HOME REIT

[murraypaul]

It is hard to now see their initial response on the 30th November as anything other than lying by omission:

30th November RNS:

· ALLEGATION 1 - The Company's Tenants "do not appear to be paying rent", "Substantial quantities of Home REIT's rent will never be collected," and therefore "[this] is likely…to [result in] substantial downwards revaluations of its investment properties"

RESPONSE - Home REIT's rent is ultimately supported by central government funding and Local Authorities' statutory duty to house homeless people. There are no overdue arrears in relation to amounts billed to 31 August 2022, supporting the independent valuations of the Company's portfolio carried out by Knight Frank LLP ("Knight Frank").

While that may be technically true, it is impossible to believe that they did not realise at this time that there was...

16th February RNS:

... a serious deterioration in rent collections for the quarter to November 2022 [...]. For the quarter ending November 2022, only 23% of rent has been collected, meaning that out of a £14,827,147 quarterly rent roll, only £3,401,615 has been paid. In addition, the rent forecast to be collected for the coming months is highly uncertain as the Investment Adviser deals with a combination of issues surrounding the tenants' ability, or willingness, to pay. It is not possible to quantify the future amounts of rent to be collected with certainty as the issues are not straightforward.

Viceroy seem to have had this one spot on.

[murraypaul]

And who is Bluestar?

A dormant company with £1 in the bank, £60 of investments, and an unspecified debt for £170k as their only real asset.

Whose previous registered office just happens to be the same as Alvarium's.

Who runs it?

Bluestar Group, founded by Ben Gotlieb, is a special situations investment company set up to acquire and lend capital to pan European real estate-backed businesses and development schemes. Prior to founding Bluestar Group, Ben was Vice President of Acquisitions at Queensgate Investments where he oversaw the acquisitions, financings and operational turnarounds of Grange Hotels, Generator Hostels, London Executive Offices and Kensington Forum. Prior to his time at Queensgate, Ben was at Alvarium Investments where he specialised in various real estate sectors including hotels, student accommodation and residential development.

Who is Queensgate Investments?

Queensgate Investments LLP is a private investment firm focused on acquiring control positions in asset backed operating companies in Europe, the UK and the US. A partnership between the Kow Family, Alvarium Investments and Peterson Group, Queensgate differentiates itself by its flexible, nimble and non-institutional approach.

This is just Alvarium orchestrating taking the company back so they can continue to appoint themselves as advisors and suck all the money out.

[BullDog]

And who is Bluestar?

A dormant company with £1 in the bank, £60 of investments, and an unspecified debt for £170k as their only real asset.

Whose previous registered office just happens to be the same as Alvarium's.

Who runs it?

Bluestar Group, founded by Ben Gotlieb, is a special situations investment company set up to acquire and lend capital to pan European real estate-backed businesses and development schemes. Prior to founding Bluestar Group, Ben was Vice President of Acquisitions at Queensgate Investments where he oversaw the acquisitions, financings and operational turnarounds of Grange Hotels, Generator Hostels, London Executive Offices and Kensington Forum. Prior to his time at Queensgate, Ben was at Alvarium Investments where he specialised in various real estate sectors including hotels, student accommodation and residential development.

Who is Queensgate Investments?

Queensgate Investments LLP is a private investment firm focused on acquiring control positions in asset backed operating companies in Europe, the UK and the US. A partnership between the Kow Family, Alvarium Investments and Peterson Group, Queensgate differentiates itself by its flexible, nimble and non-institutional approach.

This is just Alvarium orchestrating taking the company back so they can continue to appoint themselves as advisors and suck all the money out.

The entire episode absolutely stinks to high heaven. Whilst there's seldom been a greater need for decent social housing, as usual, the greedy unscrupulous vultures exploit the situation. A horrible situation.

[murraypaul]

Not that anything else is really required, but:

https://find-and-update.company-informa ... y/12881400

Bluestar Advisors.

Same address as Alvarium, directors are Ben Gotlieb from Bluestar and Jonathan Elkington, a director of Alvarium.

They aren't even trying to hide it.

Anyone invested in LXI REIT might want to know that:

LXi REIT’s Investment Advisor is LXi REIT Advisors Limited, which is owned by Alvarium and the principals, shareholders and directors of Osprey Equity Partners Limited.

You lie down with dogs, you get up with fleas.

