Home REIT (LON: HOME) shares have jumped over 10% Wednesday morning after the company responded to a recent short report by Viceroy Research.
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Home REIT shares tumbled last week, falling more than 19% following the report, touching a low of around 53.3p per share. They are currently trading at just over 61p.
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In the short report, Viceroy made claims such as several of Home's largest tenants not seeming to be paying any rent, with many of the charities potentially not having the ability to service these leases on a long-term basis. They named tenants, including Dovecot and Princess Drive.
They also argue that government records show that many Home REIT properties were purchased at an inflated price, artificially inflating its NAV and that despite stating it limits exposure per client to 15%, “Home REIT's largest clients all appear to share the same office and are run by the same people.”
However, on Wednesday, Home REIT released its response to each point made by Viceroy. The company said, concerning the claim that its tenants “do not appear to be paying rent,” that Home REIT's rent is supported by “central government funding and Local Authorities' statutory duty to house homeless people.” The firm added that there “are no overdue arrears in relation to amounts billed to 31 August 2022,” and that it is supported by independent valuations carried out by Knight Frank LLP.
Furthermore, regarding inflated property purchase prices, Home REIT stated that the total revaluation gain for properties acquired between the company's IPO and February 28, 2022, is £43.2 million, resulting in an average of 6.4% per property. They also stated that the statements made by Viceroy “misunderstand the process” of how Home REIT acquires its assets.
“This is a business whose sole focus is on providing safe and secure accommodation to some of the most vulnerable in society, whilst generating shareholder value. It is with deep frustration that the Board is having to spend time and resources responding to these baseless and misleading allegations,” commented Lynne Fennah, Chair of Home REIT.
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