Ires Reit and an activist Canadian investor in the company have locked horns again, accusing each other of seeking to mislead shareholders in the State’s biggest private residential landlord in advance of a crucial extraordinary general meeting (egm) next month.
Shareholders will vote at the meeting on February 16th on plans by Toronto-based Vision Capital, which has a 5 per cent stake in Dublin-listed Ires, to replace five directors with candidates it has put forward and secure a mandate to sell or break up the company within two years.
Ires, which owns 3,734 apartments and houses, announced earlier this month that it plans to commence a strategic review in late February, after it reports full-year results, as it seeks to ward off a boardroom coup attempt. This will include looking at potential mergers, the company’s status as a listed real estate investment trust (Reit) and the sale of the company or its assets in lots.
Vision claimed in an open letter to shareholders, published late on Thursday, that Ires has mischaracterised its egm resolution on a break-up or sale within 24 months as being more a “distressed sale situation”. The Canadian investor highlighted that the resolution requires the board to use its “all reasonable endeavours” to carry out a sale or divestment process inside that time frame.
Vision said that it has received support from certain unnamed larger institutional shareholders and smaller Irish investors.
“For clarity, as there is no distress in Ires property holdings and the supply-demand fundamentals in its markets are extremely favourable, and rental apartments are one of the most highly sought-after real estate subsectors globally, Vision does not support any distressed sale,” it said.
It alleges that the Ires “intended to create alarm in order to keep the entrenched current board in place”.
Vision also took aim at Ires’s point in the egm circular that it had delivered a total shareholder return, comprising share price gains and dividends, of 2.4 per cent over 12 months to January 4th, compared with an average return of minus 48 per cent of comparable European peers.
Vision said that the share price had been supported during the period of its “engagement and activism and shareholder enthusiasm regarding the prospect of realising value for shareholders”. The Canadian firm issued its first letter against the company in April last year.
“In doing so, Ires’s entrenched and misaligned current board desperately has the audacity to purport to take credit for the increase in the share price driven by shareholder enthusiasm from Vision’s action plan which it opposes.”
Ires shares have soared from a low of just under 87 cent in late October to almost €1.14. However, much of that rally has been in line with other property stocks, on speculation about the prospect of central banks cutting interest rates this year, according to market sources. Ires’s stock remains at a 23 per cent discount to the company’s most recent calculation of its net asset value.
In a statement on Friday, Ires said Vision’s response to the egm circular was “misleading, contains inaccuracies and depends on unsupported statements attributed to unidentified third parties”.
It said that the board stands by the contents of the circular.
“There is a lot of detail in the Vision release but the main question it all boils down to, in our view, is whether shareholders should give the Ires board their support to go ahead with a strategic review or should they vote with Vision to empower the nominee directors to embark on a large-scale asset disposal programme without delay,” said John Cronin, an analyst with Goodbody stockbrokers. “Each option presents its own particular prospective risks and rewards.”
Vision suggests, following discussions with property industry players in Ireland, that a multipronged assets divestment approach could be taken on the Ires portfolio. It said some of the trust’s higher-end properties would have “a strong bid at any time”, while “other properties with more affordable rents could be sold to Government or non-profit groups”. A portion of the remaining units could be sold individually to end users, it said.
A source close to Ires responded: “There is no evidence that the Government wants to purchase fully occupied, non-social housing at scale and to become a major landlord. Vision’s approach is flawed and presents as them not understanding the market or the business.”
Ires announced last week that it had tapped existing board member Hugh Scott-Barrett to become its next chairman, as existing chairman Declan Moylan plans to step down after the company’s annual general meeting in May. Group chief executive Margaret Sweeney also plans to leave the company in the coming months.
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