The board of PRS REIT has undergone personnel changes following an agreement with requisitioning shareholders.
The changes will see non-exec chair Steve Smith step down at the firm’s next AGM after seven years.
Senior independent director Geeta Nanda will then become interim chair, leading the process to appoint a permanent replacement.
Meanwhile, both Robert Naylor and Christopher Mills will be proposed for election to the board as non-executive directors at the trust’s next AGM in early December.
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Shareholders representing 17.3% of issued shares wanted to replace both Smith and non-executive director Steffan Francis on the board with Harwood Capital’s Naylor and Mills, who would then work with the remaining board members to undertake a review of the trust to return value to shareholders.
The group included firms such as CCLA, Harwood Capital, and Waverton Investment Management.
However, Francis will remain on the board, with the trust saying he ensures a continuity of property experience.
As a result of the agreement, the investor group has withdrawn the requisition notice.
In a stock exchange announcement today (13 September), the board said: “The board believes the agreement and changes announced today reflect a balance of the views of all shareholders.
“They respect the principles of good governance in orderly succession planning, and help to ensure that a new independent chair and any future board directors have the appropriate blend of skills and expertise.
“The board believes this agreement will allow the company to move forward and focus on value maximisation for all shareholders.”
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Marcus Phayre-Mudge, fund manager at PRS REIT shareholder TR Property, said: “It is heartening to see that PRS REIT’s board has responded swiftly and decisively to the sizeable group of shareholders with concerns about the company’s governance.”
TR Property was not a part of the requisitioning group.
“This matter has ultimately been about the board’s renewed arrangement with its external manager. Shareholders rightly felt that the contract was designed in a way that did not align the manager with their interests,” Phayre-Mudge added.
“Situations like this contribute to the imperfect reputation of external management, but it is important to remember that it is entirely possible to get these contracts right, with good controls including fees based on market cap, a lead manager that eats their own cooking [an element of the fee paid in shares], and one-year notice – maximum – rolling management contracts.
“It has been good to see a group of long-term shareholders stand up on this issue, serving as a reminder for all REIT boards to embrace governance practices that safeguard the interests of shareholders.”
