Home REIT carrying out 'enhanced' audit in response to allegations

Home REIT said it was carrying out enhanced audit procedures, which include a detailed review of the material allegations made against the company and its advisers by short sellers.

The company on Monday said continues to "work constructively" with its auditor to ensure that the full year results for the period to August 31 can be published as soon as practically possible and expects this to be no later than the end of next January.

It also pledged to strengthen its management team and bring in independent pre-purchase valuers as part of several changes to boost shareholder confidence after a number of allegations in recent weeks. The company will also appoint a new non-executive director and hire a firm to carry out property management services on its portfolio.

Home REIT said its portfolio continued to operate effectively, with rents flowing from tenants. It also declared an interim dividend of 1.38p a share for the three months to August 31.

The sheltered housing investment trust last week faced new allegations that it misled shareholders and owes them redress for “significant losses”.

Law firm Harcus Parker, which specialises in mounting class actions, said it was considering suing Home REIT on behalf of investors after its research allegedly found that the trust had “used investors’ money in a way which runs contrary to what investors were told”.

Home REIT went public in October 2020 and then tapped investors for £850m, which it spent on a portfolio of almost 12,000 beds in houses and small blocks of flats let to the homeless.

Last month it was attacked by Viceroy Research over the viability of its portfolio, while activist investor The Boatman Capital also weighed in, demanding the resignation of Home REIT's chairwoman Lynne Fennah and Marlene Wood, the chairwoman of its audit committee.

Boatman Capital accused the company of being “over-optimistic in its assumptions” on the value of its portfolio. The allegations meant that the company’s results, which were due two weeks ago, had to be delayed.

Viceroy published a report last month accusing the firm's properties of being run by "bad actors", prompting a slump in the share price.

Following the report, Home REIT on Monday said that besides hiring additional senior level investment professionals, it will appoint "an experienced and specialist national property management firm, to carry out a full suite of property management services, including rent invoicing and collection and tenant liaison and monitoring."

Further, it aims to recruit a non-executive director with a "particular focus on direct experience in property and environmental, social and corporate governance matters."

Reporting by Frank Prenesti for Sharecast.com