Shares in property investor Home REIT tanked nearly 25 per cent yesterday after it came under siege from notorious short seller Viceroy Research over the financial stability of the charity tenants in its property portfolio.
Viceroy, which previously campaigned against collapsed German payments firm Wirecard, said in a report this morning that the property investor’s charity tenants in many cases cannot afford rent, are simply not paying or are run by bad actors.
FTSE-250 Home REIT buys up property and leases it to social housing organisations to provide sheltered accommodation for homeless people. However, Viceroy said that many of the tenants are not in the position to service the 25 year leases provided by Home REIT and were lured into signing contracts with the promise of cash kickbacks and properties.
“If the management were running an ethical and decent business, why was there a need to give incentives to charities – that are newly formed – in [the form of] £3m or properties,” Perring told City A.M.
“I would call it an inducement and query the legality of it. Why is there a need to give these inducements to charities?”
Perring claimed his investment firm was now readying to file a complaint with the Metropolitan Police on the grounds it “fundamentally misled investors” and there were “suspicions it may be fraudulent.”
Shares in the firm plunged on the publication of the report. As a short seller, Viceroy stands to profit from sharp falls in its share price.
Home REIT, which floated on the London Stock Exchange in October 2020 and raised £240m in the largest investment trust IPO that year, looked to rubbish the accusations yesterday.
“The report was published without any engagement with the Company’s Board, Investment Advisor, or wider advisory team,” Home REIT said in a statement.
“It is the Board’s belief that the report is inaccurate and misleading in its comments about the Company, being based on mistaken assumptions, misinformed comments, and disputable allegations.”
Bosses at the firm said they were preparing to publish a “full and detailed response” demonstrating the factual inaccuracies of Viceroy’s allegations.
24.11.22 – This article was corrected to reflect that Noble Tree Foundation did not receive a Newcastle property as a donation from Home REIT.