Hard-pressed real estate investment trust Home REIT announced on Monday that two of its tenants comprising over 18% of the sheltered housing provider’s annual rent roll have entered voluntary administration.
Liverpool-based homeless charity Gen Liv UK contributed 5.7% of the REIT’s income, while Wolverhampton-based Lotus Sanctuary contributed 12.5%.
In a statement, Home REIT said that arrangements have been made for existing care and support services to continue, to ensure that there is no impact on underlying residents.
“No resident will lose their accommodation as a result of the above creditors' voluntary liquidations,” the company stated, adding that discussions are underway with prospective tenants to overtake the leases.
Home REIT received a takeover bid from Bluestar Group in February for an unannounced cash sum, which the company was reported to be considering.
Short sellers swoop in
The REIT has been under pressure following a report by Viceroy Research, a short-selling firm, which questioned its financial health in a 27-page research piece published in November 2022.
Viceroy raised concerns over Home REIT's receivables, quality and diversity of its major tenants.
Home REIT said at the time that the report was “inaccurate and misleading in its comments about the company, being based on mistaken assumptions, misinformed comments, and disputable allegations”.
Allegations that Home REIT’s net asset value was artificially inflated were denied, with Knight Frank cited as the independent advisor.
Viceroy was also criticised for disclosing the addresses of certain properties owned by Home REIT housing vulnerable people.
Yet for the quarter ending November 2022, only 23% of rent was collected by Home REIT, with further uncertainty over future cash flows noted in its quarterly report.
Today’s news has vindicated some of these concerns.
Since the publication of the Viceroy report, Home REIT has seen what it described as a “general deterioration” in its rent collection position, with two other tenants, Big Help Group and Noble Tree Foundation, failing to pay rent contractually due for the quarter tom November 30, 2022.
The group also said that around 67% of its portfolio required refurbishment at a cost of up to £20mln.
Shares have been suspended from the London Stock Exchange since January 3.