Home REIT receives takeover approach as it confirms rent collapse and ‘wrongdoing’ investigation
Home REIT revealed it is the subject of a potential takeover bid this morning as it confirmed its rental collection had collapsed and swathes of its property portfolio were in need of refurbishment.
In a statement, the troubled social housing investor said it had received an unsolicited approach from London-based investment firm Bluestar regarding a possible cash offer for the entire issued share capital of the firm.
Bluestar now has until the 16th March too firm up its interest and make a formal bid for the company, Home REIT said.
The potential deal comes as Home REIT confirmed its rental collection had collapsed in recent months with only 23 per cent of rent collected, meaning that out of a £14.8m quarterly rent roll, only £3.4m has been paid.
Lynne Fennah, chair of the board, said in a statement: “We recognise the serious issues facing the Company and are examining all options to preserve shareholder value, and the interests of all stakeholders.”
City PM has revealed that a number of tenants have withheld their rent payments in recent months in protest at the dilapidated state of the housing provided by Home REIT.
The former FTSE 250 firm admitted today that it needed around £15m-20m to adequately renovate the properties after 25 per cent were found to be in need of refurbishment after recent inspections.
The admission marks a stark reversal from Home REIT’s previous positions that it requires only “fully refurbished” and “high quality” homes.
City A.M revealed in January that Home REIT had also opened an internal investigation into whether bribery had taken place as part of deals to acquire huge portfolios of unrefurbished property at massive mark-ups.
Home REIT said it had instructed Alvarez & Marsal, independent forensic accounting experts, to investigate the allegations.
“This investigation is ongoing and it is not possible to confirm its outcome at this stage,” Home REIT said.