The board of Ires Reit, the State’s largest private sector landlord, has said it will commence a strategic review in late February as it seeks to ward off an attempted boardroom coup by an activist investor pushing for a sale or break-up of the company.
In a circular issued to investors on Monday, the directors of Ires have also urged shareholders to vote against all resolutions put forward by Canadian firm Vision Capital at an extraordinary general meeting (egm) next month.
The Toronto-based activist investor, which holds a 5 per cent stake in Ires, has been pushing for a wholesale boardroom shake-up, having lined up candidates to replace five directors, and for the group to be taken private, sold or broken up. Vision has cited various grievances since going public with its list of complaints last April, not least the property group’s share price, which has consistently traded at a deep discount to its intrinsic value in recent times.
Having previously resisted the idea, the Ires board said on Monday it will begin a strategic review of its operations to explore all options to create value for shareholders in the coming weeks, including the sale of the business and “returning value to shareholders”.
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“The options will include, but not be limited to, new strategic initiatives, consolidation, combinations, mergers or other corporate action, a review of the company’s status as a listed Reit (real estate investment trust), the sale of the entire issued share capital of the company, and selling the company’s assets and returning value to shareholders,” Ires said.
Investment bank Rothschild appears well placed to advise on the review, having been hired by Ires to help with the defence against Vision, according to sources.
Shares in Ires jumped 4.8 per cent to almost €1.13, bringing their gain over the past month to more than 13 per cent. The stock is currently trading at about a 25 per cent discount to its net asset value. Still, Ires argues that the discount for comparable European residential property peers is 48 per cent.
It is understood the review committee will be led by an Ires board member to be named at a later date. The intervention by Vision comes as Ires is searching for successors to its chairman, Declan Moylan, and chief executive Margaret Sweeney.
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Mr Moylan had strongly argued at Ires’s agm last May that it was the wrong time for a sale of the company, as real-estate values were under pressure amid rising interest rates. However, the board said in the circular that “2024 may represent a more appropriate time to conduct a strategic review, with greater financial market stability and moderating inflation levels resulting in the outlook for interest rates stabilising with potential for rate improvements”.
Euro zone inflation was running at an annual rate of 2.9 per cent last month, down from a peak of 10.6 per cent in late 2022. The European Central Bank (ECB) is widely expected by economists to start cutting rates this year, after hiking its main lending rate from zero to 4.5 per cent in the 14 months to September.
Ires insisted its strategic review led by the company, which will commence after its full-year results are published on February 23rd and look at a number of options, would be “better than” one “forced by” Vision, which is seeking a sale or break-up within 24 months. “The board believes this [Vision proposed] framework is typical of a distressed sale situation and unnecessarily limiting at a time when the macroeconomic outlook may be changing,” Ires said.
Separately, the Ires board said it “unanimously” recommends that shareholders vote against all resolutions put forward at the egm on February 16th by Vision.
It said Vision seeks to take control of the company by taking five of the nine board seats to force the sale of Ires within two years. The board said it believes this “seriously risks the value inherent in the assets and the platform of Ires in forcing a risky and potentially value destructive approach that, while it might be in the interests of Vision, is not in the interests of shareholders as a whole”.
Ires’s board has accused Vision of having “no credible plan” for the business beyond a liquidation or a sale. “Vision’s sole objective appears to be to create a forced liquidity event to serve its own interests through a sale of Ires or its assets or a liquidation within 24 months, irrespective of market and other conditions,” it said.
Goodbody Stockbrokers analyst John Cronin said that the egm “is essentially a vote on who is best placed from a stewardship perspective in the context of a strategy overhaul, with Vision more explicit, thus far, in relation to the strategic actions to take”.
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