Confirmed: Home REIT investment adviser distances itself from troubled firm ahead of US listing
Home REIT’s investment adviser, Alvarium, has sold off the division responsible for managing the property firm’s portfolio in a move that distances itself from the troubled housing provider ahead of a US public listing today.
Home REIT, which invests in social housing for people without a fixed address, has been targeted by short sellers over the financial health of its charity tenants, many of whom have signed 25 year leases with little financial track record.
Alvarium is set to float on New York’s Nasdaq exchange today via a merger with Cartesian Growth Corporation, a Cayman Islands-based acquisition vehicle, and Tiedemann Group, which was finalised yesterday afternoon.
However, City A.M exclusively revealed yesterday that securities filings showed Alvarium sold off the division responsible for managing Home REIT for £24m on the 30th December to a newly formed entity owned entirely by the management team of Alvarium Home REIT advisers (AHRA). Alvarium Tiedemann has also retained a right of first refusal to repurchase the firm after the merger.
In a statement this morning, Home REIT confirmed the news and said it had entered entered into an agreement to sell AHRA to a newly formed entity owned by its management team “funded by way of a promissory note”.
“These arrangements were made prior to the recently completed merger and listing of Alvarium Investments Limited in the US, and the sale also includes specific terms allowing Alvarium RE Limited to re-acquire AHRA in the future for a purchase price equal to the promissory note outstanding,” the firm said.
The sale underscores the scale of the troubles facing Home REIT, and puts distance between Alvarium and the housing provider before a shift onto the public markets.
City PM can reveal that short sellers are already circling the merged vehicle with the expectation it will plummet after listing as Alvarium Tiedemann due to its ties to Home REIT.
“Alvarium selling the Home REIT element of their advisory company will not change their liability for massive investor losses,” short seller Fraser Perring told City A.M.
“Alvarium knowingly purchased assets at inflated price. This is wrong and has serious criminal implications.”
Perring launched the first public attack on Home REIT in November via his research firm Viceroy Research. He told City PM he will short the merged firms after listing.
Activist investor The Boatman Capital has also been exploring taking a short position against the firm after its listing tomorrow, City PM understands.
A spokesperson for Boatman separately told City PM that the numerous governance issues exposed at Home REIT “have been on Alvarium’s watch as investment manager”.
“Alvarium needs to demonstrate to Home REIT’s investors that it can turn this situation around and rebuild confidence in the company’s share price,” the spokesperson said.
“Failure to do so could have a meaningful impact on Cartesian Growth Corporation, the SPAC Alvarium is merging into. We would expect these risks to be disclosed to Cartesian’s shareholders,” the spokesperson added.
Home REIT was forced to suspend its shares this morning after failing to publish accounts before the required deadline as its auditor BDO continues to pore over its accounts in light of allegations made by Viceroy and others about the firm’s financial health.
Bosses at Home REIT have previously dismissed Viceroy’s allegations as “baseless and misleading” but shares in the firm have tumbled over 50 per cent since the initial claims were published late last year.
Tiedemann declined to comment. Home REIT and Alvarium did not respond to requests for comment at the time of publication.