The UK’s financial regulator has launched an investigation into the actions of a social housing investment trust, Home REIT, whose shares have been suspended for more than a year.
The Financial Conduct Authority (FCA) announcement comes as investors’ ire has risen over the fate of the real estate investment trust, with one short seller calling for people to be sent to prison over the affair.
Home REIT was founded in 2020 with a mission to provide sheltered accommodation for the homeless. It listed on the London Stock Exchange and raised £240 million in the largest IPO of any investment trust that year.
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However, by the end of 2022, its share price had fallen by 70% amid allegations from a group of shareholders of misleading the market.
The report, written by short seller Viceroy Research alleged that Home REIT had acquired properties at inflated prices, thereby artificially affecting the trust’s NAV and the fees paid to its manager Alvarium.
Home REIT’s shares were suspended in early 2023 and have remained so ever since.
In its latest trading update in December 2023, the company disclosed that its property portfolio had dropped in value by more than 50%.
And in August 2023, the company also conceded that part of its portfolio was in the private rented sector, contravening its mission to invest in social housing.
The FCA’s probe will cover the period between from September 2020 to January 2023. Home REIT has vowed to “cooperate fully” with the regulator in its investigation.
