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(Alliance News) - Home REIT PLC on Thursday said it sold a further 117 properties worth GBP5.6 million in gross proceeds, as it scrambled to reduce borrowings and raise working capital while under investigation by the UK Financial Conduct Authority.
The London-based real estate company, which focuses on investing in accommodation for homeless people, said the properties represent 1.4% of its portfolio by value, based on JLL's draft valuation in August last year.
The gross proceeds are around GBP1.0 million, or 16%, below the August 2023 draft values. Home REIT said the majority of the properties sold are below portfolio average lot size.
This was also the case in in an auction in January, when it sold 103 properties for around GBP6.6 million, which Home REIT said may cause a greater percentage variation when comparing sale price to the August draft valuation.
Earlier in the same month, Home REIT said it sold 81 properties for GBP16.4 million in December, with completion expected in January.
Completion of the latest auction is expected in "approximately one month's time", the company said, while sale proceeds will be used to reduce borrowings and provide working capital.
Home REIT also said a further property is expected to be entered into a public auction on Thursday of which the result will be included within the company's next monthly update.
Shares in Home REIT are currently suspended from trading in London.
On Tuesday, Home REIT announced it was under investigation by the FCA, months after a shareholder first called on the regulator to act. Home REIT said the FCA probe will cover the period from September 22, 2020 to January 3, 2023.
"Naturally, the company will cooperate fully with the FCA in its work," the firm added.
Pressure on the regulator to look into Home REIT started in June last year, City AM reported. The outlet had obtained a letter to the FCA from shareholder The Boatman Capital, in which the activist investor called for a probe into claims Home REIT made regarding its rental income and the quality of its properties.
Boatman accused Home REIT of misleading the market with incomplete and inaccurate information, leaving investors "badly burnt". It also said Home REIT was providing "sub-standard" housing, the "opposite of what investors were promised".
At the time, City AM said the FCA refused to comment on the matter. This Is Money likewise reported in late August that the regulator was still "keeping quiet".
Previously, in November 2022, short seller Viceroy Research claimed that several of Home REIT's tenant organisations did not appear to be paying any rent, among other allegations which it said cast doubt on the portfolio's financial viability. The next month, Boatman called for Home REIT's chair and audit chair to be replaced, citing what it described as "governance failures and accounting irregularities".
By Greg Rosenvinge, Alliance News senior reporter
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