Home REIT investors move to sue the firm after portfolio craters in value
Shareholders of beleaguered housing investor Home REIT have moved to formally sue the company and its investment manager today after it revealed its property portfolio was now worth less than half of what it initially paid.
Law firm Harcus Parker, which is representing some 250 Home REIT shareholders, said it has “initiated the formal stages of the claim” against the firm and its former investment manager Alvarium. Alvarium spun off its Home REIT division before it listed as AlTi in New York at the beginning of this year.
A letter of claim has been sent to the two firms on behalf of the group of investors, which Harcus Parker says includes some of the big institutional shareholders in the company. It did not name the shareholders.
The letters mark the first formal claim against the firm after an implosion over the past 14 months in which its rent roll has dried up and a slew of its major tenants have collapsed.
The firm was set up with the ambition of housing the homeless but swathes of its portfolio were revealed to be uninhabitable and a large number of tenants failed to win exempt housing status, which it previously claimed made up the majority of its rent roll.
“A year on, the company is unable to tell what portion of their tenants qualify for social housing benefit, and has provided no clarity whatsoever on how the investors will be compensated for their losses,” Jenny Morrissey, a partner at Harcus Parker, said today.
“While the shareholders’ questions remain unanswered, we are now awaiting a response from the company and its former advisors to the letter of claim that we have sent on behalf of a growing body of investors that have joined our claim.”
Home REIT declined to comment. AlTi has been contacted for comment.
Home REIT sacked Alvarium as its investment advisor earlier this year and called in AEW to try and stabilise its rental income. The firm also called in Jones Lang LaSalle to conduct a independent valuation of its properties.
In an update to the London Stock Exchange today, Home REIT revealed that the portfolio has now been valued at less than of what it paid.
The 2,473 properties it still owns have now been priced at £412.9m, down £564.1m on the acquisition cost. The firm has been offloading properties at steep discounts throughout this year and revealed it had sold a further 80 properties today in a bid to clear its debts.
Lynne Fennah, chair of Home REIT, said she was “extremely disappointed” by the significant value reduction.