Home REIT tenant surrenders hundreds of properties after regulatory probe
Scandal-hit property investor Home REIT has struck a deal to claw back hundreds of leases from a major tenant facing a probe from the charities watchdog.
In an update to the market today, the former FTSE 250 social housing firm said it had agreed a deal with the Liverpool-based charity group Big Help for the surrender of leases on some 600 properties, equating to around 30 per cent of the group’s total property portfolio.
Big Help was once among the firm’s biggest tenants but the move could now effectively sever the ties on a relationship which has broken down over the past two years.
In January 2023, City A.M. revealed that Big Help was among the companies to withhold rent from Home REIT in protest at the dilapidated state of housing it provided, forcing the firm to negotiate a secret rent relief deal.
Big Help Group, which comprised a number of separate Home REIT tenants including CG Community Council, Dovecot & Princess Drive Community Association and N-Trust Homes CIC, has since faced a probe from the Charities Commission over the alleged misuse of funds.
Home REIT said in its statement today that reclaiming the leases would allow it to “collect the underlying income from these properties, increasing rent collection and facilitating asset management opportunities”.
“The company will be appointing various Property Managers to the surrendered properties, who will be responsible for the day-to-day management and rent collection,” Home REIT said.
Home REIT has been scrambling to restore stability after a string of scandals since 2022 which have caused its rental take to collapse since November 2022.
Last year, the firm sacked its investment manager Alvarium and called in AEW to try and steady the ship but said in a recent update it had collected just 11 per cent of total billed rent between September and April.
Big Help group, run by former Labour councillor Peter Mitchell, collectively accounted for nearly a fifth of the fund’s total rental income before his organisations began withholding rent.
In a statement in February, the Charity Commission said it had launched an inquiry into the group after identifying a “significant increase in its reported income” and concerns around “trustee decision making, potential unauthorised trustee benefit and unmanaged conflicts of interest”.
In a statement at the time, Big Help said it was “very disappointed to note the decision of the Charity Commission” and had “cooperated fully” with the investigation. The charity has also appealed against the investigation.
“We look forward to clearing up any issues raised during this process and are now exploring various legal channels through which we can do so,” the group said.
Home REIT itself is facing a probe from the Financial Conduct Authority, while the Serious Fraud Office has opened inquiries into the firm, City A.M. previously revealed. The SFO has said it cannot confirm or deny any investigations.