Home REIT: Fennah heads for the exit with trail of destruction in her wake
Home REIT chair Lynne Fennah announced yesterday she’s finally heading for the exit — Charlie Conchie looks at why shareholders say it’s about time.
The writing was etched deep into the wall some 14 months ago for Home REIT’s hapless chair, Lynne Fennah.
After a campaign of pressure from investors, a chair that presided over one of the most monumental implosions of a listed company in recent memory has finally agreed to go.
“I recognise and share investors’ frustration at the events which have unfolded over the last 14 months and the deterioration in the performance of the company,” Fennah said in a statement yesterday morning.
“With a new investment manager in place and the stabilisation of the company’s portfolio and financial position ongoing, now is the right time to step aside.”
For those who have followed the toppling of Home REIT’s house of cards since October 2022, the comments strike a familiar tone.
Fennah has consistently positioned herself as just another party duped by her duplicitous money managers, Alvarium, which had control of the investment decisions made by the fund. When independent valuers at Jones Lang LaSalle completed their assessment of Home REIT’s crumbling portfolio in December, Fennah said she was “extremely disappointed” by the “significant value reduction” revealed in the audit.
Her comments reveal the abdication of oversight that opened the door to Home REIT’s downfall and show just how Alvarium was allowed to run amok with fanciful claims of housing the homeless.
But it was not always so. The outgoing chair implied she had a firm grip on the firm’s operations when she came out forcefully in November 2022 to dismiss the allegations of short seller Viceroy Research, which first revealed the state of Home REIT’s property portfolio.
“This is a business whose sole focus is on providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value,” Fennah told the market. “It is with deep frustration that the Board is having to spend time and resources responding to these baseless and misleading allegations.”
As Morning Wire and others revealed in the following months, the “baseless and misleading allegations” were more or less bang on the money. A string of its tenants were in fact already withholding large chunks of rent in protest at the shoddy housing Home REIT had provided. Private warnings had already been sent to the fund managers at Alvarium warning of “slum conditions” in its property portfolio. Whether the warnings were passed on to Fennah is unknown, but Viceroy’s warnings were by no means a bolt from the blue.
In a telling exchange with investors in early December 2022, Morning Wire revealed the extent of Fennah’s lacklustre stewardship of the firm.
“[We] can’t provide an exact figure,” she and her top team admitted when asked how much of their rental income came from government-backed payouts. That came despite the company repeatedly stating its entire business model was propped up by them.
That Fennah took this long to step down rather than scarper could be taken to her credit. But investors certainly think otherwise.
“The incompetent Board of Home REIT has overseen a complete disaster,” investor The Boatman Capital tells Morning Wire “It was clear a year ago that the current directors had no credibility and needed to go and we have been advocating for that.”
Fraser Perring, the chief of Viceroy Research, the short seller who initially uncovered the flaws, said it was “laughable” that Fennah’s departure has taken so long.
“If Viceroy Research could find the issues, what were the board doing? It appears they were asleep at the wheel, while ‘property advisors’ enriched other parties at the significant expense of shareholders,” Perring added. “The move should be applauded, but we fear it’s all but too late.”
Home REIT’s board has agreed to go en masse when it finally publishes its long-delayed accounts at an undisclosed date in the future. Fennah’s replacement Michael O’Donnell, the chair of storage firm Big Yellow, will now be tasked with steering the firm back to stability.
But as investors look out on the rubble and rotten foundations left by Fennah and co, they may not be expecting a sturdy rebuild any time soon.