An activist shareholder in Ireland's largest private landlord, Irish Residential Properties REIT, has demanded an extraordinary general meeting (EGM) be convened so that shareholders can vote on its proposal to replace five directors.
Vision Capital, which owns 5% of IRES, said it remains dissatisfied with the overall management of the company under the stewardship of the current board and executive management team.
In a statement released this morning, it also pointed the finger at what it claimed is IRES’ continued poor share price performance and its "persistent discount relative to the market value of its assets".
The Canadian based shareholder also blamed IRES' "bloated cost structure, mismanagement of its balance sheet leading to the destruction of shareholder value the inefficiency and limitations of the REIT structure in Ireland, notably poor trading liquidity, and the inability to effectively raise meaningful equity capital in a value-accretive manner."
"These challenges are hindering IRES' ability to contribute to much-needed supply in a significantly undersupplied Irish housing market."
The investor said it is calling for the EGM now because Margaret Sweeney, the current chief executive officer, is due to retire soon and this makes the matters to be considered by shareholders urgent.
"Vision has significant concerns regarding the prospect of IRES hiring any new senior executive management team members before shareholders have the opportunity to consider and vote on the matters outlined in this communication," it said.
"Such action could result in unwarranted financial burdens and strategic mismanagement for IRES, necessitating additional resources and expenses to rectify."
In its resolutions, Vision has suggested the replacement of Declan Moylan, current chair of the board, retiring CEO Margaret Sweeney, current chief financial officer, Brian Fagan, and Joan Garahy and Tom Kavanagh, who are two other directors serving on the remuneration committee.
In their place, the shareholder is proposing the appointment of a number of new directors, including Mark Barr, Richard Nesbitt, Colm Lauder, Amy Freedman and Sharon Stern and that one of them would be elected chair.
Vision is also proposing that a process take place to find an internal or external candidate on either an interim or full-time basis to replace Margaret Sweeney as CEO, and that the candidate would be "aligned with the directives of the refreshed board."
The shareholder has also proposed a resolution to require IRES to consider a comprehensive strategic review to assess options including a sale of the company or its assets, or a process to sell IRES or its assets in an organised manner over the next two years.
"The Board considers that Vision Capital's actions are part of a campaign to undermine the good governance of the Company and to override normal corporate governance standards," IRES Reit said in a statement responding to today's developments.
"The Board believes an EGM is not in the interests of the Company’s shareholders and wider stakeholders," the statement said.
"The Board is in the process of reviewing the content and validity of the Requisition with its advisers. A further announcement will be made in due course. In the meantime, shareholders are urged to take no action," it added.
A spokesperson added that Vision Capital's current and historic interactions are causing continued uncertainty for all IRES stakeholders and creating additional unnecessary costs for the company, "while also occupying significant board and management time that would be far better spent delivering value for all shareholders."
In May, shareholders narrowly backed the re-election of Margaret Sweeney and Brian Fagan, after Vision Capital attempted to rally opposition to the re-appointment of them and other directors.
IRES Reit has a portfolio of about 4,000 homes in Dublin and Cork.
In August it said its half yearly revenues had risen by 5.2% to €44.3m, on the back of the delivery of new assets and organic rental growth across the existing portfolio.
It also said it delivered Net Rental Income (NRI) of €34.3m, an increase of 5.1% on the same time last year and this drove a 6.9% increase in adjusted EBITDA to €28.7m.
Shares in IRES have lost around 40% of their value over the last two years, but were trading higher in Dublin today.
