The PRS REIT board has formed a sub-committee to engage with the shareholder group that filed a requisition notice last Thursday (29 August).
The requisition, which aims to call a general meeting to vote on replacing board chair Stephen Smith and NED Steffan Francis with Robert Naylor and Christopher Mills, has been backed by around 18.9% of the trust’s issued share capital.
The remaining three board members, who are not a part of the requisition, will lead the sub-committee and the board’s response.
See also: Major PRS REIT shareholders call for board shake-up
Board response
The shareholder group raised a range of concerns in its requisition notice, including over the trust’s 23.29% discount.
The group also said that if they are successful, they would pursue options for returning value to shareholders, which could include the sale of properties to repay debt where it exceeds the net rental yield of the trust’s portfolio.
Responding to the notice, the board said that while it shares shareholder frustration over the discount to NAV, it is a sector-wide issue with 60% of UK REITs also trading at a discount of 20% or wider.
In a stock exchange announcement, the PRS REIT board added: “Changing the composition of a board through the mechanism of a general meeting is typically used under extraordinary circumstances.
“The process abruptly circumvents normal succession planning and UK corporate governance processes, and incurs additional cost, disruption, and potential reputational damage to a company. This type of action would usually occur when constructive prior private discussions have taken place over time and irretrievably broken down.”
It believes that immediate disposals would not be value maximising, but does expect market conditions that may allow selected asset disposals to improve in 2025 as the interest rate environment improves.
The sub-committee added that there have only been “limited discussions” with the requisitioning shareholders, while it questioned the need for calling a general meeting before the trust’s 2024 AGM in December. The sub-committee also believes there are areas of alignment between the board and the requisitioning shareholders, and will seek to engage with the group and other shareholders to work towards a resolution.
The board said it will provide a further update in due course.
