Home Reit (HOME ), the suspended homeless accommodation provider struggling with a rent strike and allegations of financial wrongdoing, has been approached by Bluestar, the property debt investor, over a possible cash bid for the company.

Bluestar has until 16 March to firm up its unsolicited approach, the company said in an update to investors, adding there was no certainty it would do so.

However, a sale of some kind looks likely as the company said it would consider all options to preserve shareholder value.

The board said its efforts to do so had been hampered by the unexpected resignation of its two brokers, Alvarium Securities and Jefferies International. Smith Square Partners has been appointed in their place on Monday.

It said a report by Simpact, the specialist housing manager, appointed last month to review its portfolio, had highlighted a serious deterioration in rent collection with just 23% of rent collected in the November quarter. Of a £14.8m quarterly rent roll, just £3.4m had been paid, the company said.

Legal claims have been launched against seven charity tenants which have refused to pay rent in disputes over the condition of their properties and a lack of agreed refurbishment.

Simpact has revealed that a quarter of the portfolio by beds requires some level of refurbishment at a cost of between £15m-£20m. Home Reit said its financial exposure was hard to quantity as vendors of the properties were contractually responsible for the refurbishment and more analysis was being done to establish the full level of work required. It noted it had around £10m held by solicitors which it could use if necessary.

To preserve cash, the board has suspended the payment of quarterly dividends and is ’engaging’ with its lender, Scottish Widows, the investment and pension arm of Lloyds (LLOY) bank that lends to many investment companies.

It confirmed that Alvarez & Marsal, the forensic accounting experts, had been appointed to investigate allegations of inflated property values in early January in response to a report by short-seller Viceroy Research in November.

Home Reit shares were suspended in the New Year after a four-month delay in publishing its annual report as auditor BDO reviewed the figures in light of Viceroy’s allegations. The shares plunged 70% last year, with most of the fall in the fourth quarter.

The company is due to hold an annual general meeting of shareholders on Monday at the London office of its PR firm FTI Consulting.

‘Whilst the board will endeavour to be as open as possible at the forthcoming AGM, there will be a limit to what it can say due to ongoing investigations,’ it stated.

Lynne Fennah, chair, added: ‘We recognise the serious issues facing the company and are examining all options to preserve shareholder value, and the interests of all stakeholders.’