Home REIT’s efforts to renegotiate the terms of its £130m debt pile have fallen apart in a blow to the embattled social housing fund as it scrambles for stability after a string of scandals.
In a statement to the market this morning, the former FTSE-250 housing firm said refinancing talks with lender Scottish Widows had failed to yield terms “it could recommend to shareholders”, forcing it to now turn to further property sales to generate cash to pay off the debt.
“Whilst the stabilisation strategy adopted in August 2023 has progressed from an operational perspective, re-financing of the debt was a key component of its continued advancement,” said Michael O’Donnell, non-executive chairman of Home REIT.
“As a re-financing has not been possible, the board is considering a number of options both to repay the outstanding debt and provide an optimised resolution for shareholders, which may include a more extensive realisation strategy.”
The firm’s investment manager and debt advisory outfit JLL had conducted a “thorough” refinancing process in a bid to ease the terms of the loan, Home REIT added.
Scottish Widows has said that its “objective is for repayment of the loan balance in the short term,” Home REIT said.
At the end of May, the total debt owed by Home REIT stood at £131.8m, which it said would be reduced by around £27m after collecting the cash from a spate of recent sales.
Failure of the talks is now likely to trigger an acceleration of sales after scores of properties have already been offloaded this year. Home REIT wrote down the value of its property by some 60 per cent earlier this year and has been selling houses for a fraction of what it paid.
Home REIT, which was floated in 2020 by former investment manager Alavarium, has been rocked by crisis since the end of 2022 when short seller Viceroy Research sounded the alarm on the make-up of its tenants.
Shares in the firm have been suspended since January last year, and the firm is yet to file its accounts for 2022.
While the board sacked Alvarium and called in AEW to try and stabilise its rental collection, Home REIT revealed last month it had collected just 11 per cent of total billed rent between September and April.
The Financial Conduct Authority has launched a probe of the company and City A.M. revealed officials from the Serious Fraud Office have opened initial inquiries. The SFO has said it does not confirm or deny investigations.