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Monday 05 December 2022 1:25 pm

Home REIT ‘significantly’ inflated property value, claims shadowy activist investor

By: Charlie Conchie

City Editor

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A law firm is considering bringing a legal claim against a Home REIT sister fund, which has collapsed in value and is being investigated by the Financial Conduct Authority (FCA), City PM has learned. 
Home Long Income Fund (HLIF), a vehicle set up by investment manager Alvarium in 2018, provided the basis for the now scandal-hit social housing investor Home REIT.

Social housing investor Home REIT faced calls for its board to be sacked today for “significantly” inflating its property portfolio, in the latest of a string of attacks against the firm in the past two weeks.

In a letter to senior independent director Simon Moore, shadowy activist investor The Boatman Capital levelled a series of accusations at Home REIT, including that it had “been over-optimistic in its assumptions” on property value and its portfolio could in fact be “39-51 per cent lower” than it claims.

The activist said the inflated valuations and a slew of accounting issues made the positions of the chairwoman and the audit chair “untenable”, and it was now poised to agitate for further change if its demands were not met.

“Entities related to The Boatman Capital currently hold stock in Home REIT Plc and we may consider making a larger investment,” the letter said.

“We may also consider engaging with other like-minded investors to achieve change if it is not otherwise forthcoming.”

The latest barrage from The Boatman Capital Research follows follows a series of accusations from short-seller Viceroy over the past two weeks, in which it slammed the quality of tenants in Home REIT’s property portfolio and caused its share price to plummet beyond 30 per cent.

The Boatman Capital research renewed Viceroy’s complaints over the prospect of ‘round-tripping’ revenues at Home REIT today, first raised by Viceroy in its report two weeks ago, due to the firm’s practice of indirectly capitalising the charity tenants with rent payments.

“Seeking to minimise this issue by claiming the payments are indirect is disingenuous at best and reflects an attitude of hiding behind ‘form’ rather than reflecting the ‘substance’ of the matter to shareholders,” the letter said.

The letter marks the latest anonymous campaign for Boatman Capital Research, which has built a fearsome reputation in the City for campaigns against firms including defence giant Babcock and ‘Big Four’ firm PwC.

Home REIT has been scrambling to get into a defensive position since the first attack by Viceroy on the 23rd November. 

The firm was forced to delay its full-year results last week to allow BDO to do a deepdive on the back of the criticism. Home REIT issued a full rebuttal of Viceroy’s criticisms on the 30th November, calling the criticisms “baseless and misleading” but it has since tumbled out of the FTSE-250 due the fall in its share price.

Home REIT has been contacted for comment on the The Boatman Capital’s allegations.

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