Land & Buildings this week sent a letter to Apartment Investment & Management Co. over its spin-off plan.
Land & Buildings is a real estate focused long-short hedge fund that will try to engage with management on a friendly basis when they see deep value. They invest in real estate in the public markets and select corporate engagements. Their positions are often under the threshold, and they are prepared to nominate directors and have received board seats at Brookdale Senior Living, Felcor Lodging Trust, Life Storage, Macerich, Mack-Cali and Taubman Centers.
Terry Considine has been the company's chairman and CEO since its IPO in 1994 and since that time the company has underperformed its Proxy Apartment Peer Average by a negative 914%. Additionally, the company has traded at a substantial discount to its own NAV estimate as well as sell-side estimates of NAV over a trailing five year period, and the company has returned negative 35.21%, negative 25.99% and negative 8.
Land & Buildings believes many shareholders agree with them and is calling for the board to put the spin-off to a shareholder vote, which the company has no obligation to do and likely will not do. In that case, Land & Buildings' recourse is to get the support of a total of 25% of shares to call a special meeting of shareholders to put the transaction to a vote.
If the AIV board executes the spin-off without a shareholder vote or in the face of a negative shareholder vote, and the NAV gap is not closed from the transaction, Land & Buildings will have even more ammunition for its activist campaign and more evidence that its theories are correct and will likely press forward with an activist campaign at the newly formed AIR company.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.
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