UK regulator ends Home REIT investigation

UK Regulator Ends Home REIT Probe, Company Shares Surge on FCA Decision

FCA Investigation Closure and Market Impact

By Kirstin Ridley

Regulatory Decision and Share Performance

LONDON, Oct 21 (Reuters) - Britain's financial regulator has closed its two-year investigation into London-listed Home REIT, a British social housing company, although the watchdog said on Wednesday that it supported an ongoing criminal investigation.

The Financial Conduct Authority ended the probe without taking any action, helping send the company's beleaguered shares 3.7% higher at the market close, their biggest daily percentage gain since June.

FCA Statement and Future Considerations

"We have carefully considered the case and believe the best way forward is to support the Serious Fraud Office's ongoing investigation," an FCA spokesperson said. The watchdog is reserving its rights to review its decision if new information comes to light.

Company Response and Ongoing Investigations

Home REIT's Cooperation

Home REIT's Chair Michael O'Donnell said the FCA investigation was closed following the company's "extensive cooperation".

Serious Fraud Office Actions

The UK Serious Fraud Office, however, arrested six people in January in an estimated £300 million ($401 million) bribery and fraud investigation. Seven sites were searched, including a home in the Italian city of Venice.

Background on Home REIT

Company History and Fundraising

Home REIT, which listed on the London Stock Exchange in 2020, bought properties across Britain, raising more than £850 million in its first three years of trading.

Business Model and Social Impact

The company told investors their funds would help to buy and restore properties that would be block-let to publicly funded charities and community interest companies to house rough sleepers, veterans and people struggling with addiction. Rent payments would generate returns for investors.

Controversy and Legal Actions

Viceroy Research Report and Share Suspension

But a report by short-seller Viceroy Research in November 2022 raised concerns that included the valuation of the properties and the ability of the tenants to pay rent. The company rejected the allegations, but its shares were temporarily suspended from trading in January 2023.

Investor Lawsuit

More than 800 investors are suing Home REIT, alleging they were misled about the security of the company's rental income, its financial strength and its stated social impact.

Exchange Rate Information

($1 = 0.7474 pounds)

(Reporting by Kirstin Ridley, additional reporting by Alun John; Editing by Emelia Sithole-Matarise)