Home REIT estate is now worth less than half of the total purchase cost
- JLL estimated that Home REIT's estate was worth £412.9 million at the end of August
- The Home REIT chairman said bosses were “extremely disappointed” by the valuation
- In addition to the appraisal, Home REIT announced that it has sold an additional 80 properties
Home REIT's property portfolio is now worth less than half of what the company spent to buy its estate, an independent valuer has found.
The troubled real estate investment trust, which has been under intense scrutiny since a short-seller attack last year, hired real estate group Jones Lang LaSalle in September to assess the value of its residential portfolio.
JLL estimated that Home REIT's estate was worth £412.9 million at the end of August, or 42.3 percent of their historic acquisition cost of £977 million.
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Home REIT said the downgrade in valuation was partly due to “a reassessment of asset quality” as part of an ongoing inspection programme.
JLL carried out inspections, as did property management group Vibrant Energy Matters and Countrywide, with the latter also providing building inspections to identify necessary repairs and renovations.
Home REIT further noted that the revaluation reflected the “covenant strength” of its tenants, many of whom, including Redemption Project CIC and Supportive Homes CIC, entered bankruptcy earlier this year.
Lynne Fennah, chairman of Home REIT, said bosses were “extremely disappointed by the significant impairment announced today”.
She added: “This information contradicts reporting provided to the board during these periods.
'The company reserves all its rights in relation to the matters referred to in today's announcement and is continuing to consider, with its advisors, the conclusions and implications of the revaluation exercise, and what consequential actions it may take.'
In addition to the valuation, Home REIT revealed that it has sold a further 80 properties, equivalent to 3.6 percent of its holdings, for £16.2 million at public auction in recent days.
The company said money from the proceeds of the sale, which averaged a third of the original purchase price, will go toward paying down debt.
It follows the sale of 153 properties for around £23.4 million in early November and 40 properties for £4.8 million in August, which were also sold collectively at a significant loss.
Home REIT has been in a major crisis since November 2022, when Viceroy Research questioned the company's financial stability and the quality of its tenants.
In a 27-page report, Viceroy alleged that many of Home REIT's tenants either had not paid rent, were under administration, under the control of “bad actors” or were not providing social housing services.
Viceroy is led by Fraser Perring, who published allegations of fraud at Wirecard a few years before the German payment processor went bankrupt.
Shortly after making allegations against Home REIT, the real estate company was sued over allegations that it had “misled” some shareholders to raise money. It denied the claims.
The problems continued to mount last summer, when the group collected just 7 percent of the rent it owed for the period May to June.
In an effort to turn things around, investors approved a proposal for Home REIT to invest in all types of housing rather than just focusing on housing vulnerable residents, such as the homeless.