Another headache for Home REIT as significant tenant stops paying rent

EXCLUSIVE

CHARLIE CONCHIE

ONE of the biggest tenants of troubled property investor Home REIT has stopped paying rent and is on the brink of going under as it struggles to secure sign off for government-backed housing benefits, City A.M. has learned.

Lotus Sanctuary, which provides supported housing and accounts for 12.2 per cent of former Home REIT’s rental income, warned staff yesterday it had built a “substantial debt” pile of £2.7m and is suffering from cash flow issues as it struggles to get approval for “exempt status” from local authorities.

The warnings further blow apart claims made by London-listed Home REIT that its rental income is ultimately backstopped by government-supported payouts.

It also underscores the growing instability of its business model, after it admitted a “general deterioration” in its rental income over the past two months.

Some 35 per cent of Home REIT’s total rental income is now in jeopardy after City A.M. revealed a week ago that its biggest tenant Big Help was withholding rent.

In an email to staff seen by City A.M., Lotus boss Gurpal Judge said the organisation was finding it “increasingly difficult to get sign off on exempt status from local authorities and concurrently we are also seeing delays in the processing of housing benefit applications again from local authorities”.