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Ires activist investor wants firm to pay €425,000 of its campaign costs as compromise on board seats fails

Ires Reit says offer of two board seats has been rejected by Canadian investment firm Vision Capital

Apartment owner Ires Reit has been the subject of an activist investor campaign for the past year.

Joe Brennan
Fri Apr 5 2024 - 08:15

Canadian investment firm Vision Capital, which has waged a high-profile activist battle against the board of Ires Reit for the past year, is seeking a refund of as much as €425,000 of its campaign costs, and plans to put forward three director nominees at an upcoming annual general meeting (agm).

The development comes as talks between both sides, following a contentious extraordinary general meeting (egm) in February, failed to reach a compromise on board seats.

“Despite significant efforts by the board to find a fair and reasonable basis for a settlement with Vision, including the offer of two seats on the company’s board, to prevent further disruption to the company’s ongoing strategic review and which avoids the continued unnecessary use of shareholder funds, an agreement has not been reached,” Ires said in a statement on Friday.

Vision’s resolution requests are now on track to be added to agm resolutions, which must be circulated to shareholders by the end of next week to comply with notice rules in advance of the meeting on May 2nd.

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Shareholders rejected Vision’s attempt in February to replace five Ires directors and push through an order for the company to pursue a sale or break-up of the company within two years. Still, a sizeable minority of about 40 per cent of voting shareholders backed the Toronto-based company’s main resolutions.

Ires said it does not believe there is any justification for the company to cover a significant part of Vision’s voluntarily incurred expenses, including those related to the egm at which the activist’s resolutions were defeated.

“The board considers this request to be highly unusual and inconsistent with good governance practice, and the board remains committed to ensuring that decisions are made in the best interests of all shareholders,” it said. Vision has been critical of Ires’s running costs in the past.

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Ires’s board is pursuing its own wide-ranging strategic review and its new chairman Hugh Scott-Barrett has said he plans to issue a “substantive update” on this before the agm.

The review, widely viewed as a defensive move against Vison’s campaign, is looking at what the company calls a “full range of strategic options” to maximise value for shareholders, including consolidation, mergers, a review of the company as a listed Reit, the sale of the company or disposal of its assets.

Vision, which owns about 5 per cent of Ires, has long been of the view that flaws in Irish real-estate trust (Reit) rules, which require a high dividend payout rate, and Ires’s relatively high debt level compared to Reit limits, have limited what it can spend on development at a time of chronic undersupply of accommodation in the Republic.

The Canadian investor has also taken aim at how shares in Ires, which has 3,734 apartments and houses on its books, have traded for a sustained period at a significant discount to the intrinsic value of its assets.

Ires’s chief executive designate Eddie Byrne will start with the company next week. He will formally succeed Margaret Sweeney on the eve of the agm.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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