The future of a homeless housing investment firm modeled on the scandal-plagued Home REIT and backed by the Phoenix Group is in jeopardy after a number of its tenants filed for bankruptcy or stopped paying rent. City AM. can reveal.

Domus Social Housing, owned by Canadian investment giant Fiera Capital and secured by a £62.9 million loan from Phoenix, the UK’s largest pension fund, saw its rental income collapse last year after two of its biggest tenants went bust, another stopped paying rent and a fourth was investigated by the charity regulator. City AM. has learned.

Like the now-failed Home REIT fund, Domus promoted itself as a company committed to alleviating homelessness in the UK by buying properties and renting them to social housing providers.

The company’s structure saw Fiera’s infrastructure arm, which manages about $3 billion in assets, provide funding, while Manchester-based real estate group HSPG supported the “acquisition, management and expansion” of the company, according to a press release announcing the 2021 launch.

However, HSPG sold tens of millions of pounds worth of property to Home REIT and introduced Domus to a number of the same tenants as the former FTSE 250 company, including Midland Living, Lotus Sanctuary, Redemption Project and Big Help. City AM understands.

Lotus Sanctuary and Redemption were both run by the same person, Gurpaal Judge Singh, and filed for bankruptcy last year. Big Help, which is currently under investigation by the charity watchdog, and Midland Living are also said to have stopped paying rent to Domus and terminated their leases last year.

About 80 percent of tenants were behind on their payments last year. City AM understands, while Domus admitted in filings with Companies House that it had breached the terms of its loan with Phoenix Group, which was invested on its behalf by Barings.

HSPG has relinquished its property management mandate and has now deleted any mention of Domus from its website. In a now-deleted 2022 blog post on its website, accessed via Internet Archives, HSPG claimed to have raised £200 million for Domus. The company did not respond to a request for clarification on the figure.

Asked by City AMDomus and Fiera declined to comment on whether Domus’ financial situation was sustainable and whether the leases of the insolvent tenants had been reassigned. Domus is believed to be negotiating with local groups to manage the properties and to continue to adhere to its original investment policy.

HSPG, which is run by Guy Horne and David Searle, has won praise from the property industry for its work in social housing. Horne, who also works as a musician, was nominated for Entrepreneur of the Year at the Property Week Awards this year. This was “a reflection of the amazing work the HSPG team have done this year to solve the UK’s housing crisis,” he said.

However, the extent of the company’s links to two troubled social housing companies went largely unnoticed by the wider property industry.

“HSPG and its 50-person team are working to alleviate the growing affordable housing crisis,” said an HSPG spokesperson.

Domus’ problems raise further questions about the sustainability of the private sector model of social housing and point to the ripple effects of the Home REIT scandal.

Investors have poured money into the space, hoping it will help alleviate the UK’s homelessness crisis while generating stable, index-linked rental income. Such funds have been seen by City financiers as a prime ESG opportunity.

However, both Domus and Home REIT have seen rental income evaporate as the charities that rented out the properties either collapsed or stopped making payments. Home REIT itself has been mired in scandal since late 2022, when short-seller Viceroy Research raised the alarm and criticized the quality of its tenants, including Big Help and Lotus.

A third fund, the Home Long Income Fund (HLIF), which was formerly run by the same investment manager as Home REIT and had a similar tenant base, has also fallen into crisis and is facing an investigation by the Financial Conduct Authority. City AM Revealed earlier this year.

Home REIT, HLIF and Domus all indicated that their business models would ultimately be funded by government rental payments. At their initial launch, Fiera said Domus would “work with local authorities to provide housing and support services under UK central government guidelines”.

However, this model has failed because tenants have had difficulty qualifying for so-called “tax-exempt housing status,” which would entitle them to taxpayer-funded rent subsidies.

In the private insolvency documents submitted by City AMLast year, Lotus said it had experienced months of delays in processing its applications, leaving the company with rental obligations to its landlords but little ability to generate rental income of its own.

According to the documents, social housing company Fiera owed over £800,000 in rent when it collapsed. According to insolvency filings at Companies House, the amount owed to Fiera in repayments at the time of the collapse was around £198,000.

Barings is apparently working closely with Fiera to ensure that the Phoenix loan is secured. The companies remain committed to the Domus deal and are not looking for an exit. City AM understands. Barings and Phoenix declined to comment.

Big Help said it reached an “amicable” agreement with Domus at the end of last year and returned its leases to the company.

Midland Living said it had exited Domus to “focus on its core mission of reducing homelessness.”

Fiera declined to comment. Administrators of Redemption Project and Lotus did not respond to requests for comment.