TORONTO - InterRent Real Estate Investment Trust (TSX:IIP.UN) units rose 14 per cent to the highest close in nearly 11 months on Friday on news that a group of unitholders have joined forces to oust the REIT's board of trustees.
InterRent units closed at $2, up 25 cents, on the Toronto Stock Exchange - the highest close for the apartment real-estate trust since late September.
NorthWest Value Partners Inc. announced it and eight other investment groups representing a majority of InterRent ownership had signed consents for the removal of the InterRent trustees.
Northwest said it believes members of the board have been removed and no longer have the rights, privileges and power of a trustee and are directed to resign any other positions they hold on behalf of the trust.
InterRent said it would "formally respond to these latest actions by NorthWest in due course after consultations with legal counsel" and said it planned to complete a contentious sale of equity after it "successfully defends against the various NorthWest actions, all of which it believes to be without merit."
NorthWest had previously sought last month to block InterRent from going ahead with a plan, announced July 28, to issue up to 9.3 million units until unitholders have a chance to vote on the deal.
InterRent said Friday that 41 institutional and individuals had collectively subscribed for all $14 million of additional units being offered.
The REIT also announced separately Friday that its operating revenues grew to $8.8 million in the second quarter, a 4.8 per cent increase over the three months ended June 30, 2008.
Funds from operations fell to $600,000 from $1.4 million a year earlier, as the result of a $901,000 charge incurred in InterRent's strategic review process and one-time re-organization costs.
Distributable income fell to $90,000 or one cent per REIT unit compared to $1 million, or five cents per REIT unit, also because of the costs associated with the strategic review and re-organization.
InterRent has been paying monthly distributions of one cent per unit since the January payout. Prior to that, it paid distributions of 2.17 cents per unit.
"Despite the ongoing challenges of the economy and higher costs associated with the REIT's strategic review process and one-time re-organization costs, InterRent continued to see sustained growth in our operating revenues and net operating income in the second quarter of 2009," said Michael Newman, InterRent's chief executive officer.
"The REIT's continued investment in our properties ensures the proper maintenance of our assets, as well as high quality living standards for tenants."
Northwest, for its part, said it has directed Newman to call a special meeting of unitholders for Sept. 14 to fill the vacancies created by the removal of the board of trustees.
"The majority of InterRent's owners have spoken loudly and clearly. The current board of trustees lost the confidence of those to whom it is accountable, and was removed," said Paul Dalla Lana, president of Northwest.
"This is the clearly-expressed view of the majority of unitholders, who through their actions are rejecting the proposals put forward by InterRent on July 28. We call on InterRent to call a meeting of unitholders as soon as possible to allow unitholders to express their interests in the future of the company."