Activist hedge fund Blackwells Capital has filed a lawsuit against Global Net Lease Inc and Necessity Retail REIT Inc after being prevented from putting forward its own slate of board nominees for the real estate companies, according to a report by Reuters.
Activist hedge fund Blackwells Capital has filed a lawsuit against Global Net Lease Inc and Necessity Retail REIT Inc after being prevented from putting forward its own slate of board nominees for the real estate companies, according to a report by Reuters.
Blackwells wants to be able to nominate two directors at each company as it looks to force them to replace AR Global, the external manager of their properties, in a bid to reduce costs and improve performance.
The lawsuit, filed on Monday in Maryland state court, accuses the real estate investment trusts (REITs) of using recently amended bylaws to block Blackwells’ nominees and reserve the board seats for AR Global.
Jason Aintabi, Chief Investment Officer of Blackwells, said in a statement: “The Boards of GNL and RTL are grasping at straws to keep stockholders from having a voice in the direction of these public companies. By relying on a guileful interpretation of recent bylaw amendments, and by fabricating other pretexts to reject our valid nomination notices, these Boards seem to be acting only as marionettes to help AR Global with its sordid bidding.”
Aintabi goes on to claim that under AR Global stewardship, GNL and RTL have seen their share prices decline by negative 61% and negative 57% respectively, and have dramatically underperformed the US Diversified REIT Index returns by 110% and 71% respectively.
Over the same period, Aintabi claims that AR Global has collected $838 million dollars in compensation, fees and general and administrative expenses from the companies.
