Valeria Martinez, Investment Week,16 July 2024:
News of a proposed wind-down for the troubled investment trust Home REIT has brought shareholders closer to an exit after a turbulent two years, but legal troubles may hinder the prospect of capital returns.
The decision unveiled today (16 July), which has been backed by the former FTSE 250 trust’s key shareholders, comes after last month’s news that the board had failed to secure a refinancing of its existing debt facility on acceptable terms.
Total borrowings, which the lender Scottish Widows has demanded to be repaid by the end of this year, were reduced from £220m to £114.6m by the end of June and are expected to fall to £90.1m once recent sale proceeds are received.
Problems getting in the way of investment adviser AEW’s turnaround strategy stem from a high cost base, the need for significant capital expenditure, and the vehicle’s size once the debt is paid, which the board said makes the trust’s long-term continuation unfeasible..
Home REIT’s board said its ability to distribute funds to shareholders will be limited while the company deals with potential group litigation from Harcus Parker on behalf of a group of investors and an investigation by the Financial Conduct Authority.
Moreover, the trust will hold onto capital to cover corporate expenses and to finance legal actions against those deemed responsible for wrongdoing.
“The wind-down cannot be completed until the litigation is done – and that could be years,” said James Carthew head of investment companies at QuotedData and Home REIT shareholder.
“The litigation is important, people must be held to account for the failings here and ideally, I would like to see a criminal investigation too.”
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