A property rental group facing an attempt by shareholders to boot out its chairman and another director has hired a third banking adviser in a move that has inflamed relations still further.
PRS Reit has added Rothschild to its rosters of advisers, alongside Singer Capital Markets and Jefferies, as it tries to fend off calls from a fifth of its register to revamp the board.
Last week, investors speaking for 17.3 per cent of the share requisitioned an extraordinary general meeting in an attempt to oust Stephen Smith, 71, as PRS’s chairman and Steffan Francis, 69, a non-executive director.
In their place, the shareholders want to install Robert Naylor, 49, and Christopher Mills, 71, the former chairman and non-executive at Hipgnosis Songs Fund , the music rights group recently sold to Blackstone for £1.27 billion.
The requisitioning investors span the Waverton, CCLA and Alder investment management groups, CG Asset Management and Harwood Capital, Mills’ own firm. They are backed by the holders of a further 1.6 per cent of the shares, Ruffer AIFM and Asset Value Investors.
Shareholders are angry at the wide discount to the group’s net asset value, which has been averaging about 35 per cent over the past year, and the board’s decision to extend the contract with Sigma, the investment manager, to 2029. That is despite the group’s estate of 5,400 rental homes being almost completely built.
Tom Treanor, a director of Asset Value Investors, said: “The board’s recent extension of the manager’s contract to 2029 was unconscionable, given it clearly serves as a poison pill. Shareholders will be outraged at the prospect of Rothschild being appointed to help the board defend the indefensible at shareholders’ expense. The company already has two corporate brokers.
“Rothschild’s role as adviser to Sigma on their sale to Pinebridge a few years ago suggests there may be conflicts of interest here and raises further questions as to in whose interests the board is acting here, those of shareholders or the manager’s?”
A spokesperson for PRS, which is valued at £518 million, said: “Rothschild have been known to the board a long time. They are the leading real estate and debt advisers in the City, and the PRS Reit directors have brought them on board to help with advice on maximising returns for all shareholders.”