Shares in Ireland's largest landlord, I-RES Reit, were broadly unmoved today by the overnight news that its largest shareholder is backing proposals from another activist shareholder that could result in the breaking up and sale of the business.
It was reported last night that Capreit, a Canadian property fund which owns 18.7% of I-RES, intends to support Vision Capital’s resolutions at an extraordinary general meeting next month.
Vision is proposing that I-RES be required 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.
It is also proposing that five members of the board of I-RES be replaced with candidates that are supported by Vision Capital, which itself owns 5% of the business.
"Capreit has received a number of inquiries concerning its voting intentions at the EGM convened by Ires Reit to take place in response to a requisition from Vision Capital," said Mark Kenney, chief executive of Capreit in a statement to the Business Post.
"Capreit has carefully considered the issues raised by Vision, Ires’s responses in its circular to shareholders, Vision’s statement of 18 January and Ires’s responses to that statement,"
"As a result, Capreit has decided to support all of the resolutions proposed by Vision at the EGM."
In response this morning, I-RES said it noted the media comment on Capreit’s support for Vision.
"Capreit has previously indicated its wish to exit Europe and focus on the Canadian market," it 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."
Earlier this month, I-RES said its strategic review will start in the first quarter of this year after it reports full year results for 2023.
It said it will consider all strategic options available to maximise the inherent value contained within the IRES portfolio.
These include but are not limited to new strategic initiatives, consolidation, combinations, mergers or other corporate action, a review of the company's status as a listed REIT, the sale of the entire issued share capital of the company and selling the company’s assets and returning value to shareholders.
"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, analyst at stockbrokers Goodbody.
"This takes known shareholder support for Vision’s proposals to c.23.7% (and c.24.4% if one assumes that Ewing will also procure its support for the proposals, though there has been no confirmation of same) – though, with all of that said, it is hardly surprising that Capreit is supportive in view of its recent comments and on examination of prior AGM results."
"If Capreit does as it says it would mean that Vision needs to secure just more than one-third of other shareholders’ supports to replace five existing Board members with the Vision Nominees (it should be noted that the voting on each individual Director replacement is separate) - though that is by no means a fait accompli at this point."
