Home REIT sells properties at a hefty loss

BELEAGUERED Home REIT has embarked on a massive cut-price sale of its property portfolio as it struggles with a cash crisis.

the landlord for the homeless, which this week also saw two more of its charity tenants go bust, announced it had sold 40 properties, around 1.6pc of its entire portfolio, for just over £4.8m.

But the proceeds from the sale, which is expected to be completed next month, equate to just 39.4pc of the purchase price paid by the company when it bought the houses – meaning it made an average loss of 61pc on the sale.

Home REIT said the price reflected the vacant status of the properties and their condition, adding that some of the cash would be used to reduce its debts.

the discounted sale is likely to fuel allegations that former managers overpaid for the properties in its portfolio which were then rented out to charities and other organisations to provide housing for vulnerable people.

Home REIT has been in crisis since last year when shortselling firm Viceroy Research raised questions about its business model.

the firm’s shares were suspended in January amid an accounting probe into its annual results, which remain unpublished. the company is also in dispute with some of its tenants about the state of its properties.

others, meanwhile, have been unable to pay their rent due to financial problems or have already collapsed.

Home REIT’S investment adviser, AEW, is rushing to stabilise the business, while the company itself has drawn up plans to remove its focus on housing only vulnerable people and instead invest in all kinds of residential property.

AEW will also restructure the property portfolio, with lease lengths made more flexible to ‘better align’ with the needs of residents and councils.

shareholders will vote on the proposals later this month.

A Home REIT investor told the Daily Mail that while it was ‘good to see’ news from the company following months of silence, they remained concerned the firm’s properties were being sold on the cheap.

the shareholder said yesterday: ‘ We think a fair price would have been around a 30 to 50pc discount, but the key issue is the quality of the homes for sale. if they sold the good stuff first, they didn’t set a good precedent.’

the massively discounted sales prices are also likely to fuel allegations that the company misled investors after it previously claimed to only buy ‘high-quality’ accommodation when it made its debut on the stock market in 2020.

‘Firm didn’t set a good precedent’