Home Reit declares two tenants in default

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Home Reit declares two tenants in default
Home Reit has been struggling with rent collections since 2022 (Ian Forsyth/Bloomberg)
BySally Hickey

An investment trust struggling with rent collection has said two of its tenants have collapsed into insolvency.

In a statement to the stock exchange this morning (March 6), Home Reit said Gen Liv UK CIC and Lotus Sanctuary CIC have both gone into voluntary liquidation.

The two groups represent 18.2 per cent of the Reit’s annual rent roll.

The trust is in discussions with prospective tenants to take on new leases of the two companies’ portfolios, and in that time no residents will lose their accommodation.

Short-seller's concerns

The property fund has been mired in controversy since concerns were raised by a short-seller.

Viceroy Research said in a report last year that many of the trust’s tenants do not appear to be paying any rent and questioned the long-term viability of some of its tenants. 

In response, the Reit said it had no overdue arrears in the period ending August 31 last year, but since the report it had seen a “general deterioration” in its rents.

The trust collected 23 per cent of rent in the three months to November 2022, it said last month, and said it was facing “serious challenges” in collecting rent for December and January.

The Reit's share price crashed 65 per cent between mid-September and December last year, and was suspended temporarily due to a delay in the company publishing its annual report.

The trust's ultimate tenants are vulnerable and include refugees and victims of domestic abuse, who rely on state benefits to pay rent.

This rent goes to the charities who take long leases on buildings owned by trusts such as Home Reit, who have described their income as 'government backed'.

However, the trust is under investigation by the Charity Commission regarding a “serious incident” with Noble Tree, one of its charity tenants, according to the Investors Chronicle.

Property deals involving the Reit are also being scrutinised by the National Crime Agency, according to City AM.

The trust has instructed consultancy firm Alvarez & Marsal to look into these allegations.