Shares in Home Reit PLC, the fund that aims to provide inflation-protected income by investing in government-backed homeless accommodation, jumped 10% after it provided a detailed rebuttal of allegations made by a US short-seller.
Shares in the real estate investment trust (REIT) have fallen over 20% since a 27-page report was published by Delaware-based Viceroy Research, the short-seller run by former social worker Fraser Perring and which was one of the first to point to fraud at Wirecard (ETR:WDI).
After Home Reit first responded last week, saying the report was “inaccurate and misleading” and “based on mistaken assumptions, misinformed comments, and disputable allegations”, it today released a more thorough response to each of the issues raised by Viceroy.
In a summary rebuttal, the company addresses Viceory’s comment that tenants “do not appear to be paying rent” and that substantial quantities of rents “will never be collected”, with the response that its rent is “ultimately supported by central government funding and local authorities' statutory duty to house homeless people”, with “no overdue arrears in relation to amounts billed to 31 August 2022”.
And on the allegation that the REIT’s investment adviser, Alvarium, has “systematically inflated the prices of properties on the balance sheet”, the company said the total revaluation gain for properties purchased between IPO and 28 February 2022 is £43.2mln, equating to an average of 6.4% per property, with the amount of the gain “established by the external valuation process undertaken by Knight Frank as per the RICS valuation”.
Home Reit said the statements made by Viceroy “misunderstand the process by which the company acquires its assets, misinterprets figures derived from underlying SPVs and relies on misleading HM Land Registry data”.
Board chair Lynne Fennah said in a statement: “This is a business whose sole focus is on providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value. It is with deep frustration that the board is having to spend time and resources responding to these baseless and misleading allegations.”