Troubled Home Reit pushes back deadline for property sales

The troubled real estate investment trust is expecting the portfolio to be sold by the end of the year, three months later than previously predicted.

Homeless accommodation provider Home Reit (HOME ) has pushed out the deadline for the sale of its remaining properties to the end of the year.

The fund, which has been suspended from trading on the London Stock Exchange since the beginning of 2023 and has been at the centre of one of the biggest investment company scandals in years, used a trading update today to confirm its wind down strategy ‘continues to progress’.

The update said ‘the company anticipates that the portfolio sale process will conclude in the fourth quarter’, finally offloading the remaining 853 assets in the fund.

However, this is a later date than flagged in a May update, with the company previously expecting the sale of the portfolio to go through in the third quarter, having extensively marketed the assets at the end of last year.

The board is aiming to return capital to beleaguered shareholders once the sales are complete but warned that ‘the ability of the company to make distributions to shareholders may be constrained while the company faces potential shareholder group litigation’.

Legal proceedings were launched against the closed-end fund by Harcus Parker, operating on behalf of some shareholders, claiming that Home Reit misled and lied to investors about the true condition of the properties it purchased to provide accommodation for the homeless, thereby inflating the value of the portfolio.

Both Home Reit and its former manager, Alvarium Fund Managers, were targeted by Harcus Parker, but in July the latter entered into administration. This could cause complications for shareholders’ applications for compensation and for Home Reit, which was taking legal action against Alvarium Fund Managers and related entities.

In the trading update, new manager AEW Investment Management, which is managing the wind-down, said there had been ‘no material changes’ to the potential shareholder group litigation or the investigation by the Financial Conduct Authority (FCA), which opened a file on the company last year.

It confirmed that no formal legal proceedings have been issued by Harcus Parker but said it intends ‘vigorously to defend itself in respect of the threatened litigation and has denied the allegations made against it’.

The update added that Home Reit has ‘sufficient capital resources’ to meet its ongoing corporate costs and ‘pursue legal action against those it considers responsible for wrongdoing’. 

As at the end of July, the fund had £9.2m in cash and confirmed rents received have averaged £1.1m a month, although rent collected in July totalled £1.3m.

The cash on the balance sheet plus the rents mean the fund has sufficient money to cover ‘operational expenses and fees during the managed wind down and for the next 12 months’.

AEW also has the job of publishing outstanding accounts, including the annual accounts for the year to 31 August 2024, which are expected this month. Interim results for the six months to end of February 2025 are expected during the fourth quarter.

Both the board and AEW said they were ‘committed to the restoration of trading in the company’s ordinary shares as soon as is practically possible’.