Manchester-based PRS REIT announced it received a letter from shareholders holding 17.3% of its stock requesting a general meeting to vote on resolutions to remove two of the firm’s independent non-executive directors — David Steffan Francis and chairman Stephen Paul Smith.
PRS REIT plc is a closed-ended real estate investment trust established to invest in the Private Rented Sector. The company currently has investments of more than £1 billion, with over 5,400 new rental homes.
The letter also requests shareholders vote to approve the appointment of Robert Graham Naylor as non-executive chairman and Christopher Harwood Bernard Mills of Harwood Capital Management as a director.
The shareholders requesting the meeting are Harwood Capital Management Limited, Waverton Investment Management Limited, CCLA Investment Management Limited, Alder Investment Management Limited, CG Asset Management Limited.
“In addition, the Company understands that Ruffer LLP and Asset Value Investors Limited, representing in aggregate c.1.6% of issued share capital, have given irrevocable undertakings to vote in favour of the resolutions to be proposed by the Requisitioning Investors.” said PRS REIT.
Harwood Capital Management holds 1.1% of the share capital of the PRS REIT.
“The company is taking advice as to the validity of the requisition letter, and a further announcement will be made in due course,” said the REIT.
Harwood Capital Management Limited said in a stock exchange statement: “A group of leading investors in The PRS REIT, who between them manage shares constituting approximately 17.3% of the issued share capital of the Company, have today served a requisition on the Company.
“The requisition requires the removal of Stephen Smith, Non-Executive Chairman, and Steffan Francis, Non-Executive Director, and the appointment of Robert Naylor and Christopher Mills in their respective places, with immediate effect. If appointed, the requisitioning investors want the new Directors, to work with the remaining Board members, to undertake a review of options to return value to shareholders.
“The requisitioning investors are Waverton Investment Management Limited, CCLA Investment Management Limited, Alder Investment Management Limited, CG Asset Management Limited and Harwood Capital Management Limited, of which Mr Mills is the ultimate majority shareholder.
“The full of text of the explanatory statement which accompanies the requisition is available at www.nascit.co.uk. “
The requisitioning investors said they want a review of options which may include, but is not limited to: selling properties to repay debt “where the cost of debt exceeds the net rental yield of PRS REIT’s investment portfolio” or “buy back shares to target a discount at which PRS REIT’s shares trade to net asset value of 10% or narrower” or “commence a process” to determine “if there are interested parties to acquire PRS REIT’s assets or entire issued share capital.”
The investors also want PRS REIT “to review all contracts between PRS REIT and Sigma PRS Management Ltd (the Investment Advisor) to ensure that the PRS REIT has received sufficient value from these transactions and the contracts contain appropriate robust provisions to enable the Investment Advisor to be held to account.”