Land & Buildings Takes Aim at Aimco to Place Two Directors on the Board

For at least the fourth time this year, Land & Buildings has issued a letter or presentation to convince shareholders to back a change in a publicly held company—in this case, Apartment Investment and Management Company, or Aimco.

The former “announced that it has issued a presentation outlining why it believes change is needed in [Aimco’s] boardroom,” a Land & Buildings press release said.

Land & Buildings claims that “Aimco has a troubling track record of apparent disregard for shareholders,” it has “instituted and maintained archaic corporate governance practices,” “has underperformed for years and has been undervalued,” that it “prefers to hide from shareholders,” and that there is “an opportunity to unlock substantial value at Aimco, to the tune of an approximate 60% upside to NAV.”

To achieve all this, Land & Buildings proposes two new members of Aimco’s board of directors. One is Michelle Applebaum, who the company claims “has been a shareholder advocate for more than 30 years and is well-positioned to help Aimco improve its corporate governance, make smarter investment decisions, and regain credibility among the investment community.”

The other is Jim Sullivan, who “has been a highly respected REIT analyst for more than 25 years and can help improve Aimco’s capital allocation, overall strategy, and investor outreach.”

“It is clear to us that the incumbent Board utterly lacks credibility and cannot be relied upon to represent shareholders’ best interests,” the release quoted Land & Buildings Founder and Chief Investment Officer, Jonathan Litt.

The presentation looks back to what it seems to claim was a pivotal point when Aimco “chose to ignore the will of nearly half of its shareholders and spun out 90% of its assets in a taxable transaction into a new entity in December 2020 (the ‘Spin’), without holding a special meeting to seek shareholder approval of the Spin.” Though the statement seems to logically imply that if almost half of shareholders did not want this, then more than half did, or weren’t concerned.

This is at least the fourth public attempt that Land & Buildings has made in 2022 to gain in investment goal with regards to a REIT. In February, the activist investor sought to buy LXP Industrial Trust. March saw its attempt to gain control over Ventas. Then, in April, the firm issued an open letter on “environmental concerns” about American Homes 4 Rent.

Aimco responded with its own press release and investor presentation with the SEC in advance of its annual meeting scheduled for December 16, 2022.

The company claimed that “a new, reconstituted Board of Directors with individuals who have the right skills and expertise to lead the Company forward” and that it had “delivered outstanding total stockholder returns of 45%” since the 2020 spin-off.

“In addition, over the past 13 months the Company has met with stockholders representing more than 80% of Aimco’s outstanding shares of common stock,” it stated. “Following these discussions, the Company has implemented several governance enhancements that demonstrate Aimco’s commitment to stockholder engagement and value creation.”

Also, Aimco’s board said that Land & Buildings’ two nominees “would not be additive,” stating that “Applebaum’s expertise pertains to the steel industry” and she has “no relevant real estate or REIT experience.”

As for Sullivan, Aimco acknowledges that while he “has research experience from his role at Green Street Advisors,” that is in the past as Sullivan no longer works for the firm, which Land & Buildings doesn’t appear to have stated in its release or presentation. And Aimco notes that it has worked with Green Street since September 2021 and has a “close, ongoing advisory relationship with the unit within Green Street where Mr. Sullivan previously worked,” so “already benefits from the full depth and breadth of that organization’s expertise.”