Harcus Parker, the law firm representing 800 current and former Home REIT (HOME) shareholders, has issued High Court proceedings against the former homeless accommodation provider that returned from a 39-month share price suspension in April.
Confirming the launch of legal action against Home REIT, its directors as well as the company’s former investment adviser Alvarium Home REIT Advisors, and former fund manager Alvarium Fund Managers (UK), Nate Barber, a partner at Harcus Parker, accused the company of making statements that “were simply not true”.
Shares in the real estate investment were suspended shortly after short-seller Viceroy Research exposed an over-valuation scandal in November 2022. It subsequently emerged that HOME was receiving little in the way of rent and its properties were worth less than half what had been paid for then.
In January, the Serious Fraud Office (SFO) arrested six people as part of its investigation into bribery and fraud.
The shares stand at 9.5p having peaked at 123p in August 2022.
Barber stated: “What was said by Home REIT in respect of their investment strategy, the types of tenants they would be leasing to and a number of really important statements that were in their regulatory filings were simply not true.
“They said they were going to be leasing to housing associations, but that wasn’t true. There were sweetheart deals with linked entities; they were purchasing properties that were unfit for habitations; they were renting some out as holiday lets. Retail clients and pensioners ought to be able to trust regulatory filings that are being produced by publicly-traded companies.”
Harcus Parker has not said how much redress it is seeking for HOME shareholders, but The Times said it was expected to be over £120m.
Home REIT noted the announcement from Harcus Parker. “The company cannot comment any further at this stage and a further announcement will be made at the appropriate time.”
Our view
David Batchelor, senior analyst at QuotedData, said: “HOME’s brief response offers no substantive defence to Harcus Parker’s case of alleged misrepresentations about the security of rental income, tenant quality and the social purpose of the portfolio. Shareholders deserve accountability, but with HOME among the defendants any compensation funded from asset sales reduces the pot available for eventual distribution. Meanwhile, costs continue to erode that pot with HOME incurring £3m of non-property operating expenses in the June quarter, primarily legal and management fees.”
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