[murraypaul]

The FT have picked up on the close connections:

https://www.ft.com/content/4f8d442c-055 ... 2f945f5892

We’ve asked Home Reit’s people whether these overlaps with Alvarium could have been disclosed in today’s statement and will update this post as soon as we get a response.

I wonder if they will get a response.

[murraypaul]

From Bluestar's RNS:

A subsidiary of Bluestar had previously entered into a business arrangement with Alvarium RE Limited, a former affiliate of Alvarium Home REIT Advisors Limited ("Alvarium Home"). This business arrangement, ended in December 2022 and is in the process of being dissolved. For the avoidance of doubt, neither Bluestar nor any of its group companies has any business association or otherwise with Alvarium Home or any of its group companies.

[murraypaul]

https://www.cityam.com/home-reit-was-wa ... ty-vendor/

Home REIT was warned of “slum conditions” in its property portfolio as early as October but failed to publicly acknowledge the scale of the issues until yesterday, City A.M. can reveal.

Bosses at the beleaguered social housing investor were warned by a whistleblower of the scale of dilapidation in its portfolio during a row between its community interest company (CIC) tenants and a property ‘vendor’ called Christopher Downing, whose firms sold housing to Home REIT, City A.M. has learned.

In a letter to Home REIT, seen by City A.M., the whistleblower raised major concerns over the state of some properties and said the provision of care to vulnerable groups by some of Home REIT’s CIC tenants had effectively broken down.

“Some of your tenants are in slum conditions, some without basic services, i.e. no heating, no hot water, damp, water ingress, poor roofs and lack of basic maintenance carried out,” the letter said.

Home REIT chiefs were warned they needed to act and had a “responsibility to inform your insurance brokers of void/uninhabitable properties”.

“I stress, should one of these properties cause harm to a tenant you as an organisation, knowing all, are responsible,” the letter said.

However, City A.M. understands that the firm failed to respond to the whistleblowers letter. Home REIT did not respond to a request for comment.

[Pendrainllwyn]

It makes one wonder what due diligence HOME REIT did before purchasing these properties or did subsequently to ensure they were being properly maintained. When investing in a specialist company like this it is not unreasonable to think that management with the necessary skills are in place. A warning for all of us.

Pendrainllwyn

[murraypaul]

Like many (most?) REITs, HOME doesn't really have any management.

From the annual report:

Employees: As a real estate investment trust,the
Company does not have any employees as all its
functions are carried out by third party service
providers. However,the Company has a Board of
Directors comprised of non- executive directors
who receive fixed fee remuneration. The Company’s
Board receive regular market and regulatory updates
from its professional advisors such as the Investment
Adviser, Broker and Company Secretary and attend
seminars where required.

It is just a wrapper to raise money and pass it to the investment advisor.

Directors’ fees 145 thousand
Investment Adviser’s Fee 1.828 million

The focus should be on Alvarium.

Either they were complicit in what has happened, or they were unaware, and therefore would seem to have been incompetent.

[BullDog]

Like many (most?) REITs, HOME doesn't really have any management.

From the annual report:

Employees: As a real estate investment trust,the
Company does not have any employees as all its
functions are carried out by third party service
providers. However,the Company has a Board of
Directors comprised of non- executive directors
who receive fixed fee remuneration. The Company’s
Board receive regular market and regulatory updates
from its professional advisors such as the Investment
Adviser, Broker and Company Secretary and attend
seminars where required.

It is just a wrapper to raise money and pass it to the investment advisor.

Directors’ fees 145 thousand
Investment Adviser’s Fee 1.828 million

The focus should be on Alvarium.

Either they were complicit in what has happened, or they were unaware, and therefore would seem to have been incompetent.

But I should think that the company directors are accountable if Alvarium and others are either incompetent or corrupt. Assuming of course that the directors themselves have done their duties correctly. From what evidence is emerging, at the very least, the directorate have been asleep at the wheel.

[Alaric]

It is just a wrapper to raise money and pass it to the investment advisor.

Many ITs have similar structures. If they are investing in quoted Companies, there's less to go wrong. That breaks down a bit if they invest in unquoted Companies.

[murraypaul]

https://citywire.com/investment-trust-i ... g/a2409770

Alex Baker, a 34-year-old portfolio manager at Alvarium Home Reit Advisors, was present. Baker joined Alvarium from Fiera Real Estate UK last summer as an assistant portfolio manager but was promoted in November as Gareth Jones, one of the original portfolio managers at its October 2020 flotation, announced he would be taking sick leave. It is understood he stopped work this month.

