The claim centres on the contention that investors paid more for their shares than they were actually worth on the basis that Home REIT has not invested the proceeds from its fundraising rounds in accordance with its stated investment objective and policy.  Furthermore, the claim asserts that the company’s business model and the security of its income stream were in practice materially different from what investors were told about them, and its main asset—its property portfolio—was materially overvalued in the company’s accounts.

Some of the issues which form the basis of the claim include:

Whether misleading information was provided by in relation to Home REIT’s social impact 

Home REIT informed investors that it would invest in “high-quality homeless accommodation” and that its investment strategy will seek to “exclusively tackle homelessness”. However, we have seen evidence to indicate that properties owned by Home REIT are being used in the private rented sector,  have been found by local authorities to be unsuitable for housing vulnerable individuals and have consequently been denied “exempt accommodation” status under the relevant housing benefit rules, and that others are being advertised by agents and on websites such as Zoopla and Spare Room for students and professionals and even on booking.com as holiday lets. The evidence we have seen suggests that the properties are being advertised for individuals who are not vulnerable and in need of care, support and supervision, and who consequently would not qualify for exempt accommodation under the housing benefit rules.

Whether misleading information was provided in relation to the quality of its tenants who were responsible for leasing Home REIT’s properties to vulnerable individuals 

Contrary to representations in Home REIT’s listing particulars and other documents, it appears from our investigations and analysis that the registered charities, housing associations and other organisations Home REIT leases its properties to generally do not have “robust financials”, and nor do they have a “proven long-term operating track record across a diverse range of homeless sub-sectors and locations”.  During the course of 2023, many of Home REIT’s largest tenants have become insolvent and unable to meet their rental obligations to the company.  In January 2024, the company reported that it had collected only 12% of invoiced rent in December 2023.  This was consistent with low rent collection levels reported by the company throughout 2023. 

Whether misleading information was provided in relation to Home REIT’s business model 

Home REIT represented that its rental income from its tenants was effectively underwritten by the UK Government (in a similar way to other UK Government securities) and that there was low risk attached to the security of its income stream, when our understanding of the relevant housing benefit rules and the way Home REIT and its tenants operate would indicate that this is not the case.

Issues with the valuation of Home REIT’s assets 

Our analysis of Home REIT’s property portfolio suggests that Home REIT appears to have regularly paid in excess of the market value for property to parties who are closely connected to some of Home’s largest tenants. More specifically, it appears that properties are acquired by intermediaries who then “flip” the properties between related parties over a short period of time, even on the same day, before the property is sold to Home at a significant profit on the original acquisition price.

The valuation of Home REIT’s property undertaken by the independent valuer is based on an assessment of the operating performance of the property as an investment asset, and particularly, the covenant strength of Home REIT’s individual tenants and their ability to make rental payments to Home REIT over the term of their leases. We have, however, seen evidence that the intermediaries who sell properties to Home REIT have made substantial payments to Home REIT’s tenants, which will have the effect of improving their financial position and ability to make rental payments to Home REIT. In circumstances where the same intermediaries have sold property to Home REIT at a significant profit, we consider that the effect of these payments to the tenants is to use the company’s own funds to enhance the covenant strength which forms one of the bases of the valuation of the company’s property.

Our analysis appears to be consistent with Home REIT’s December 2023 reporting to investors, which states that following a “re-assessment of the quality of the [property] assets through the on-going inspection programme, and of the covenant strength of the tenants” “there has been a very material reduction in the valuation of the Company’s property portfolio”. 


Investors are entitled to compensation for losses they have suffered on shares as a result of untrue or misleading information.