Beleaguered homeless housing landlord Home REIT in takeover talks following collapse in rent payments
Embattled Home REIT has received a takeover approach following a collapse in rent payments.
The homeless housing landlord, whose shares have been suspended from the stock exchange since the start of this year, said London-based investment firm Bluestar Group had made an ‘unsolicited approach’ to the firm regarding a possible cash offer.
Bluestar has until March 16 to make a firm offer. Home REIT warned there was no guarantee a formal bid would materialise.
Offer: Home REIT said London-based investment firm Bluestar Group had made an ‘unsolicited approach’ regarding a possible cash offer
But the prospective bid has already fallen under scrutiny as it emerged Bluestar Group’s director Benoit Gotlieb is also involved in running another entity, Bluestar Advisors, which is part-owned by Alvarium, the investment firm that originally set up Home REIT.
The troubled landlord revealed rent collection had plunged in recent months after several major tenants withheld payments in protest against the conditions of some of its properties.
The company rents out housing to charities and other community groups who then pay rent on long leases to provide accommodation for the homeless and other vulnerable groups such as women fleeing domestic violence.
But Home REIT reported the ‘serious deterioration in rent collections’ meant that for the three months to the end of November last year, only 23 per cent of its rent had been received, equivalent to around £3.4million from a total owed of £14.8million.
It added that collection of rent in the coming months was ‘highly uncertain’ as it was faced with tenants who were unwilling or unable to pay.
The revelation followed reports that Lotus Sanctuary, one of the firm’s largest tenants, had stopped paying rent, while two others, Liverpool-based Big Help Group and Noble Tree Foundation, are withholding payments amid a dispute over their obligations.
Meanwhile, Home REIT admitted it needed between £15million and £20million to renovate some of its properties after inspections revealed 25 per cent of its portfolio needed refurbishment.
It marked a stark difference from the firm’s previous claims that it only acquired fully refurbished homes of high quality.
To make matters worse, the company has appointed independent forensic accountants Alvarez & Marsal to investigate allegations reported last month that bribery may have taken place in some of its deals to acquire large numbers of properties.
‘We recognise the serious issues facing the company and are examining all options to preserve shareholder value, and the interests of all stakeholders,’ said Home REIT chairman Lynne Fennah.
The company was thrown into crisis in November when it came under attack from short-seller Fraser Perring, who questioned Home REIT’s business model and its ability to collect rent.
At the time Home REIT branded the allegations ‘baseless and misleading’, but the report triggered a delay of its annual results and caused the share price to plunge 51 per cent before its suspension from the London Stock Exchange.