Co-manager Charlotte Fletcher, who joined the team shortly after launch, was off on maternity leave but returned last month.

Sounds like lots of people are going to be wanting to talk to Gareth Jones, who seems to have effectively been sole manager, and went on 'sick leave' when the Viceroy report was published.

[Alaric]

The report is also at
https://www.theaic.co.uk/aic/news/cityw ... is-meeting
which doesn't require a citwire login.

[murraypaul]

https://www.cityam.com/exclusive-home-r ... x-ticking/

Gareth Jones, a partner at the beleaguered social housing firm’s former investment adviser Alvarium, told property vendor Christopher Downing in August to ensure that tenants backed up its sustainability claims when quizzed by ESG analysis firm the Good Economy, which had been called in to compile a report on its housing stock, leaked emails seen by City A.M. reveal.

After the Good Economy flagged concerns over the shoddy state of some homes leased to Home REIT tenant Serenity CIC, Jones tried to explain away the issues and told Downing to ensure that Serenity backed up its claims if asked. Serenity was at the time run by Downing’s daughter.

A private email from Jones to Downing’s personal email address read “Hey mate – see below – this is that we’ve gone back to the ESG Auditor in relation to enquiries about some properties. Can you make sure they [Serenity CIC] get and corroborate in line if asked?”

A separate email sent the previous month by Downing to a group of community interest companies, who leased properties that Downing’s property aggregation company Karla had sold to Home REIT, told tenants to put a positive spin on the homes when questioned.

“Their [Home REIT’s] investors want to be told that they are ESG compliant with positive outcomes, and it is the investors that pay for their lifestyle, they Homes REIT tell us that they would like to receive such information and with notes of positive interaction and ESG compliance, and Homes REIT funds the lifestyle of Karla and now i on behalf of Karla am asking that all of you to take this seriously, because Karla funds your lifestyle, including mine and i like my lifestyle,” Downing wrote to the tenants.

[murraypaul]

https://www.lse.co.uk/rns/HOME/tenant-u ... 6ixur.html

The Company announces that Gen Liv UK CIC, a tenant making up 5.7% of the Company's annual rent roll, has entered into a creditors' voluntary liquidation and has appointed FRP Advisory Trading Limited as liquidators.

The Company further announces that Lotus Sanctuary CIC, a tenant making up 12.5% of the Company's annual rent roll, has also entered into a creditors' voluntary liquidation on 2 March 2023.

[brightncheerful]

Under another of my online names, I got told off by another shareholder when on advfn chat, I criticised HOME weeks before the shorting activist did so in a big way. In my view, HOME had it coming and served them right!

[murraypaul]

The totally-not-connected bid from Bluestar appears to have devolved into open warfare:

https://www.lse.co.uk/rns/HOME/update-r ... 4zlwc.html

Since Home's 16 February 2023 announcement, Bluestar has invested significant time and resources in arranging financing, carrying out outside-in due diligence and continuing to engage or attempt to engage with Home on the possible offer. To support this, Home provided Bluestar with limited diligence information in February 2023, but, despite repeated attempts by Bluestar, has provided nothing in the subsequent months. We have also not been provided access to the board of Home (the "Board"). On 14 April 2023 Bluestar submitted a proposal to the Board for the entire issued and to be issued share capital of Home for 40 pence per share in cash (the "Possible Offer"). Any announcement by Bluestar of a firm intention to make an offer pursuant to Rule 2.7 remains subject to the satisfaction or waiver (by Bluestar) of a limited number of customary pre-conditions, including financing, which is at an advanced stage with its anticipated financing providers, and due diligence, which awaits appropriate engagement from Home.

...

On 5 May 2023, Bluestar made a formal request to Home for an extension to the PUSU deadline of 5.00 p.m. on 11 May 2023 (the "PUSU Deadline"). In the subsequent days, we have repeatedly attempted to engage and meet with Home and SSP. On the afternoon of 10 May 2023, approximately 27 hours before the expiration of the PUSU Deadline, SSP delivered the staggering message that the Board had met and decided that it would not grant an extension to the PUSU Deadline as "Bluestar has not sufficiently progressed the Possible Offer." This is despite Bluestar having received no information since February and having been guided by SSP that Home desired Bluestar to wait patiently until the Board is able to assess the Possible Offer and provide Bluestar with the requested due diligence information.

