(Update) Long-suffering shareholders in Home REIT (HOME) have seen their stakes drop a further 78.8% this morning after the scandal-hit former homeless accommodation provider returned from a 39-month share suspension.
Shares that were suspended at 38p on 3 January 2023 sank around 30p to 8p after trading resumed at 7.30am.
They stood at 123p in August 2022 before a report by short-seller Viceroy Research exposed over-valuations of its properties and income, exposing investors to a total 94% loss.
Viceroy’s revelations forced the company to reassess its audit, delaying publication of the 2022 annual results which led to the lengthy suspension. PWC is currently under investigation by the Financial Reporting Council for its audit of HOME.
The real estate investment trust also remains the subject of a fraud investigation by police and a regulatory probe by the Financial Conduct Authority.
In a statement yesterday afternoon it said it had published all financial information under listing rules and its listing had been restored.
The company completed the £119.2m sale of 706 properties to Patron Capital on 1 April, from which it has received £94.2m with another £25m due in a year’s time. However, its ability to return the money to shareholders is restricted by the threat of legal proceedings from some former and current investors.
A pre-action letter of claim was sent to HOME by legal firm Harcus Parker on these investors’ behalf in October 2023. No legal proceedings have been issued yet and correspondence continues between the parties, the company said.
HOME stated: “The company continues to incur significant costs defending itself and its former directors from shareholder related potential litigation, which will ultimately affect any return of capital to shareholders.”
It has just £3.8m in unrestricted cash and 144 remaining properties valued at £17.3m last August.
Our view
Richard Williams, senior analyst at QuotedData, said: “It’s obviously good news to see HOME’s shares trading once again, but it is nigh on impossible to value the company with a law suit pending, a potential FCA fine incoming, and the company also going after the former manager. Shares opened at 7.5p this morning, above an opportunistic offer it received in the depths of its troubles back in 2024 by Southey Capital at 4p. With the company running through around £1m a month in costs (which should go down slightly as assets are sold but will remain elevated for legal fees), and with the timing of its voluntary liquidation and return of capital very much up in the air, it may be that selling your shares now and walking away from this sorry affair with something is best.”
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