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Real estate industry

Activist Hedge Fund and Blackstone Stalk InterRent Amidst Surprising Silence from Executives

Strategic Insights

— 2 min read

InterRent Real Estate Investment Trust's executives have declined to comment on activist Anson Funds' push for a sale, despite the REIT's $1.6-billion apartment portfolio being attracting significant attention from larger rivals and Anson. The Ottawa-based REIT has reported financial results, with numbers slightly better than analysts' expectations, but its executives' silence has sparked speculation and fueled the debate on the REIT's potential sale. Analysts have suggested that the market may have been anticipating news bigger than just a simple earnings update, given the late reporting date and recent price action.

Key Takeaways:

  • InterRent's executives have consistently declined to comment on activist Anson Funds' push for a sale, despite the REIT's significant interest from larger rivals and Anson.
  • Blackstone, a major investor in apartments, has increased its holding in InterRent by 80,000 units to 8.8 million units, and now owns a 6-per-cent stake worth roughly $100-million.
  • InterRent's board has turned down takeover proposals from a number of suitors, including Blackstone, in recent months, according to three sources familiar with the REIT.
  • InterRent's unit price closed at $11.64 on the Toronto Stock Exchange, a 15.7 per cent increase so far this year, partly due to takeover speculation.
  • InterRent spent $49.5-million buying back its own units, "to address the disconnect between the intrinsic value of its units and their trading price," the REIT said in a press release.
  • The REIT increased the rent it charged tenants by 5 per cent, year-over-year, and InterRent's 96.9-per-cent occupancy rate was up slightly compared with the same period last year.
  • Potential InterRent suitors include Blackstone and Canadian Apartment Properties Real Estate Investment Trust, the country's largest multifamily property REIT, with a $6.6-billion market capitalization.
  • At least two of the country's "Maple Eight" large pension funds have also looked at InterRent, the sources said.
  • Anson, a $3-billion fund manager with a track record for successful activist campaigns at REITs, is pushing for change at InterRent at a time when private equity funds are considering acquiring publicly traded residential property companies.

Statistics:

  • InterRent owns 12,000 apartment units in 18 cities in British Columbia, Ontario, and Quebec.
  • Anson owns a 9-per-cent stake in InterRent.
  • Blackstone has increased its holding in InterRent by 80,000 units to 8.8 million units.
  • InterRent spent $49.5-million buying back its own units.
  • The REIT increased the rent it charged tenants by 5 per cent, year-over-year.
  • InterRent's 96.9-per-cent occupancy rate was up slightly compared with the same period last year.
  • InterRent's unit price closed at $11.64 on the Toronto Stock Exchange, a 15.7 per cent increase so far this year.
  • Blackstone owns approximately $18-billion of real estate in Canada.
  • Anson has a track record for successful activist campaigns at REITs.

Sources:

  • RBC Capital Markets analyst Jimmy Shan
  • Bank of Nova Scotia analyst Mario Saric
  • InterRent's CEO Brad Cutsey
  • Anson Funds
  • Blackstone
  • The Globe and Mail
  • Colliers Canada's head of research, Adam Jacobs

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