...

Given the imminence of the PUSU Deadline, Bluestar is requesting shareholders to immediately urge the Board to extend the upcoming PUSU Deadline and engage properly with Bluestar on the Possible Offer. Bluestar notes that if the Board continues to refuse to seek to extend the PUSU period by 5.00 p.m. (London time) on 11 May 2023 and Bluestar announces that it does not intend to make an offer, Bluestar will not be allowed to make another offer for 6 months other than in very limited circumstances permitted by the Code.

[murraypaul]

HOME's response:

The Board of Home REIT notes the announcements by Bluestar on 10 and 11 May 2023. The Board met on the morning of 10 May 2023 to formally consider the PUSU extension request received from Bluestar on 5 May 2023 and has given further careful consideration to its position following receipt of further information from Bluestar and feedback from shareholders.

The Board believes that progressing Bluestar's proposal at this time is unlikely to maximise value for shareholders. The Board and its financial adviser have given particular consideration to the significant uncertainties in relation to the deliverability of Bluestar's non-binding and indicative proposal, including its key valuation assumptions, extensive due diligence requirements and extremely limited information on its financing. The Board's immediate concern is to complete the appointment of a new investment adviser in order to stabilise the Company's property portfolio and maximise value for shareholders, while at all times prioritising the interests of the occupants of the Company's properties. The Board will not proactively pursue a sale of the Company at this time and therefore this part of the review of strategic options announced on 16 February 2023 is now concluded. The Board and its new investment adviser, when appointed, will continue to monitor this position, in particular once it is in possession of a new property valuation.

[Clitheroekid]

HOME's response:

The Board of Home REIT notes the announcements by Bluestar on 10 and 11 May 2023. The Board met on the morning of 10 May 2023 to formally consider the PUSU extension request received from Bluestar on 5 May 2023 and has given further careful consideration to its position following receipt of further information from Bluestar and feedback from shareholders.

The Board believes that progressing Bluestar's proposal at this time is unlikely to maximise value for shareholders. The Board and its financial adviser have given particular consideration to the significant uncertainties in relation to the deliverability of Bluestar's non-binding and indicative proposal, including its key valuation assumptions, extensive due diligence requirements and extremely limited information on its financing. The Board's immediate concern is to complete the appointment of a new investment adviser in order to stabilise the Company's property portfolio and maximise value for shareholders, while at all times prioritising the interests of the occupants of the Company's properties. The Board will not proactively pursue a sale of the Company at this time and therefore this part of the review of strategic options announced on 16 February 2023 is now concluded. The Board and its new investment adviser, when appointed, will continue to monitor this position, in particular once it is in possession of a new property valuation.

I can't help feeling that one possible reason for their opposition to the offer is that they don't want any outsiders looking at their dirty washing and potentially exposing it to the public gaze.

[Itsallaguess]

From what evidence is emerging, at the very least, the directorate have been asleep at the wheel.

A new update this morning makes for interesting reading on that specific point -

As announced on 16 February 2023, the board of directors of the Company instructed Alvarez & Marsal Disputes and Investigations, LLP as independent forensic accountants in early January 2023 to conduct an investigation in relation to allegations of wrongdoing including matters raised in the Viceroy Research report.

A&M has delivered to the Company a detailed report. The A&M Report has been prepared from documents and information (including emails and telephone messages of relevant parties) provided by the Company, Alvarium Home REIT Advisors Limited, Alvarium Fund Managers Limited and by other third parties, as well as information derived from publicly available sources.

The Company reserves all of its rights in respect of the matters referred to in the A&M Report and does not wish to prejudice its position in respect of any further action which may follow. Accordingly, and mindful of its obligations, there is a limit on the information that the Company feels that it is appropriate to disclose publicly.

Key findings from the A&M Report are summarised below -

• Arrangements for the refurbishment of properties were not brought to the Board's attention by the Investment Adviser

• Settlement of rent arrears and arrangements with tenants were not brought to the Board's attention by the Investment Adviser

• Ongoing monitoring of tenants was limited by the Investment Adviser

• Information provided to The Good Economy by the Investment Adviser was inaccurate

More details on each of the above issues can be found in the following RNS news link from this morning -

HOME REIT - Update on Internal Investigation -

https://www.investegate.co.uk/announcement/7549080

Cheers,

Itsallaguess