1st Dec 2022 13:21
(Alliance News) - Home REIT PLC dropped out of the FTSE 250 index during Wednesday's index review following a share price slide spurred on by a short-selling report by Viceroy Research last week.
Delaware-based Viceroy Research published a report on November 23, including a number of claims against Home REIT which caused its share price to drop around 20% that day. A week later, the investor in accommodation for homeless people issued a detailed response to the allegations.
In its response to Home REIT's rebuttal, Viceroy on Wednesday claimed that Home REIT "all but confirms round-tripping of revenues to tenants via vendor agreements, low tenant quality and related party structures between major tenants".
Regarding the claim that Home REIT's properties are run by "bad actors", Viceroy said Home REIT addressed concerns by "simply asking the parties in question if they are bad actors, and passing their denials along to investors".
"Never have we seen this lack of care in [know-your-customer]," Viceroy added.
On the question of Home REIT collecting rent, Home REIT had suggested that its rent is government backed. Viceroy said this was "completely falsified by the bankruptcy administration of one of its major clients: Circle Housing & Support."
Viceroy also said Home REIT's "transparency in relation to its asset purchases" was "damning". Viceroy used the example of a Stoke-on-Trent portfolio.
The short-seller's findings would suggest the portfolio changed hands several times in the same day before eventually being landed by Home REIT.
"We fail to understand how anyone can refurbish dozens of properties in a single portfolio in one day, pocketing millions of pounds," Viceroy added.
Viceroy said that although Home REIT claims to have paid for EPC upgrades and to improve all EPC ratings to C+ within six months of acquisition, "a casual search of Home REIT's properties shows that many certificates are expired, and substantially all valid certificates show D-E ratings".
EPC is an energy performance certificate.
On Wednesday, Home REIT released its full response to Viceroy's initial report, expressing "deep frustration" that it is spending time and resources responding to "baseless and misleading allegations".
The investor said it is "completely confident in the integrity of the business it is operating, its financial soundness and the beneficial impact the company is having in reducing homelessness in the UK."
Shares in Home REIT were trading 4.3% lower at 48.45 pence each in London on Thursday afternoon. The stock is down nearly 42% in November.
By Chris Dorrell; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Home Reit