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Home REIT facing litigation claim from shareholders

Home REIT property in Gloucester

Home REIT has come under more fire today, as law firm Harcus Parker launches a litigation claim alleging that shareholders were misled by information they were provided by the company and its associates.

The collective action is seeking compensation for retail investors “in relation to significant losses on their investments”.

Harcus Parker claims that while Home REIT, which has seen its share price fall 60% in the year to date, says that it has an investment strategy to “exclusively tackle homelessness”, its research has found the company “has used investors’ money in a way which runs contrary to what investors were told”.

On its website, the law firms states: “[investors] were told that their money would be used for high-quality homeless accommodation, but instead it seems that at least some of that money has been used to fund accommodation for people who are not in vulnerable situations.”

It goes on to say: “We have discovered that properties owned by Home REIT have been found by local authorities to be unsuitable for housing vulnerable individuals, or are being advertised for students and professionals, and even as holiday lets. In addition, we have found evidence that the company has been overpaying for property, allowing substantial profits to be made by those who are selling property to the company. In these instances, investors’ cash is not being used to address the issues of the undersupply of housing and underfunding which are contributing to homelessness and is being diverted away from the cause it was intended to serve.”

The law firm has instructed barrister Sebastian Isaac KC to prepare the claim on behalf of investors. It intends to argue that investors paid more for their shares than they were actually worth, and that Home REIT has not invested the proceeds from its initial public offering (IPO) in 2020 and additional fundraising earlier this year in accordance with its stated investment objective and policy.

The action will also argue that the company’s business model and the security of its income stream are in practice materially different from what investors were told about them, and that, because of this, its property portfolio is significantly overvalued.

Home REIT delayed its full-year results in November after several allegations were made in a report by short seller Viceroy Research. Home REIT called the claims “baseless and misleading” in a rebuttal.

Earlier this week Home REIT faced a call for its board to step down by shareholder Boatman Capital Research, which said that it was “over-optimistic in its assumptions” on the value of its portfolio.

Harcus Parker added that anyone who has held or continues to hold shares in Home REIT, either directly or through an intermediary, is eligible to join the claim.

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