Home REIT has said that a report by a short-seller attacking the company is “inaccurate and misleading” and “based on mistaken assumptions, misinformed comments, and disputable allegations”.
Viceroy Research alleged that many of 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”.
Home REIT said it would publish a full and detailed response demonstrating the factual inaccuracies and selective use of information in due course. The company’s share price fell 20% yesterday on the publication of the report.
Short sellers look to profit from any falls in the share price of company’s that it shorts. The report by Viceroy mirrors a similar attack on Civitas Social Housing last year.
The Viceroy report criticises Home REIT for its judgement regarding Circle Housing & Support which 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”.
The report also alleges:
- Several of Home REIT’s largest tenants, including Dovecot and Princess Drive, do not appear to be paying any rent.
- Publicly available charity financials show that many of these charities may not have the ability to service leases on a long-term basis.
- Despite claims to limit exposure per client to 15%: Home REIT’s largest clients all appear to share the same office and are run by the same people.
- Many Home REIT properties were acquired at an inflated price thereby artificially inflating its NAV (and thereby management fee paid to the manager Alvarium).
[QD comment: We will, of course, bring you Home REIT’s response when it is published before making any judgments. What we would say now is that social housing REITs such as Civitas and Home REIT provide vital accommodation to those vulnerable and in need at a significantly cheaper cost to the public purse than the alternative. The fact that the sector is young and not yet established means that issues with the charities and housing association tenants are inevitable. The underlying fundamentals of strong demand for the accommodation, a lack of suitable properties and plan by central government to tackle social housing needs means that private sector intervention is paramount.]