Shareholders of embattled property company, I-RES REIT, have narrowly backed the re-election of the firm's Chief Executive Officer and Chief Financial Officer to the board at today’s annual general meeting (AGM).
CEO Margaret Sweeney received support from 61.5% of those shareholders who either voted for or against the resolution proposing her reappointment to the board.
While CFO Brian Fagan received the backing of only 54%, just above the simple majority threshold of 50% required for it to pass.
The outcome follows attempts in recent weeks by Canadian based shareholder, Vision Capital, which holds 5% of I-RES Reit to rally opposition against the re-election of Mr Fagan, Ms Sweeney and Chairman Declan Moylan, along with two other directors.
However, Mr Moylan received almost 90% support for his re-appointment in today’s vote.
Directors Joan Garahy and Tom Kavanagh, who were also targeted by the group of unhappy shareholders, received 86% and 89% of votes in favour respectively.
But shareholders strongly defeated the special resolution seeking the receipt and consideration of the Remuneration Committee on Director’s Remuneration for 2022, in a clear sign of dissatisfaction at pay policies at the company.
It received just 36% support.
While two other special resolutions around shareholder pre-emption rights, which required 75% support to pass, received less than 50% each.
I-RES is Ireland's largest private residential landlord, with a portfolio of 4,000 apartments and other property in Dublin and Cork.
At the AGM in Dublin today, Vision Capital President, Jeffrey Olin addressed a range of questions to the board around issues such as plans to sell non-core assets, the company’s handling of debt refinancing, directors’ pay and the board’s opposition to exploring a sale of the company.
Mr Olin claimed the company’s mis-management of its balance sheet had led to the destruction of €170m in shareholder value.
He also stated that the board’s decision not to pursue the sale of the company in order to unlock shareholder value had led to I-RES becoming a "lame duck" REIT.
"In your press release dated April 17th 2023, your management suggested that it would not be a good time to look to sell the company," he said.
"This was the same reply given to Vision in 2021 when the concerns set out in our letter of April 12th were first presented to the company."
"Since 2021 was objectively speaking a great time to sell assets, isn’t it a reasonable conclusion that the board and management suggest there was never a good time to consider the sale of this lame duck REIT?"
However, the board mounted a robust defence of its actions and the performance of the business in what it claimed was difficult market conditions.
Mr Moylan said 2022 was a year of progress and delivery for I-RES which delivered a strong performance and successful completion of the internationalisation of the management of the company, previously carried out by founding shareholder CAPREIT.
He said it was frustrating that despite the strong performance of management and the team the share price doesn’t reflect it.
The chairman referenced rising interest rates, inflation and the Government’s rental cap as some of the issues that had affected the entire sector, which he claimed IRES has out-performed.
But he added that he understood the frustration of shareholders.
He also said the board has endeavoured to engaged constructively with shareholders, has acted at all times with responsibility and will continue to do so.
Mr Moylan said the board has confidence in both the company's strategy and its management and believes this will be reflected by the market in due course, with upside potential for shares when the cyclical property market inevitably turns.
He denied media reports that I-RES is in the process of doing a deal to sell the Marker Apartments, which Mr Olin had described as a linchpin of the company’s portfolio and not in his view non-core in nature.
The chairman also claimed that an objective analysis of current market conditions shows, in the board's view, that there could not be a worse time to sell I-RES.
"That at a time of high interest rates, high inflation and a rental cap in place, it would be an unwise thing to do in our view to put the company up for sale in these circumstances," he told the meeting.
"We believe rather that to continue trading in a proper and organised fashion and to wait until the inevitable cyclical change comes in the European real estate market, and to keep it steady as she goes until conditions improve, is the right thing to do."
He said maybe in due course a time will come for the sale of the company, but that time is not now.
Speaking afterwards, Mr Olin said this is the beginning of the process for Vision Capital, whose intention is to move forward and give shareholders other alternatives.
He said that alternative options should be considered and that Vision Capital has enough shares to be able to call for an extraordinary general meeting (EGM) that could be used to put those forward.
Separately, Ms Sweeney said every shareholder is entitled to seek an EGM under the constitution, while Mr Moylan said if Vision did call an EGM the company would respond and comply with its legal obligations.
Both also said that nothing they had seen would lead to them consider their positions on the board, following the AGM votes.
