Home REIT set for showdown with investors as crises mount

Home REIT, a troubled landlord to the homeless, faces a fiery meeting with investors tomorrow after a torrid few months in which it has fallen into serious financial trouble.

The group is mired in a series of escalating crises. The plight has led critics to suggest the homeless shelter industry may be experiencing a “Southern Cross moment” — a reference to the care home giant collapsing a decade ago after a period of private equity ownership.

Home REIT, (which stands for Real Estate Investment Trust) will confront shareholders at 9.30am at the offices of advisory group FTI in the City of London. It has barred the media, which is usually welcome at annual meetings. Major Home REIT shareholders – including investment firms M&G, BlackRock and Legal & General – are expected to attend.

The Mail on Sunday also understands that short-seller Fraser Perring, the head of Viceroy Research, may also be leaving. A report from Perring — with allegations largely denied by Home REIT — set off a chain reaction that saw the shares suspended early this year.

Perring, who became famous for calling German payments company Wirecard before the collapse, questioned Home REIT’s business model and its ability to collect rent. The company describes the allegations as “unfounded and misleading.”

Home REIT is in a dispute with some of its key tenants who have withheld payments in protest at the condition of some properties. Other tenants could not pay their rent due to financial problems.

The company’s rental roll has now collapsed. It managed to collect only about £3.4 million for the three months to November of a total of £14.8 million owed.

The company’s full-year results, delayed after Viceroy’s broadside, are still unpublished as the accountant BDO examines the accounts. The group has enlisted forensic accountants Alvarez and Marsal to investigate allegations of wrongdoing.

Some in the industry fear the debacle could exacerbate the social housing crisis by making it more difficult for legitimate charities and providers to raise funds from private investors.

The head of a major stockbroker, who declined to be named, said individual depositors and others “genuinely believed that [Home REIT] was a vehicle that would yield substantial social benefits’. He added: ‘All those people are now going to look at other attempts to fund specialist housing support and think twice.’

The broker said it had become “virtually impossible” for care home operators to raise cash after the Southern Cross scandal.

“The loss of large sums of money in Home REIT will have the same impact on people’s attitudes towards specialized assisted housing as the Southern Cross moment did for care homes.” Southern Cross was the UK’s largest care home provider until it collapsed.

Home REIT could be bailed out by a takeover of London-based investment firm Bluestar Capital, which has made an unsolicited offer for the firm. The bidding vehicle, Bluestar Group Limited, is controlled by director Benoit Gotlieb, who is involved in running Bluestar Advisors, which is part-owned by Alvarium, the investment company that originally founded Home REIT.

Adrian Bell, the CEO of Allia C&C, a brokerage firm that provides financial services to charities, said: ‘People who provide resources to house those in need need to behave carefully and responsibly in a way that doesn’t seem to be here. happened.

Home REIT responded to the desire of asset managers and private investors to deliver a strong social good while delivering predictable returns. Unfortunately, using long-term, inflation-linked leases to provide assets to poorly capitalized charities was inappropriate and exposed these charities to significant financial risk.”

He said Southern Cross’s collapse undermined its ability to raise money from investors for care homes, “a problem that persists to this day.”