Home REIT investigation: investment manager passed over ‘innacurate’ ESG info and had ‘undisclosed’ conflicts of interest

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City Editor

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A law firm is considering bringing a legal claim against a Home REIT sister fund, which has collapsed in value and is being investigated by the Financial Conduct Authority (FCA), Morning Wire has learned. 
Home Long Income Fund (HLIF), a vehicle set up by investment manager Alvarium in 2018, provided the basis for the now scandal-hit social housing investor Home REIT.

The former investment manager of scandal-hit property firm Home REIT passed over “inaccurate” information to an ESG inspector and certain top figures had “undisclosed potential business interests” with third parties, a damning internal report has revealed today.

In the initial findings of a much awaited investigation today, embattled former FTSE250 firm Home REIT also revealed that its former investment adviser Alvarium allowed tenants to strike sideline refurbishment deals with external developers and did not tell the Home REIT board how much rent it had been paid to the firm.

The report comes after Home REIT called in forensic accountants at Alvarez & Marsal (A&M) earlier this year after receiving serious allegations of wrongdoing in some of its property deals.

In a damning verdict on Alvarium’s management of the portfolio, A&M found that Alvarium’s “ongoing monitoring of tenants was limited” and the information it provided to an external environmental, social and governance (ESG) inspection firm, The Good Economy, was inaccurate.

The Good Economy’s findings fed into a report and were key to tempting in top City investors on ESG grounds.

“The Board believes that these matters were likely to have had an impact on the conclusions reached by [The Good Economy] in their assessment of the company,” Home REIT said

  Alvarez & Marsal’s key findings at a glance:

  • Arrangements for the refurbishment of properties were not brought to the [Home REIT] Board’s attention by the Investment Adviser [Alvarium]
  • Settlement of rent arrears and arrangements with tenants were not brought to the Board’s attention by the Investment Adviser
  • Ongoing monitoring of tenants was limited by the Investment Adviser
  • Information provided to The Good Economy by the Investment Adviser was inaccurate

Home REIT added that A&M also identified the existence of “certain undisclosed potential outside business interests and undeclared potential conflicts of interest as between certain persons associated with [Alvarium] and third parties”. 

“The Board may decide to investigate some or all of these additional matters further, particularly if new information comes to light,” it added.

Home REIT said it had not published the entire findings of the report “because it does not wish to prejudice its position in respect of any further action which may follow”.

“Accordingly, and mindful of its obligations, there is a limit on the information that the Company feels that it is appropriate to disclose publicly,” Home REIT said.