Homeless accommodation provider Home Reit (HOME ) has sold another 81 properties in wake of a revaluation that slashed the value of the portfolio to 60% of its previous level.

In a monthly update, the embattled fund – which is facing a legal claim from shareholders – said it sold 81 properties for £16.4m in December as part of ongoing auction sales, with completion expected this month. The suspended fund is awaiting receipts from properties that were exchanged in September, November and December that have not yet completed.

As part of an ongoing bid to strengthen the balance sheet, new manager AEW has repaid £25.6m of outstanding debt, lowering outstanding borrowing to £172.7m.

AEW has an uphill battle when it comes to rent collection, and although it has improved drastically from just 3% in September, rent collection is still only at 12%, as the ability of tenants – many of which are charities - to meet their rent obligations deteriorated.

The board of the trust said AEW ‘continues to make progress in obtaining control of Home Reit’s assets in respect of non-performing tenants’.

‘AEW is pursuing all strategies available to the company including taking legal action on selected tenants that are not engaging constructively and continue to withhold payment of rent,’ it said.

It is not the only legal action Home Reit faces as law firm Harcus Parker started a formal legal claim against the trust on behalf of its shareholders in December. 

At the end of last year John Lang LaSalle, the company’s property valuer, reported that at the end of August, the company had 2,473 properties worth £412.9m, a 42.4% reduction from the £977m unaudited historical acquisition cost.

When total borrowings and cash were included, the portfolio valuation implies net assets of just £230m, or 30%.

The independent valuer said the reduction was a result of ‘a reassessment of the quality of the assets through the ongoing inspection programme and of the covenant strength of the tenants’.

As of the end of December, an additional 287 internal property inspections have been completed taking the total to 1,515 and the inspection programme will continue in both January and February.

The board is anticipating the publication of the outstanding accounts in early 2024, and said it was ‘committed to the restoration of the trading in the company’s ordinary shares as soon as it is practically possible’.

AEW was appointed in May alongside company turnaround specialist Bill Starn and is transferring leases and re-tenanting the portfolio, with the expectations that more tenants will enter into liquidation in the short term.

While the Reit will suffer a short-term hit, re-tenanting will allow it to carry out other asset management initiatives in order to generate higher rents in future.