It was a week to forget for shareholders in Home REIT
(HOME), the investment trust which aims to alleviate homelessness in the UK through funding the creation of secure sheltered accommodation.

US short seller Viceroy published a damning note causing shares in the UK firm to slide to 55p.

Viceroy claimed the trust’s accounts showed poor operating results, some of its biggest tenants weren’t paying rent, and many charities weren’t able to service their leases on a long-term basis, much less the 25 years proposed by the company.

Viceroy also questioned the incentives for external manager Alvarium to ‘fix’ the problem given it is paid based on a percentage of net asset value, and suggested there was ‘substantial audit risk in the revaluation of Home REIT’s book’.

The manager called the report ‘inaccurate and misleading’, saying it was based on ‘mistaken assumptions, misinformed comments and disputable allegations’. It then issued a full response to the report on 30 November.

Investors should read both the report and the response and make up their own mind whether to keep the shares. Unfortunately, even if the allegations are unfounded, like litigation finance provider Burford Capital (BUR:AIM), which found itself similarly targeted, it could take years to rebuild the firm’s reputation.

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