A move five weeks ago by Ires Reit’s founding shareholder, Toronto-based real-estate investment firm Capreit, to sell its remaining shares in the apartments owner removed a big stock overhang in the market.
Capreit, which had been Ires’s asset and investment manager before the work was brought in-house two years ago, began selling down what was originally an 18.7 per cent stake earlier this year.
But any hopes that Ires’s share price would find a fresh lease of life once the big seller had exited the stage have been misplaced.
The group’s stock has merely drifted since then, down more than 16 per cent so far in 2024 to 93 cents. The shares are languishing 30 per cent below the value Ires put on its net assets per share at the end of last year.
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And with good reason. There is a growing sense among investors that the group’s strategic review — an update on which is due next week as Ires reports interim results — is going to deliver no real change to its strategy.
The last update in late April, signalled that the board — led by new chairman Hugh Scott-Barrett and recently appointed chief executive Eddie Byrne — remained against a sale or break-up of the group.
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An accelerated disposal of its assets in the market “would be challenging to maximise value for shareholders in the short-term”, it said at the time. Ires argued that investment activity remains muted against the backdrop of higher interest rates, an upcoming general election, and a 2 per cent cap on rent increases in areas where Ires’s properties are based.
While the European Central Bank has moved since then to cut its main lending rate by a quarter of a percentage point to 4.25 per cent, the expected pace of follow-up reductions has been scaled back by economists and financial markets. At present two more are priced in by the year-end, at best.
Meanwhile, the activist investor that led a year-long campaign for a sale or break-up, Vision Capital (which is also based in Toronto), has been muzzled since April, when Ires offered two board seats to secure a truce.
Are the opportunistic investors that cropped up on the shareholder register in the past year in the hope of making a quick buck — including Asset Value Investors and Starwood Capital — prepared to settle in for the long haul?
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