The board of Ires Reit, the State’s largest private landlord, has said that there is “no external evidence” that a sale of the company would deliver “significant upside” for investors “at this time” but that it plans to sell €100 million of non-core assets “in the short term” to deliver value for shareholders.
It comes after an activist investor said recently that it plans to vote against the re-election of the company’s chairman and other directors at its annual general meeting next month. In an open letter last week, Vision Capital Corporation, which holds a 5 per cent stake in the Irish company, said its pleas to the board to explore a sale of the “undervalued” company have been ignored.
Vision said that it has been a shareholder in Ires since 2014 and has been privately airing its concerns with the company since July 2021, highlighting that the stock has been trading for some time well below its underlying net asset value.
In a statement on Monday, the board hit back at the investor’s comments, noting that formal sales processes are “uncertain, disruptive for the business and stakeholders” and that there is “no external evidence that such a process would be successful in delivering significant upside at the current time”.
It said that it has sought to “constructively engage” with Vision Capital’s requests for non-executive director and management meetings.
“The Ires board is committed to delivering value for shareholders and seeking to address the existing undervaluation,” it said, recommending “unanimously” that shareholders support all proposed resolutions at the agm next month. “The board does not believe a formal sales process is in the best interest of shareholders at this time and is mindful of its fiduciary duties in the event of a credible offer for all or parts of the business. Ires will continue to engage constructively with Vision and other shareholders and welcomes all shareholders’ views.”
The board also highlighted that the stock has outperformed the wider real estate index by 6.4 per cent since December 2021, against “a challenging backdrop”, while also delivering 6.5 per cent revenue growth last year.
The board said: “The Ires share price and wider real estate sector has been impacted by a wide range of macroeconomic factors including interest rate hikes, inflation and geopolitical issues. The Irish residential real estate sector has additionally been impacted by regulatory controls with the tightening of rental caps to 2 per cent per annum introduced in December 2021.”
[ Ires investor targets directors and pushes for group to be put up for saleOpens in new window ]
The board’s response also outlines plans to dispose of non-core assets worth in excess of €100 million, including a residential site at Rockbrook in Sandyford Business District, Dublin 18. The Irish Times reported in February that the company was likely to sell about €50 million of assets in 2023 to ensure it has sufficient headroom over legal and financial debt covenants.
Ires said on Monday that it will continue to review “further disposals of non-core assets [...] where appropriate in an efficient manner”.
In an analyst note, Goodbody Stockbrokers said the disposal programme may have already generated €20 million, including €15 million from the sale of Rockbrook.
Ires Reit’s shares rallied almost 1 per cent in early trading on Monday after the statement was published.
