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Home REIT starts suing its own tenants as shareholders and regulators circle

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City Editor

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Two bosses from one of Home REIT’s biggest charity tenants made “unauthorised” payments of nearly £1.2m to their own companies before it collapsed into administration, City PM can reveal.
Home REIT was set up to house the homeless but has been rocked by scandal for the past 18 months.

Scandal-hit housing fund Home REIT has begun suing its own tenants in a bid to restore its rental income as a group of shareholders progress with their own legal action against the company.

In a statement to the London Stock Exchange this morning, the former FTSE 250 investor said it had collected £300,000 of its total rent in April, just 11 per cent of the total billed amount for the month.

Over the six months to the end of April, Home REIT collected a total of £3.1m of its total billed rent roll, 11 per cent of the total billed figure for the period.

The firm’s investment manager AEW said today it has now begun taking legal action in an attempt to recover the portfolio and force out certain tenants.

“AEW continues to focus on obtaining control of the portfolio with legal action being taken against selected non-performing tenants,” the firm said in a statement. “The company is progressing negotiations with a number of tenants to facilitate restructuring of leases and rationalisation of the portfolio, further announcements will be made in due course.”

The action against tenants will add to the legal pressures facing the firm after a group of shareholders moved to sue Home REIT earlier this year for allegedly misleading the market. Home REIT has also threatened to sue its former investment manager.

Home REIT denies the allegations it misled investors.

The company has been offloading its sprawling property portfolio at dramatically cut prices in a bid to steady its financial position.

In the update today, bosses said they had sold 553 properties for a total of £83.6m in the six months to the end of April at a loss of around 60 per cent of their original purchase price.Regulators are also circling the firm, with the Financial Conduct Authority launching a probe in January.

City A.M. also revealed that the Serious Fraud Office had opened preliminary inquiries into the company. The SFO has said it does not confirm or deny any potential investigations.