Ires Reit sought on Friday to play down a move by Capreit, the founding and largest shareholder in the property group, to align itself with an activist fellow Canadian investor that is pursuing a boardroom coup and plan to sell or break up the company within two years.
Capreit chief executive Mark Kenney told the Business Post late on Thursday that his firm, which owns 18.7 per cent of Ires, will vote with Vision Capital for a resolution at an extraordinary general meeting (egm) next month that would pave the way for a sale or break-up of the business. He also said Capreit would vote in favour of resolutions to replace five existing board members with candidates Vision Capital has put forward.
“Capreit has previously indicated its wish to exit Europe and focus on the Canadian market,” a spokesman for Ires said. “The board recognises every shareholder will vote in line with their own requirements. However, the role of the board is to represent the interests of all shareholders. The board unanimously believes its proposed strategic review is in the best interests of all shareholders and reaffirms its recommendation that shareholders vote against all of Vision’s proposals.”
[ Ires rebuts activist investor’s claims board cannot be trusted with reviewOpens in new window ]
Still, the Capreit declaration marks a significant setback for Ires as it seeks to rally investors behind a plan for its current board to lead a wide-ranging strategic review. Ires said earlier this week that it “strongly refutes” claims from Vision, which has waged a public campaign against the board since last April, that its existing board cannot be trusted to lead its strategic review of its business. Vision owns about 5 per cent of Ires.
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“While one could sense that the wind was blowing very firmly in this direction, Capreit’s public declaration of support for Vision’s proposals in their entirety represents a significant moment in this debacle,” said John Cronin, an analyst with Goodbody Stockbrokers.
“The threshold required to attain shareholder approval to pursue the stated asset disposal strategy is 75 per cent of the votes (versus the 50 per cent threshold required to effect directorship change) and it is less clear as to whether that is realistically achievable at this juncture.”
Mr Cronin said Vision’s nominee directors may be open-minded on the next steps if elected to the board “and given access to the requisite company materials to more fully inform their assessment as to the optimal course of action”.
“But, one thing that is hard to deny is that this team of nominee directors appears committed to move efficiently and to relentlessly seek to eke out maximum possible value crystallisation for the entire shareholder base – which, some might say, seems differentiated to the status quo,” he said.
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 overhaul 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.
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