CG Asset Management has issued an open letter to shareholders of PRS Reit, criticising the trust’s response to the requisition notice served last week.
CGAM is part of the 17.3% of shareholders that have called for an EGM to vote on removing the board chair and NED.
The firm have criticised the updated terms of PRS REIT’s Investment Advisory & Development Management Agreement with investment advisor Sigma PRS Management, announced in July.
Under the agreement, Sigma’s contract as investment adviser was extended to 2029, with the initial contract set to expire at the end of 2026.
CGAM claims that, despite regularly being in contact with the company and the board, they were not consulted about the new arrangements.
“We could see no justification for awarding such a long contract and were forced to conclude that the relationship between the board and the manager was too close and there was insufficient challenge from the board to the manager,” CGAM said in an open letter.
The firm also raised concerns over a potential conflict of interest after PRS Reit appointed Rothschild & Co as a third corporate adviser.
“The company already has two advisers, appointing a third adds further cost to shareholders for unclear benefit. We understand that Rothschild & Co advised the manager, Sigma PRS Management, on its sale to PineBridge Investments.
“Their appointment presents a potential conflict of interest which could be avoided by making use of the company’s existing advisers.”
Responding to the open letter, a spokesperson for PRS REIT told Portfolio Adviser: “The PRS REIT’s Board shares the frustration of all shareholders with the share price discount to NAV. All options have been, and are, under active consideration although there are timing issues as to when some of these can be implemented optimally. The board will continue to work towards a resolution that is in the best interests of all shareholders.”
