former FTSE 250 firm, including Midland Living, Lotus Sanctuary, Redemption Project and Big Help, Morning Wire understands.
Lotus Sanctuary and Redemption were both run by the same person, Gurpaal Judge Singh, and folded into administration last year. Big Help, which is facing a probe from the charities regulator, and Midland Living, are also understood to have stopped paying rent to Domus last year and surrendered their leases.
Some 80 per cent of its tenants were in default at points last year, Morning Wire understands, while Domus admitted in Companies House filings that it had breached the terms of its loan with Phoenix Group, which was invested on its behalf by Barings.
HSPG has surrendered its property management mandate and has now wiped any mention of Domus from its website. In a now-deleted blog post on its website in 2022, accessed via internet archives, HSPG claimed to have raised £200m for Domus. The company did not respond to a request to clarify the figure.
Asked by City A.M. whether the financial position of Domus was sustainable and whether it had reassigned the leases from the failed tenants, Domus and Fiera declined to comment. Domus is understood to be engaging with local groups over the management of the properties and still backs its original investment policy.
HSPG, run by Guy Horne and David Searle, has won plaudits from the property industry for its work in social housing. Horne, who has a side career as a recording artist, was nominated for entrepreneur of the year at the Property Week awards this year in what he said was “a reflection of the amazing work the HSPG team has done this year to solve the housing crisis in the UK”.
However, the extent of the company’s ties to two troubled social housing firms has gone largely unnoticed in the wider property industry.
“HSPG, and its team of 50 people, work to alleviate the growing affordable housing crisis,” an HSPG spokesperson said.
The struggles of Domus raise further questions over the sustainability of the private sector-led social housing model and point to the ripple effect of the scandal facing Home REIT.
Investors have poured money into the space on the promise of easing the UK’s homelessness crisis while earning a steady index-linked rental income. Such funds were seen as a prime ESG opportunity by City financiers.
However, both Domus and Home REIT have seen their rental income dry up as the charities leasing the properties either collapsed or withheld payments. Home REIT itself has been mired in scandal since late 2022 when short seller Viceroy Research sounded the alarm on the quality of its tenants, including Big Help and Lotus.
A third fund, Home Long Income Fund (HLIF), formerly run by the same investment manager as Home REIT with a similar tenant base, has also been plunged into crisis and is facing a probe from the Financial Conduct Authority, Morning Wire revealed earlier this year.
Home REIT, HLIF and Domus all suggested their business models were ultimately supported by rental payments from the government. In its initial launch, Fiera said Domus would “work with local authorities under UK Central Government directives to provide housing and support services”.
However, the model has been blown apart as tenants have struggled to qualify for so-called exempt accommodation status, which would entitle them to rental support from the taxpayer.
In its private insolvency documents, obtained by City A.M. last year, Lotus said its applications had been delayed for months and it was therefore left with rental obligations to its landlords but little means of bringing in rental income itself.
The social housing firm collapsed owing Fiera over £800,000 rent, according to the documents. Redemption owed around £198,000 to Fiera at the time of its collapse, according to insolvency filings on Companies House.
Barings is understood to now be working closely with Fiera to ensure the Phoenix loan is secure. The firms remain committed to the Domus deal and are not looking for an exit, Morning Wire understands. Barings and Phoenix declined to comment.
Big Help said it had reached an “amicable” agreement with Domus at the end of last year and surrendered its leases to the company.
Midland Living said it had exited from Domus to “focus on [its] core mission of reducing homelessness”.
Fiera declined to comment. Administrators of Redemption Project and Lotus did not respond to requests for comment.