Home REIT is considering selling scores of properties as it attempts to stabilise the battered business.
It is also reviewing an initial report from Alvarez and Marsal into allegations of bribery and widespread wrongdoing.
In an update to shareholders, who have seen their holdings frozen since the start of the year after the REIT indefinitely delayed the release of its annual results, Home said it “continues to explore all available options”.
But it added that it “is giving particular consideration to the potential sale in the near-term of a limited number of properties, as the company works to stabilise its property portfolio”.
Since its launch in 2020 Home REIT has spent nearly £1bn amassing 2,400 properties. However, since the publication of a damning report by Viceroy Research last year, the REIT’s share price has tumbled. It is currently suspended at 38p. Several of the REIT’s tenants have now gone out of business, and it has said it has only been able to recover 25% of rents.
Home said its investment adviser and Simpact, which it brought in to review its operations, “continue to engage with the company’s tenants to restore rent payments”.
Simpact last month reported that the REIT’s tenants had paid just 23% of rents owed. It is understood that collections have not increased significantly since.
The REIT acknowledged that a number of its “tenants have entered into creditors voluntary liquidations”, including Lotus Sanctuary, which accounts for 12.5% of its portfolio.
Home REIT said it had also received proposals from six candidates to take over from Alvarium Home REIT Advisors as the REIT’s investment adviser.
The bidding process to replace Alvarium, dubbed Project Harbour by Home REIT, closed on Friday. Atrato is thought to be the front runner.
Talk of a possible takeover by Bluestar Group, a dormant company with links to Home REIT’s Alvarium, has gone quiet. Some shareholders suspected that the offer was simply “a ruse to give Home REIT more time”.
Home REIT has also repaid £30m of its £250m debt with Scottish Widows. The REIT was only permitted to access the cash to invest in more assets, and is not permitted to use it for “general working capital purposes”.
However it added that “the lender has also provided the group with access to additional funds for general working capital purposes”.
The REIT said its board “recently received” an initial draft of a report by Alvarez & Marsal. The firm had been brought in to investigate allegations of bribery and widespread wrongdoing. The REIT said: “This is an extensive and complex report which the board is reviewing with its advisers and the report currently remains subject to certain clarifications and finalisation. An announcement regarding its key findings will be made as soon as practicable.”
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