Business

Starwood reticent on Ires strategy after building up 1.5% stake

US investment firm with €106bn of assets under management declines to shed light on Ires investment strategy

Starwood Capital Group chairman and chief executive Barry Sternlicht. Photograph: Patrick T Fallon/Getty

Joe Brennan
Thu Feb 29 2024 - 05:30

Starwood Capital Group, a US investment firm focused on global real estate, is staying mum on its game plan with Ires Reit after building up a 1.52 per cent stake in the apartments owner, which is currently the subject of sale or break-up speculation.

A spokesman for Starwood, which has $115 billion (€106 billion) of assets under management, declined on Wednesday to comment on the investment strategy at Ires, after disclosing the previous day it had acquired almost 8.08 million shares in the Irish company.

The development comes as Ires embarked last Friday on a strategic review, as a Canadian activist investor, Vision Capital, continued to wage a public campaign for the Irish company’s assets to be put up for sale as a whole or in lots. Ires has been deemed to be in a takeover period by the Irish Takeover Panel since it flagged the sweeping review in January.

While Ires defeated Vision’s attempted boardroom coup at an extraordinary general meeting (egm) on January 16th, the rebel shareholder is now pressing for director representation commensurate with the 40 per cent of investors that supported its resolutions. These included one that called on the board to “use best endeavours” to pursue a sales or divestment process within two years.

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Starwood has been buying shares at a time when Ires’s foundering shareholder, Toronto-based Capreit, has been in the market selling down shares. Capreit has reduced its holding to 16.5 per cent from 18.7 per cent in the last three weeks.

Starwood backs Urbeo, a Dublin-based build-to-rent business that has acquired and built about 2,000 apartments in the past five years.

“There has previously been speculation that the Ires portfolio would fit neatly with Urbeo, with prospective synergy capture for Starwood to the extent it were to consolidate both platforms,” said John Cronin, an analyst with Goodbody Stockbrokers.

However, he added that he “would caution against drawing any hard and fast conclusions in relation to what its intentions might be at this juncture.”

Even if Starwood has no intention to bid for Ires or blocks of its assets, observers said its move to snap up shares at this stage means it would, at a minimum, be highly supportive of a so-called liquidity event from a sale or break-up of the company.

Starwood has become involved in Irish property companies that are subject to takeover speculation in the past.

It emerged two years ago that a fund belonging to the US company had built up a 2.99 per cent interest in Hibernia Reit before the then Dublin-listed offices group announced in March 2022 that it was being acquired by Canadian investments group Brookfield Asset Management.

Starwood sold its stake days after the announcement of the Brookfield deal, which was priced at an almost 36 per cent premium to Hibernia’s prevailing share price before the transaction was unveiled.

Starwood has been an active investor in Irish assets over the years. It made a major play on the Irish market in 2013 when it led the purchase of a non-performing loan portfolio connected with commercial property, mainly in Dublin, from the National Asset Management Agency (Nama) at a significant discount to its original €800 million value.

More recently, it acquired a 50 per cent stake earlier this month in Irish data centres developer Echelon for $850 million.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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