Home Reit (HOME ) has taken a 60% loss on the fire sale of 40 properties as its new fund manager AEW starts the urgent process of stabilising the portfolio of the suspended homeless accommodation provider.

At a public auction yesterday afternoon the company sold the vacant, poor-quality assets, which account for 1.4% of its properties, for £4.8m, an average of 39.4% of their purchase price. The transactions are expected to complete in a month with the proceeds used to reduce the stricken real estate fund’s debts and provide working capital.

‘The sale properties were identified as having limited prospects for income and capital return given the required capital expenditure in order to be brought up to specification,’ Home said in a statement.

‘It appears that these properties were at the lower-end of the quality spectrum but the c.60% reduction on the purchase price is worse than we thought and creates a challenging backdrop for AEW’s efforts to stabilise the portfolio,’ said Peel Hunt analyst Anthony Leatham.

AEW, which replaced the trust’s former fund manager Alvarium in May, plans to re-tenant and rationalise the portfolio if shareholders approve the broadening of its investment policy at a general meeting on 21 August.

The announcement continues the bad news from Home as it struggles with a collapse in rental income. Earlier this week the company announced that two more of its tenants, accounting for 12% of the rent roll, had collapsed.

Shares in Home were suspended in January after publication of its annual results was delayed by allegations of fraud and over-valuation of its properties.