Trading in Home Reit shares have been suspended after the self-styled “landlord for the homeless” was unable to get its annual accounts signed off in time following the recent attack from a short-seller on its business model and practices.
The company, which rents out thousands of homes to councils and charities, had been due to publish its results for the year to the end of August in late November.
However, a few days before, Viceroy Research published a critical report flagging a number of concerns with the business. They included doubts about tenants’ abilities to pay rent, the prices Home Reit paid for some of its houses and the structure that determines how much the fund managers receive in fees.
Soon after Viceroy’s report was published, Home Reit issued a response stating that the claims were “inaccurate and misleading” and “based on mistaken assumptions, misinformed comments and disputable allegations”. A lengthier 13,000-word rebuttal followed a few days later.
Despite its denials, Home Reit was forced to delay the publication of its results to give BDO, its auditor, more time to look into the allegations made by Viceroy.
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Under stock exchange rules, companies must submit their annual accounts within four months after the end of their financial year. Home Reit’s deadline was December 31. The expectation had been that it would miss that deadline given the “enhanced set of audit procedures” to which BDO was subjecting it.
The landlord previously told shareholders that it was hopeful of getting its accounts signed off before the end of January and was “working tirelessly” to do so. It said today that it would publish the results “as soon as practicable”.
The suspension means that Fraser Perring, the former social worker who runs Viceroy, will be unable to close his £5 million short-bet for the time being. Another short-seller, the hedge fund Oasis, closed out its larger short position in the week before Christmas.
Shortly before Viceroy’s report was published in November, Home Reit shares were trading at about 77p. They have since halved in value and closed at 38p on Friday. Its stock market value has dropped from about £610 million to £300 million over the past six weeks.
Home Reit floated in October 2020 at 100p. Since then it has tapped investors for £850 million to build a portfolio of almost 12,000 beds in houses and small blocks of flats that it has bought and renovated. It says “robust tenants”, such as charities and local councils, rent the properties, typically on 25-year leases, to house homeless people, including those who have just left prison or foster care or are victims of domestic abuse.
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Alvarium, the fund manager that runs Home Reit, has said it believes that Viceroy’s “allegations are without substance”. However, it promised last month to beef up the senior management team. It also said it would get an independent valuer to assess any buildings it is looking to buy as it seeks to allay fears that it overpays for properties.
