Home REIT nears loan covenant breach as rent collection faces further deterioration

Potential risk of contagion

Home REIT’s dwindling net income as a result of rent strikes, the liquidation of two of its largest tenants, a hefty refurbishment bill and potential valuation write-downs is driving the embattled trust close to breaching its loan covenants.

The financial health of several of the social housing REIT's community interest company (CIC) tenants has been called into question, with several experts pointing to a potential risk of contagion that could see more charities in the trust's portfolio go bankrupt. Last week, the former FTSE 250 investment trust told shareholders that two of its largest tenants, Lotus Sanctuary CIC and Gen Liv UK CIC, respectively comprising 12.5% and 5.7% of the company's annual rent roll, are facing collapse.  The fact two tenants have entered into voluntary liquidation poses a "genuine challenge" to ...