Pressure mounts on Ires to sell up – but can it rely on Canadian founder?

Vision Capital, the Canadian activist investor that has declared war on Ires Reit, says it has “received an outpouring of support” from both Irish and international shareholders and many small investors to the shot it fired across the company’s bows earlier this month.

The Toronto-based company, which owns 5 per cent of Ires, went public on April 12th with its grievances after the group refused to listen to its private calls to put itself up for sale. It is calling on other investors to vote against the re-election of four directors, including chairman Declan Moylan, at Ires’s upcoming annual general meeting (agm) on May 4th.

The firm followed up on Monday with another missive, after it emerged Ires had put its Marker high-end apartment block in Dublin 2 on the market for €70 million – hot after selling, for €20 million, a site in Sandyford in Dublin 18 on which it had aimed to build more than 400 apartments.

The sales are part of a plan by Ires, led by chief executive Margaret Sweeney, to raise €100 million to give it a financial cushion over debt covenants at time when commercial property values are declining amid rising interest rates.

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Ires, owner of almost 4,000 homes, wrote down the value of investment properties on its balance sheet last year by €45.6 million to €1.48 billion.

The asset sale planis a “knee-jerk” action and should be abandoned until Ires “establishes and communicates a clear and effective strategy that is aligned to surface shareholder value”, the Canadians said.

“The only strategy Ires seems to have is to do whatever it takes to maintain the existence of this flawed entity to serve the interests of its misaligned board and management who have failed to act in Ires’ and its shareholders’ best interest,” it said.

It has to be said that Institutional Shareholder Services, which advises large investors on agm votes, said last week that it has not found evidence “that the board has been a poor steward of capital”.

Ires was trading at about a 40 per cent discount to its net asset value (NAV) before Vision Capital made its displeasure known. The gap has since narrowed a tad.

It’s not yet clear, however, where Capreit, the Canadian property firm that set up Ires and continues to have an 18.7 per cent share, stands. But having been replaced as Ires’s investment manager last year as day-to-day running of the portfolio was brought in-house, Capreit has little reason for loyalty.