Social housing landlord Home REIT was under pressure again on Monday as activist investor The Boatman Capital Research published an open letter calling for members of the board to resign.
In the letter, addressed to senior independent director Simon Moore, Boatman expressed concern that the board had been “over-optimistic” in its assumptions and that the value of the company’s property portfolio may be “significantly inflated”.
“Our own estimates suggest that a typical property could be 39-51% lower in value,” Boatman said.
It pointed to a series of other concerns, such as a lack of due diligence on some of its tenants and failure to highlight significant accounting issues to shareholders.
Boatman also said it was “necessary” for the leadership of Home REIT to be replaced, starting with the chair and the head of the audit committee.
At 1540 GMT, the shares were down 5% at 50.30p.
Last month, Home REIT shares tumbled after Delaware-based short seller Viceroy Research said than an investigation into the group’s investments and tenants had suggested “significant downside”.
It said financial data of Home REIT’s tenants had shown that many cannot afford rent, have not been paying rent, are in administration, are run by bad actors, or simply do not provide social housing services.
In the conclusion of its report, Viceroy said: “Home REIT’s tenants raise questions about the financial viability of Home REIT’s portfolio, and also about the appropriateness of this venture.
“We strongly believe that these are not the people who should be entrusted to look after the vulnerable, nor should they be entrusted with your taxes to do so. This industry is nascent, subject to limited oversight, and has begun breeding a plethora of for-profit vultures who have limited ability to actually run a charity or social enterprise.
“Scrutiny in these industries should be encouraged. Viceroy Research is short Home REIT.”
