A group of shareholders of London-listed investment fund PRS REIT is besieging the company’s boardroom with the aim of ousting the chairman and forcing a strategic review that could lead to a sale of the company.
Sky News has learned that several institutional investors, who together control almost 20 percent of the shares, are preparing to call an extraordinary general meeting to remove Stephen Smith as chairman.
They also reportedly want to remove another unidentified board member and are expected to appoint successors to the two directors.
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Mr Smith is the former Chief Investment Officer of British Land and also held a senior position at AXA Real Estate Investment Managers.
PRS REIT has a market capitalisation of almost £500 million and is the largest build-to-rent platform in the UK private rented sector (PRS).
Its backers include government agency Homes England and the company owns more than 5,300 new rental properties.
A number of shareholders are apparently dissatisfied with the company’s announcement in July to extend its existing management contract with Sigma PRS Management by two and a half years until 2029.
According to a source, the extension was unnecessary because the investment process being carried out by the manager will be completed in 2025, making a revised agreement unnecessary.
PRS REIT stated at the time of the extension that it had achieved annual cost savings of £460,000 as part of the deal.
On Wednesday, it was reported that MIGO Opportunities, a special situations investor, had acquired a stake in PRS REIT in anticipation that the company would be forced into corporate action, such as a breakup.
The disgruntled institutions, whose names were unclear on Wednesday evening, reportedly believe that PRS REIT’s board should now consider all strategic options to maximize shareholder value.
This could involve selling assets to generate capital to return to investors or selling the entire company, according to a person familiar with the agenda.
A strategic review, combined with the proposed board changes, could help reduce or eliminate the discount to net asset value currently facing PRS REIT shareholders, the source added.
PRS REIT went public in 2017, raising £560 million through the sale of new shares and subsequently launched further capital raisings in 2018 and 2021.
The price was 100 pence per share and although the shares have risen by more than 20% in the past twelve months, they were still below that level at 89.5 pence on Wednesday afternoon.
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A number of real estate funds, including Home REIT, have encountered difficult times as publicly traded companies, raising serious questions about corporate governance.
PRS REIT shares closed at 89.5 pence on Wednesday, down just under 0.25%.
PRS REIT did not respond to a request for comment.
