Blackwells launches proxy fights, wants board seats at GNL, Necessity Retail

Necessity Retail REIT

25/10/2022 13:00

By Svea Herbst-Bayliss
       NEW YORK, Oct 25 (Reuters) - Blackwells Capital has
launched two separate proxy fights for board seats at Global Net
Lease Inc  GNL.N  and Necessity Retail REIT Inc  RTL.O  and
wants the real estate companies to fire their outside manager,
two people familiar with the matter said.
    The investment firm nominated the same two director
candidates at each company and also wants the firms to make
sweeping governance reforms and even consider selling
themselves, the sources said. 
    Blackwells wants both companies to replace AR Global, the
company that owns and operates properties on behalf of others.
To ratchet up the pressure even more, Blackwells plans to
nominate two more directors at GNL and Necessity Retail REIT in
2024, the people said.
    Blackwells founder Jason Aintabi has said the proxy fights
will show how a conflicted group of operators have harmed
shareholders and that the only way forward is to replace the
outside manager, fix corporate governance and adopt proper
commercial practices, according to the people.
    He has blamed the connection with AR Global, the external
manager, for high costs and poor performance at both companies,
the people said.
    Representatives for GNL, Necessity Retail and AR Global did
not immediately respond to emailed requests for comment.
    At GNL, where Blackwells is a top five shareholder, Aintabi
reached out to the board last month but has not had any
meaningful engagement with the company, the people said. At
Necessity Retail REIT Blackwells owns only 100 shares.
    GNL is valued at $1.14 billion while Necessity Retail REIT
is valued at roughly $840 million. Each has seen its share price
tumble roughly 30% since January. 
    Over the last five years, GNL and Necessity Retail REIT have
lost about half of their value, with Necessity Retail's stock
price down 54% and GNL's stock price off 49%.
    By comparison, the benchmark Vanguard Real Estate Index Fund
ETF lost 32% this year but is off only 5% over the last five
years.
    STRATEGIC ALTERNATIVES
    In addition to terminating AR Global, Blackwells wants GNL's
and Necessity Retail REIT's boards to consider strategic
alternatives and introduce sweeping governance changes.
    It wants all board members to stand for election annually.
And Aintabi wants each board to form a strategic review
committee to consider hiring financial advisers to weigh selling
the companies, the people said.
    GNL's board currently has eight directors while Necessity
Retail REIT has five.
    Blackwells is nominating the same directors at each company.
Richard O'Toole, a tax lawyer, is an executive at real estate
firm The Related Companies and James Lozier, who founded Goldman
Sachs Realty Management, has experience as a director at a
publicly traded company.
    At GNL, Blackwells hopes to replace directors James Nelson
and Edward Weil. Nelson is GNL's chief executive while Weil is
CEO of AR Global. At Necessity Retail, Blackwells is also
targeting Weil, who is board chair there, and Stanley Perla.
    If elected at next year's annual meeting, the two new
directors would work to roll back the companies' anti-takeover
measures, the people said.
    Blackwells made headlines this year by pushing for the
ouster of Peloton  PTON.O  co-founder and CEO John Foley but is
better known in the real estate industry for pushing for changes
at Colony Capital and Monmouth Real Estate Investment Corp.
    Blackwells and Colony settled for board seats and Tom
Barrack, a billionaire friend of former President Donald Trump,
stepped down sooner than expected as CEO of the company.
 (Reporting by Svea Herbst-Bayliss; Editing by Muralikumar
Anantharaman)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))