Homeless accommodation landlord Home Reit (HOME) has hit back at a “baseless and misleading” short-seller report published last Wednesday which made damning allegations about its financial stability. Home Reit’s share price has nosedived 29 per cent since the report was published. The longer rebuttal, which included detail on Home Reit's tenants and portfolio valuation, did not trigger a share price rebound - it fell 2 per cent after publication.
The document from Viceroy Research, which caused Home Reit to delay the publication of its results due on 28 November, alleged that the tenants Home Reit works with to provide accommodation for homeless people “cannot afford rent, have not been paying rent, are in administration, are run by bad actors, or simply do not provide social housing services”. These tenants are a mix of charities and newer associations or community investment companies.
In response to Viceroy, Home Reit said there were no overdue arrears in relation to amounts billed to 31 August 2022 and added that its due diligence includes "confirming the tenant's legal qualification to receive exempt housing benefit, in addition to reviewing financial statements, operational capabilities (e.g. staffing levels) and their business plan/forecasts, such that the tenants can meet their rent payment obligations as they fall due".
It said it takes "any accusation against the conduct of directors/trustees of its tenants seriously and would investigate any suspected wrongdoing, if required".
The report also echoed concerns raised by an Investors’ Chronicle investigation in August this year which found that three of Home Reit's largest tenants – Big Help Project, GC Community Council and Princess Drive Community Association – share more than one trustee, including Labour councillor Peter Mitchell. Other tenants are registered at the same address or previously shared directors.
Home Reit said in reply that “there is nothing unusual in these arrangements”.
“For smaller charities, it is common practice to share senior level expertise, administrative support functions and office space, which drives a reduction in operating costs, allowing them to focus resources on the vulnerable people they support,” it added.
The Viceroy report went on to criticise Home Reit for its judgement regarding Circle Housing & Support which Investors’ Chronicle revealed collapsed into administration in July. The administrators Carter Backer Winter (CBW) said at the time that “leases for certain locations are onerous and that without a restructuring of the portfolio, the charity would be unable to pay its ongoing liabilities in the not-too-distant future”.
Home Reit said in reply that “the circumstances surrounding Circle's solvent administration were driven by a change of strategic direction by Circle's management”.
It added that Circle's existing leases were “reassigned on the same rental terms” to another one of its tenants One CIC and that doing so “demonstrat[es] the resilience of Home REIT's business model and its ability to continue to provide critical housing to its vulnerable occupants due to the protective statutory framework that the Homelessness Reduction Act 2017 created”.
