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Home REIT to take legal action over tenants withholding rent
Beleaguered homelessness accommodation provider Home REIT has revealed that legal action is being taken against a number of its tenants who have stopped paying rent
In a market update, the listed firm said that its investment manager, AEW, is “pursuing all strategies” to help Home REIT stabilise its property portfolio.
This includes “taking legal action on selected tenants that are not engaging constructively and continue to withhold payment of rent,” the filing said. The identity of the tenants was not disclosed.
Home REIT’s tenants are predominantly charities, which then provide accommodation to homeless people. As of August last year, the fund owned 2,473 properties.
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AEW was called in by Home REIT in May last year to help with the firm’s turnaround. It has been rocked by difficulties since November 2022, after short-seller specialist Viceroy Research raised doubts about its business model.
In February 2023, the fund said it was considering a possible sale after a report revealed over £10m in outstanding rent for the quarter ending in November 2022. An internal investigation last summer found “undeclared potential conflicts of interest”.
Home REIT has also seen a number of its tenant clients collapse. One of its biggest clients, Redemption Project, which had 152 properties, entered voluntary liquidation last August.
In its latest update, the firm revealed it had only collected 12% off rent invoiced during the month.
Home REIT has been raising funds through selling properties at auction. The latest filing revealed it sold 98 properties last month for £26.5m. Another 162 properties have exchanged, with completion expected this month for £25.7m.
“Further sales are expected in the near term as part of the strategy to stabilise the financial position of the company,” the update said.
Last month, Home REIT revealed that its properties are worth almost 60% less than the £977m it paid for them.
The firm repaid £25.6m of debt to the its lender in December, meaning its total borrowings have reduced to £172.7m, the filing showed.
If you are a tenant subject to legal action by Home REIT and you would like to respond, please email: stephen.delahunty@oceanmedia.co.uk.
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