Home REIT shares rise as UK regulator ends probe

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Home REIT probe ends

Highlights

Financial Conduct Authority closes its probe into Home REIT with no action taken, supporting instead the Serious Fraud Office’s ongoing investigation.
Home REIT shares surge 3.7% by market close, marking their largest daily gain since June, after the FCA’s decision is announced.
The Serious Fraud Office continues to investigate an estimated £300 million bribery and fraud case, with six arrests and ongoing legal action from over 800 investors.

Regulatory decision and market response

As reported by Reuters, citing the Financial Conduct Authority, the UK regulator closes its investigation into London-listed Home REIT without taking action and says it believes the best way forward is to support the Serious Fraud Office's ongoing investigation.

The announcement helps lift Home REIT shares 3.7% by the market close, their biggest daily percentage gain since June. The FCA also says it reserves the right to review its decision if new information emerges.

Home REIT Chair Michael O'Donnell says the FCA investigation is closed following the company's extensive cooperation. The company, which listed on the London Stock Exchange in 2020, raises more than 850 million pounds in its first three years as it buys properties across Britain.

Fraud case and investor fallout

The Serious Fraud Office, however, continues a criminal investigation after arresting six people in January in an estimated 300 million pound bribery and fraud case. Investigators also search seven sites, including a home in Venice, Italy.

Home REIT tells investors their money would fund the purchase and restoration of properties to be block-let to publicly funded charities and community interest companies housing rough sleepers, veterans and people struggling with addiction. Rental payments are intended to generate returns for investors.

Pressure on the company intensifies after Viceroy Research publishes a report in November 2022 raising concerns about property valuations and tenants' ability to pay rent. Home REIT rejects those allegations, but its shares are temporarily suspended from trading in January 2023, and more than 800 investors are now suing the company over claims they were misled about rental income security, financial strength and social impact.

Our earlier coverage of Equites Property Fund focused on the REIT’s decision to accelerate its exit from the UK and redirect capital toward South Africa. We explained how the £200.5 million Aviva portfolio sale helped lower leverage, support an increased interim distribution, and provide liquidity to fund domestic logistics growth while the group completes the final steps of its UK disposals.

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