Home REIT (HOME), the former homeless accommodation provider looking to liquidate more than three years after being engulfed in a valuation scandal, has expressed “frustration” at the legal costs it is incurring.
The company said most of its £3m non-property operating expenses in the second quarter related to defending itself against threatened litigation from shareholders and an ongoing investigation by the Financial Conduct Authority.
While its other costs were falling as its last remaining properties were about to be sold this month by fund manager AEW, it expected legal fees over the potential group action organised by law firm Harcus Parker would “remain material”.
Chair Michael O’Donnell said: “Despite this encouraging progress on liquidating the group’s property assets, it remains a great frustration for the board that our ability to make a distribution [to shareholders] continues to be curtailed due to threatened shareholder litigation.”
HOME sold 71 properties in the past two months and at 30 June had just £3.4m in cash, although it held £100.8m in short-term bonds and money market funds and expected a further £4.4m from completed sales on top of a £35m receivable from Patron Capital relating to its purchase of a large portfolio of properties this year.
The real estate investment trust’s shares resumed trading at the end of April after a 39-month suspension while the board oversaw a re-audit of its financial results. They stand at 10.7p, down from a peak of 123p in August 2022, and have attracted bargain hunters betting on a return of capital notwithstanding the legal uncertainty.
Our view
James Carthew, head of investment company research at QuotedData, said: “Another message from the Home REIT board complaining about the costs of legal advice but once again the statement all appears to be one way – if only those pesky shareholders would stop trying to litigate against us, we’d be able to give you your money back. Shareholders would like to know: what is the status of the company’s own claims against its former board and advisers?”
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