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(Alliance News) - Shareholders of Home REIT PLC are demanding compensation for losses on their investments, law firm Harcus Parker said Wednesday.
Harcus Parker sent a letter of claim to the company and its former advisors at Alvarium, now AlTi Global Inc, on behalf "of a significant number of shareholders" seeking compensation for investment losses, it said. Alvarium sold the investment advisor of Home REIT, Alvarium Home REIT Advisors, before the merger to create AlTi Tiedemann Global at the beginning of this year.
Home REIT, a London-based real estate firm, which invests in housing for homeless people reported that its portfolio valuation stood at GBP412.9 million as at August 31, down 2.4% from GBP422.9 million at February 28, and 0.4% lower than GBP414.4 million a year prior.
The number of properties at the end of August was 2,473, unchanged from February, but up 10% from 2,239 a year ago.
Harcus Parker said: "The company has repeatedly admitted that the board had little knowledge of the company’s property portfolio, their condition, underlying occupancy, the tenants' abilities to meet rental payments, the standards of quality, safety and compliance."
Home REIT earlier on Wednesday reported that "the majority of properties are now valued on a vacant possession basis and where a valuation has continued to be prepared on an investment basis, limitations on the duration of the income streams have been applied to account for the covenant strengths of the tenants, and the rent levels demanded under the leases."
Home REIT added that the valuation was "impacted by a deterioration in the housing market and an increase in property yields more generally following a rise in interest rates."
Further, the company said it exchanged on the sale of a further 80 properties or 3.6% of its portfolio, for GBP16.2 million. It expects completion in one month's time. "The proceeds from the sale properties represented an average of 33% of their purchase price," the company said.
Jennifer Morrissey, partner at Harcus Parker, said: "Home REIT now acknowledges that its property portfolio has been vastly overvalued due to failures to properly understand tenant covenant strength and the quality of the property assets. Despite it now being more than a year since many of these issues were raised, the company still does not appear to understand precisely where its rent is (or should be) coming from. A year on, the company is unable to tell what portion of their tenants qualify for social housing benefit, and has provided no clarity whatsoever on how the investors will be compensated for their losses. While the shareholders' questions remain unanswered, we are now awaiting a response from the company and its former advisors to the letter of claim that we have sent on behalf of a growing body of investors that have joined our claim."
Home REIT shares have been suspended from trading in London since January.
By Tom Budszus, Alliance News slot editor; updated by Tom Waite, editor
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