Two bosses from one of Home REIT’s biggest charity tenants made “unauthorised” payments of nearly £1.2m to their own companies before it collapsed into administration, City A.M. can reveal.
Noble Tree, a charity set up to provide housing to vulnerable veterans, which is facing a probe from the charities regulator, became the latest tenant of Home REIT to slide into administration yesterday, effectively shutting off a further seven per cent of the fund’s potential rental take.
The former FTSE 250 social housing investor floated in 2020 on the promise of providing housing to the homeless. But it has been mired in scandal since 2022 when a short-report by Viceroy Research sounded the alarm on the stability of its tenant base.
In a statement to the market yesterday, Home REIT said Noble Tree, formerly its tenth biggest tenant, would now surrender some 143 leases to the firm after calling in administrators.
However, City A.M. can reveal the two bosses of the charity, Jakob Kinde and Matt Fearnley, paid two companies they ran in a personal capacity, Kinde & Co and Fearnley & Fearnley, at total of over £1m in “brokerage commission fees”, according to the charity’s previously unreported accounts for the year to November 2022.
The pair also paid themselves the two firms around £70,000 each in “management fees”.
Both sets of payments breached rules enforced the Charity Commission, the company acknowledged in its accounts.
“In respect of the transactions in the note above, the Charity has breached [section] 185 of the Charities Act 2011 and such payments were technically unauthorised at that time,” Noble Tree said. “The Trustees note this as a technical breach necessitated by the fact of the small number of Trustees on the Board of the Charity. Complete and transparent disclosure has been made to the Charity Commission.”
Noble Tree said it had appointed a fifth trustee in September 2023 to ensure it did not breach the rules again.
The disclosure raises further questions about Home REIT’s due diligence processes and the use of funds by its charity tenants.
The charities regulator has been investigating Noble Tree since October last year after its income rocketed from just £3,000 in 2019 to nearly £10m in the year to the November 2022.
After making initial inquiries into the organisation, the commission said it was formally probing “conflicts of interest and connected party transactions” and the “extent of the unauthorised trustee benefit”.
Fearnley and Kinde declined to comment.
Home REIT, which is itself facing an investigation by the Financial Conduct Authority, said in its market update that Noble Tree was a non-performing tenant and had not paid rent to the firm up to April.
City A.M. has previously revealed the Serious Fraud Office has opened inquiries into Home REIT. The agency says it does not confirm or deny investigations.
After sacking its former investment manager Alvarium last year, Home REIT has called in AEW to try and steady the ship and restore its rental take.
However, it has been rocked by a string of bankruptcies among its tenants and has collected only 11 per cent of its total billed rent for the past six months, according to its latest update to the market.
Another major Home REIT tenant, Big Help, has also surrendered hundreds of leases to the firm last month after scrutiny from the charity regulator this year over the misuse of cash and payments made to trustees, which it denies.
City A.M. also revealed that Home REIT’s former bigger tenant, Lotus Sanctuary, run by Gurpaal Singh, paid its directors over £1.2m before collapsing into administration last year.