Scandal-hit property investor Home Reit has kicked out its biggest tenant, a charity which paid no rent on hundreds of properties for more than a year in a protest.
Liverpool-based organisation Big Help has agreed to give up leases on more than 600 properties, which equates to around 30 per cent of Home Reit’s portfolio.
The pair have been embroiled in a major row since the start of last year after Big Help protested over housing conditions and withheld payments on properties that it had rented from London-based Home Reit to house homeless people and prison leavers.
Big Help has claimed the rent was not owed because it needed to invest a significant amount of its own money to bring the properties it leased up to a decent standard.
The charity described the properties as mostly terraced homes previously owned by rogue landlords, which needed major works such as rewiring and new kitchens.
Home Reit, which has been dubbed the ‘landlord for the homeless’, has now said reclaiming leases will allow it to collect rent and open up new ‘opportunities’.
The company insisted there would be a ‘comprehensive handover with minimal disruption to occupiers’, and the tenancies will transfer to Home Reit, adding that the ‘current occupiers of the properties will not be impacted’ as a result of the deal.
The firm will now ‘directly collect the underlying income from these properties, increasing rent collection and facilitating asset management opportunities’.
Click here to resize this module
Home Reit is also now appointing property managers to the homes, who will be responsible for the day-to-day management and rent collection.
A Big Help spokesman told MailOnline: ‘Big Help has always been clear that we were victims in this scandal; we are delighted that after robustly defending our position for over 18 months we have been completely vindicated.
‘Home Reit is now accepting the return of these leases – that were handed over to us in a substantially different state of repair than our contracts had agreed, with significant shortfalls for maintenance budgets for each home.
‘We have ensured that our tenants have been fully supported throughout this challenging period and we can confirm their tenancies have been assured as part of this agreement. We can further confirm this agreement has been completed at no cost to our organisation.’
The successful effort to push through the deal with Big Help is a much-needed boost for the former FTSE 250 group as turnaround efforts continue.
Click here to resize this module
Home Reit has faced a series of scandals since 2022 and was suspended from the stock exchange in January last year after it failed to file accounts on time.
Troubles first emerged more than 18 months ago when short seller Viceroy Research raised concerns over the sustainability of its business model.
Viceroy had questioned the group’s ability to collect rent from tenants, most of whom were charities and community interest groups.
Home Reit marketed itself as a way to house vulnerable people, including the homeless, by letting out properties to charities and other groups, which would pay rents from Government housing benefits.
The company floated in London in October 2020 and tapped investors for £850million to build a portfolio of 12,000 beds.
Click here to resize this module
But since Viceroy’s report, it has been buffeted by a series of damning revelations.
These include a probe by forensic accountants Alvarez & Marsal which uncovered transparency and due diligence failings by its former investment adviser Alvarium Home REIT Advisors.
Alvarium was subsequently sacked and another firm, AEW, was brought in to try to steady the ship.
Since then, the group has been scrambling to sell properties in its portfolio, often at a steep discount, in order to raise cash and to keep itself afloat.
Over the past year the company has been able to complete on the sale of 585 properties and exchanged on a further 262 properties.
Several of its major tenants have also collapsed into insolvency after failing to secure Government assistance, leaving the company short of rental income.
In the group’s last trading update in December, it revealed that its 2,473 properties were worth an estimated £412.9million, which was almost 60 per cent less than the £977million that it had paid for them.
Click here to resize this module
Its troubles are far from over and in February the Financial Conduct Authority opened an investigation covering the period between September 2020 and January 3 last year.
Home Reit said it would ‘co-operate fully’.
Law firm Harcus Parker has also brought a claim against the company, representing hundreds of shareholders.
‘Investors bought shares based on its claims that it had stringent processes to ensure it acquired properties that would provide safe and secure accommodation for vulnerable residents and would generate robust, sustainable returns,’ Jennifer Morrissey, a partner at Harcus Parker, said.
‘It is now evident, from all the facts widely reported in the press, that Home Reit did nothing of the sort.’
The group has denied the allegations and has said it will defend itself.
Last month it revealed that it was taking legal action against parties it considers to have been ‘responsible for wrongdoing’.