Home REIT vows to carry out ‘enhanced’ audit in response to allegations of misleading shareholders

Home REIT will carry out an enhanced audit following allegations made against the company by short sellers.

In an update to the stock market on Monday, the investment trust said its auditor ‘is carrying out enhanced audit procedures, which include a detailed review of material allegations made against the company and its advisers’.

Last month short seller Viceroy Research published a report questioning Home REIT’s financials, including the valuation of its properties and the ability of its tenants to pay rent.

Home REIT has been hit by allegations of misleading investors by London law firm Harcus Parker

Home REIT strenuously denied the claims at the time and since. Among its rebuttals, the company says it has no overdue arrears related to amounts billed to 31 August.

Its share price has fallen dramatically on the back of the report, and is down 65 per cent year-to-date. It has fallen 4.3 per cent today alone, and was trading at 44.41p by lunchtime.

The trust, which invests in housing for the homeless, delayed issuing its results, which were due for publication on 28 November, pending verification by its auditor following the report.

Today Home REIT said it ‘continues to work constructively with its auditor’ to ensure the results can be published and expects this to be no later than 31 January 2023.

Home REIT was dealt a new blow last week as law firm Harcus Parker announced it was seeking compensation on behalf of a group of shareholders for significant losses on their investments following the trust’s share price plunge of more than 50 per cent year-to-date.

Harcus Parker has claimed Home REIT issued ‘misleading information’ to shareholders over its social impact strategy and ‘vastly overvalued’ property portfolio.

According to Harcus Parker’s research, some of the trust’s underlying properties are being used to house people who are not in vulnerable situations.

Home REIT denies the claims and today said it ‘remains of the view that the allegations made in the report and subsequent publications are without foundation and have caused unnecessary and significant disruption and losses to the company and its shareholders.’ 

It added: ‘The board has taken steps to maintain and enhance shareholder confidence.

‘The company’s portfolio continues to operate effectively, with rents flowing from tenants, and continues to fulfil its objective of providing high quality, safe and secure accommodation with genuine social impact.’

The company said it had undertaken a series of investor engagement meetings and presentations following the allegations to ‘canvas investor feedback’.

Among its renewed investment commitments include hiring more senior level investment professionals to work alongside managers Charlotte Fletcher and Alex Baker.

It will also appoint ‘an experienced and specialist’ property management firm carry out property management services, including rent invoicing and collection and tenant liaison and monitoring.

This post first appeared on Dailymail.co.uk