REITs: Activist Target #1?

One of the sectors targeted by activist hedge fund managers seeking opportunities among the casualties of the subprime mortgage mess has been Real estate companies.

Presidential Realty Corp. is just one such target. The activist Libby Frischer Family Partnership reported Monday owning a 7.2% stake in the White Plains, NY Real Estate Investment Trust. The Reit owns shopping malls and real estate directly and through joint ventures. The activist fund’s Charles Frischer says he may take activist actions such as talking to the board, management or shareholders about the company’s governance and strategy for the future. According to a Securities and Exchange Commission filing, Frischer says he may step up his activism by nominating director candidates to the REIT’s board.

“Depending on various factors including, without limitation, the Issuer's financial position, future actions taken by the Issuer's board of directors, price levels of the shares, other available investment opportunities, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, seeking representation on the Issuer’s board of directors, changes in management of the Issuer and potential strategic transactions by the Issuer,” Frischer wrote in an SEC filing.

Another recent REIT activist campaign includes the effort launched Jan. 30 at Educational Realty Trust Inc., a student housing REIT, by insurgent investors Roca Real Estate Securities Fund LP and Greenstreet Real Estate Holdings LP. In its Jan. 28 SEC filing, Roca called for the company to examine possible changes in its capital structure, a sale or merger, and other strategic alternatives.-- Ron Orol