Home Reit (HOME ) has relet the properties of a second tenant, Redemption Project CIC, which entered liquadtion last month and will surrender its leases, with some transferring to Mears for a significantly lower rent. 

Redemption Project, which leased 146 properties making up 6% of the homeless accommodation portfolio and 11% of annual contracted rent, has not paid rent this year.

Of these, 77 properties were occupied by housing and social care provider Mears Limited on subleases from Redemption. These will transfer to Home Reit, with Mears becoming a direct tenant for the remaining eight years with an initial rental income of £732,720 per year. This is significantly lower than the annual contracted rent due from Redemption on these properties, which was £1.4m. 

Last month the Reit announced it was directly leasing 100 properties to Mears, which had previously been sublet from One CIC. The new arrangement means its direct exposure is £1.6m per year in contracted rent.

‘The surrender agreement allows the company to receive a sustainable income stream from a strong tenant covenant and is expected to generate higher rent collection than has previously been received from Redemption in relation to the properties,’ the Reit said in a stock exchange announcement.

The remaining 69 properties in Redemption’s portfolio have come under new flexible leases with Community Accommodation Group, a charitable organisation that provides social and housing care. Myshon Limited, a specialist housing manager, will continue managing the properties.

The current occupiers of all the properties will not be affected, according to Home.

Analysts were encouraged by the progress being made by the Reit’s new manager AEW, but not all supported the terms of the agreements.

‘We note the resulting large reductions in contracted rent,’ said Thomas Pocock, analyst at Peel Hunt. ‘Additionally, no financial information has been provided on the “flexible” leases for the remaining 69 properties and our assumption is that a significant reduction in contracted rent will also have been taken for these.’

Earlier this month the Reit said its third-largest tenant, Supportive Homes CIC, had gone into liquidation. The tenant, which leased 209 properties for 11.3% of overall rent collected by the Reit joins another tenant, Serenity Support CIC, which accounts for 1% of rent in liquidation. 

An update in September showed Home had only collected 7% of the £13.2m in rent that was due for collection in August. 

The progress with the Redemption leases is the latest measure by AEW managing director Nick Winsley to steady the trust’s assets following the fire sale of 40 properties at a 60% loss in August.

Shares in Home were suspended in January following a report by short-seller Viceroy Research, which exposed conflicts of interest and over-valuations of properties and led to a delay in annual and half-year results which have yet to be published.