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Ireland’s biggest private landlord Ires Reit’s crunch EGM: what is going on?

What is happening at Ireland’s biggest private sector landlord and why?

Ires Reit, the State’s largest private landlord, faces an uncertain future as shareholders gather at an extraordinary general meeting. Photograph: Nick Bradshaw

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Dominic Coyle
Fri Feb 16 2024 - 11:10

What’s going on?

Ireland’s largest private landlord – the stock-market listed company Ires Reit – faces a challenge from one of its own shareholders who is looking to oust much of the current board and break up the business.

How are they doing that?

An extraordinary general meeting (EGM) of shareholders has been called to debate a number of motions put forward by the insurgent shareholder, Vision Capital. The meeting takes place today in Dublin.

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Why should I care?

Ires owns 3,734 apartments and houses, almost all of them in and around Dublin. Whatever happens at today’s extraordinary general meeting of shareholders could impact on the ownership of those properties.

From an Irish Stock Exchange perspective, losing another of its larger companies would be bad news after the departure of CRH and Paddy Power owner, Flutter, and the planned departure of Smurfit Kappa has raised questions about its future as a meaningful stock market.

Who’s who?

On one side, you have the current board of the company, led by chief executive Margaret Sweeney, who has already announced she will be standing down in April after 6½ years at the helm of the business, and chairman Declan Moylan, who has also signalled his imminent departure – he will not be seeking re-election at the company’s annual general meeting in May.

On the other is Vision Capital, a Canadian private equity group that sees itself as an activist investor.

What does Vision Capital want?

It is seeking to replace Ires’s chairman, chief executive, chief financial officer Brian Fagan and two other non-executive board members – Joan Garahy, who is the senior independent director, and Tom Kavanagh.

Its five alternatives are: former Arthur Cox partner and property lawyer Mark Barr; one-time chief operating officer of Canada’s CIBC Bank Richard Nesbitt; Goodbody Stockbrokers former head of real estate equity research Colm Lauder; Amy Freedman, an adviser to Canadian asset manager Ewing Morris; and Sharon Stern, president of Eastmore Management and Metro Investments in the US.

It is also seeking support for a special resolution to direct the company to seek to sell itself or dispose of its assets within two years.

How many votes does it need?

Vision needs more than 50 per cent of the votes cast at the EGM in each of its votes to replace the current directors.

It will need the support of more than 75 per cent of votes cast to force through its special resolution on the future of the business.

Why now?

The company’s share price has been depressed by rising interest rates which have challenged how the highly leveraged business manages its debt and the State’s 2 per cent cap on annual rent increases in rent pressure zones, which is where almost all of Ires’s portfolio of properties is based.

Vision argues that Ires is a “lame duck” real estate investment trust (Reit) whose shares have been trading consistently at a discount to the value it puts on its assets. It says the answer is to put the business up for sale.

Ires says there could not be a worse time to sell the business and argues that its market value will see “a significant uptick in due course”.

What happens if Ires wins?

If Ires manages to persuade anything more than 50 per cent of those voting to back each of its own directors, they will stay in place for now. Assuming it succeeds in getting the backing of at least a quarter of the votes cast, it has promised its own strategic review 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.

What happens if all of Vision’s motions succeed?

If Vision Capital prevails, its five candidates will join the board of the company, with the current chairman, chief executive and chief financial officer among others stepping down immediately.

And the clock will start ticking on the two-year window to sell the business or its assets.

What’s likely to happen?

That’s very unclear. Capreit, which was a founding shareholder in Ires and still its largest shareholder – with 18.5 per cent of the shares – has thrown its support behind Vision Capital, boosting its chances.

On the basis of previous shareholder turnout at annual meetings – about 70 per cent – Vision says it is confident of success but activist investors will always talk up their chances at times like this.

The special resolution is less likely to succeed, given the higher threshold of support needed for it to pass.

A voting glitch last week at a company that many institutional shareholders use to cast their ballots at AGMs and EGMs ensured last-minute drama but Ires confirmed on Wednesday that those votes had been successfully resubmitted.

When will we know the outcome?

Given how tight this is likely to be, it is likely to be later on Friday before a formal outcome of the vote on the various motions is announced.

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