The boss of Home REIT’s now-bankrupt biggest tenant controlled nearly a quarter of the firm’s rental income via three different companies – none of which have paid rent to the firm, City A.M. can reveal.
Gurpaal Judge, the chief of Home REIT’s collapsed biggest tenant Lotus Housing, also ran tenants Redemption and Eden Safe, which collectively accounted for 23.5 per cent of its total rental income.
City A.M. can reveal that both Redemption and Eden Safe are in arrears to Home REIT.
Lotus Housing alone accounted for 12.2 per cent of Home REIT’s rent but collapsed at the beginning of this month after failing to secure so-called exempt housing status, which would have entitled it to tax-payer backed rental support.
Home REIT and Gurpal Judge did not respond to requests for comment. The investment trust is undergoing a strategic review after a vicious short-seller research report at the turn of the year, with shares suspended for more than two and a half months.
City A.M. revealed last week that Judge paid himself and Lotus directors £1.2m the year before the firm collapsed.
A source close to Judge told City A.M. that he founded Redemption and Eden Safe as vehicles to skirt restrictions on the amount of leases that one tenant could sign from scandal stricken social housing investor.
The fresh rent arrears revelations pose major questions to Home REIT over how Judge was able to sign leases on such huge swathes of its portfolio.
A Home REIT shareholder told City A.M. “the more we learn, the worse it gets”.
“The Board’s claims on rent collection and tenant due diligence are being shot to pieces on a daily basis,” the investor added.
“This Board has no credibility and should not be responsible for trying to fix a mess of its own creation. That’s why we believe that new leadership is needed at Home REIT.”