Beleaguered property investment trust, Home Reit, is set to be wound down after facing "extensive challenges" including spiralling debts and an investigation by the regulator.
In a stock exchange notice today (July 16) the board said a managed wind down of the company would be in the best interests of shareholders.
As of June 30, it had managed to reduce its debts from £220mn to £114.6mn.
As part of the wind down it is expected to continue selling off properties in order to settle its debt with lender Scottish Widows.
The notice read: "The board has conducted a full review of the stabilisation strategy and whilst it recognises that there is an opportunity to add value to the portfolio at a property level, it has concluded that this strategy faces considerable challenges."
In February the Financial Conduct Authority launched an investigation into the trust covering the period between September 2020 and January 2023.
The company said while this investigation, and potential litigation, takes place the ability to make payments to shareholders will be limited.
It also expects to have to put aside money to meet corporate costs and pursue legal action against those it considers responsible for wrongdoing.
Michael O'Donnell, non-executive chairman of Home Reit, said: "It is clear that Home Reit continues to face extensive challenges, including in respect of its debt position and pursuing and defending litigation action, and responding to an FCA investigation.
"Against this backdrop and the expected reduced size of the company's portfolio, following an extensive review the board has concluded that the best course of action for shareholders is to propose a managed wind-down strategy.
"I would like to thank shareholders for their ongoing patience and support through the stabilisation process as we strive to address, and seek redress for, the issues facing the company."
Investment manager AEW was appointed in May last year with plans to sell off properties in order to raise money and also increase rental earnings.
The company expects its audited results for the year ended August 31, 2022 to be published next month, while more recent results are expected in the third quarter of 2024.
tara.o'connor@ft.com
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