A real estate investment trust under investigation by the Financial Conduct Authority is pursuing legal action against its ‘non-performing’ tenants.
In a trading update today (April 4) Home Reit said its rent collection is expected to vary month to month.
The monthly update showed it has reduced the number of properties it owns by more than 400 in the past year.
It said AEW, the investment manager appointed in May 2023, continues to work on stabilising the portfolio and pursuing legal action.
The update read: “Rent collected on operating leases including arrears represents 8 per cent of the rent invoiced for the month of March.
“A further 4 per cent (£0.1mn) was transferred by tenants prior to month end but did not clear until April 2, and as such will be reported in April collections.
“AEW continues to work with select tenants on payment plans. It is anticipated that rent collection will vary month on month in the near term as AEW continues to work on stabilising the portfolio and pursues legal action.”
In February, the FCA opened an investigation into Home Reit covering the period between September 22, 2020 and January 2023.
The latest trading update showed the number of properties owned by the trust stood at 2,017 at the end of March, compared with 2,473 at the same time the previous year.
It had £12.6mn cash balance as of March 31, of which £9.1mn was unrestricted, and had repaid £5.1mn of debt to its lender, bringing the total repaid to £76mn.
In March, the sale of 62 properties was completed for a total of £5.1mn and 252 properties remain exchanged for sale for a total of £15.8mn with completion expected in April.
On April 2 the company signed new five year leases on eight properties with a specialist provider of accommodation and support services to public bodies, working primarily to prevent homelessness.
The properties were previously leased to Serenity Support CIC which has been in liquidation since June 2023.
The company said: “The new lease allows Home Reit to receive a sustainable income stream in line with the Investment Policy."
tara.o'connor@ft.com
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