UK: A group of shareholders owning nearly 20 per cent of PRS REIT, which owns more than 5,000 BTR homes across the UK, are calling for the removal of chair Stephen Smith and a strategic review of the business.
PRS REIT plc is the UK’s first quoted real estate investment trust to focus on new-build family homes for the private rental market.
The investors, who collectively own 17.3 per cent of PRS REIT, include Waverton Investment Management, CCLA Investment Management, Harwood Capital management, Alder Investment Management and CG Asset Management.
They are calling for a strategic review of the £500 million business which owns around 5,500 completed and contracted homes with a estimated rental value of £66.5 million per year.
The shareholders have reportedly proposed former Hipgnosis Songs and Round Hill Music chair Robert Naylor as Smith’s replacement and Christopher Mills, majority shareholder of Harwood Capital Management, to replace non-executive director Steffan Francis. They are preparing to requisition an extraordinary general meeting in a bid to remove Smith and Francis.
Smith is a former chief investment officer of British Land, and also held a senior role at AXA Real Estate Investment Managers.
All PRS REIT’s homes are marketed under Sigma’s Simple Life rental brand. According to Sky News, a number of shareholders are understood to be unhappy at an announcement made in July that the company had extended its existing management agreement with Sigma PRS Management by 30 months until 2029.
A source said the extension had been unnecessary because the investment process being undertaken by the manager would be completed in 2025, rendering the need for a revised agreement superfluous. PRS REIT said at the time of the extension that it had secured annual cost savings of £460,000 as part of the deal.
Yesterday, it was reported that MIGO Opportunities, a special situations investor, had acquired a stake in PRS REIT in the expectation that the company would be forced into corporate activity, potentially including asset sales to generate capital to be returned to investors or a sale of the whole company.
PRS REIT floated in 2017, when it raised £560 million by selling new shares, and subsequently launched further capital raises in 2018 and 2021.
It floated at 100 per share. As this article was published, the share price was 97.5p, the highest it has been this year.
PRS REIT issued an announcement to the Stock Exchange this morning, confirming recepit of a letter from the shareholder group. The statement said: “The letter requests that, at a general meeting, shareholders of the company consider and vote on ordinary resolutions to remove two of the five existing independent non-executive directors, the Chairman, Stephen Paul Smith and David Steffan Francis. 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. Harwood Capital Management holds 1.1 per cent 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.”
