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Two more charity clients go bust as homelessness investment fund collects just 7% of £8.77m rent
Two more charity clients of a listed homelessness accommodation investment fund have entered voluntary liquidation as the under-fire firm struggles to collect rent.
Home REIT, a private fund that leases more than 10,000 beds across 135 local authorities for charities to provide accommodation to homeless residents, told the stock market this morning that two of its clients have gone into voluntary liquidation.
Redemption Project CIC, a tenant of 152 of the firm’s properties, made up 11% of rent demanded in June this year.
In addition, a Home REIT client with 10 properties, Serenity Support CIC, made up 1% of rent demanded over the same period. Both are now in voluntary liquidation.
The fund has now seen four charity clients go bust in the space of six months after it made a similar announcement to the stock market in March.
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Home REIT said: “Both of these tenants are non-performing, and the creditor’s voluntary liquidation unlocks the ability for the company to re-tenant the properties or to carry out other asset management initiatives as soon as possible.
“The company is working with the respective liquidators to ensure a smooth handover in an attempt to minimise any potential disruption to underlying occupants and to stabilise the portfolios going forwards. Furthermore, discussions with other prospective tenants to take on new leases on the properties have already commenced.
“It should be noted that whilst discussions with prospective tenants are ongoing, arrangements are being made for existing care and support services for the underlying residents to continue.”
The collapse of two more of the firm’s clients comes as the fund had just announced that it had collected just 7% of £8.77m in rent for the period 1 May to 30 June.
Home REIT maintains that it is taking steps to assess and stabilise its property portfolio. The firm’s new investment manager has been tasked with completing a detailed assessment of its existing portfolio and tenant engagement.
This will focus on understanding any tenant issues with properties, the identification of underlying occupancy of leased properties and an assessment of tenants’ abilities to meet rental payments with a view to improving rent collection and maximising shareholder value.
The firm told the stock market that its board believes it “can deliver a sustainable business model whilst retaining the longer-term social objective of helping to alleviate homelessness in the UK”.
In addition, Home REIT has appointed a third party to complete inspections of each of the properties in its portfolio, which it said is a key step towards the completion of the annual and interim accounts and the subsequent restoration of trading in the company’s shares.
The inspection and valuation process is expected to take a number of months and as a result does not expect to publish its audited results for the period to 31 August 2022 until late 2023 at the earliest.
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