Lawsuit claims the social housing company misrepresented its business model
More than 800 current and former Home REIT shareholders have begun High Court proceedings seeking compensation from the sheltered housing company for allegedly misrepresenting its business model.
Home REIT was launched in 2020, raising hundreds of millions of pounds, which it said it would invest in properties for homeless people, which were then let to housing associations.
However, concerns were raised about its business model in 2022 and in the subsequent years the firm faced investigations by the Financial Conduct Agency And the Serious Fraud Office. Last month its four wholly-owned subsidiaries went into liquidation.
Legal firm Harcus Parker is now bringing a legal claim on behalf of shareholders, seeking compensation for losses caused by alleged misleading statements and omissions about the company, its business model and its property portfolio.
The proceedings have been brought against Home REIT; the company’s directors; its former investment adviser, Alvarium Home REIT Advisors Limited; former alternative investment fund manager, Alvarium Fund Managers (UK) Limited; and others.
The suit includes statutory securities claims under the Financial Services and Markets Act 2000, as well as claims in deceit and negligent misrepresentation.
The claim alleges investors were given a misleading picture of the firm, the security of its rental income, the financial strength and experience of its tenants, its stated social impact, and the acquisition, use and valuation of its property portfolio.
It claims that these representations were fundamental to shareholders’ decision to invest as well as the price they paid for shares.
According to the lawyers, the reality was materially different from these representations, with some properties marketed to students, professionals and holidaymakers, rather than vulnerable people.
“Home REIT was presented to investors as offering financial returns while helping to tackle homelessness,” said Nate Barber, partner at Harcus Parker and lead lawyer for the claim.
“Many of our clients invested because they believed in both the financial proposition and the social purpose behind it.
“Our case is that what investors were told did not reflect the reality. The allegations concern the security of Home REIT’s income, the financial strength of its tenants, its stated social impact, and the acquisition, use and valuation of its property portfolio.
“What has happened since is extraordinary. Home REIT’s property portfolio has been sold, its four wholly owned subsidiaries are now in liquidation, and many investors have suffered significant losses. They are entitled to understand how that happened and, where they were misled, to seek compensation from those responsible.
“These proceedings follow years of investigation into a highly complex set of facts and legal issues. They are about establishing accountability for what happened at Home REIT and securing proper redress for our clients.
“The defendants now have the opportunity to engage seriously with these claims and explore whether they can be resolved.”
Concerns about Home REIT were first raised in November 2022, when a short-selling alleged that it was letting its properties to tenants that “cannot afford rent, have not been paying rent, are in administration, are run by bad actors, or simply do not provide social housing services.”
The firm’s shares were suspended in January 2023 and in February the following year it announced that the Financial Conduct Agency had begun an investigation.
The Serious Fraud Office launched its own investigation in January this year, into suspected fraud and bribery in the past management of the company.
The company has now disposed of its entire property portfolio and last month the firm’s four subsidiaries were placed into creditors’ voluntary liquidation.
Home REIT issued the following statement: “The Board of Home REIT notes today’s announcement from Harcus Parker which states that they have issued High Court proceedings.
“The Company cannot comment any further at this stage and a further announcement will be made at the appropriate time.”
No comments yet