Land & Buildings sets sights on Tricon Residential

Activist investor Land & Buildings Investment Management LLC set its crosshairs on Canada-headquartered Tricon Residential Inc., buying nearly 6.2 million shares in the residential landlord during the third quarter, according to the firm's most recent Form 13F filing.

Initiations and position increases

The newly purchased stake in Tricon positioned it as the firm's second-largest holding by market value, at $45.9 million, as of the end of the third quarter.

Shortly after quarter-end, the firm presented Tricon Residential as a "substantially undervalued" stock at the 13D Monitor Active-Passive Investor Summit in New York in October. In the presentation, Land & Buildings claimed poor revenue management, along with excessive overhead costs, dragged down the residential real estate investment trust's earnings and contributed to its share price falling more than 55% since early 2022. The firm said Tricon's share price has been "substantially underperforming" relative to its public single-family rental peers and trading at a steep discount to net asset value (NAV). The firm estimated a potential 65% upside to NAV for the stock.

The firm also bought back into Equinix Inc. during the third quarter after selling off its stake the quarter prior. As of Sept. 30, Land & Buildings owned 48,225 shares in the datacenter REIT, valued at $35 million.

Land & Buildings also purchased $15 million of shares in hotel REIT Ryman Hospitality Properties Inc., a stock the firm sold out of in the third quarter of 2022.

The final new addition to the firm's portfolio was healthcare REIT National Health Investors Inc., valued at $11.6 million.

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Looking at Land & Buildings' existing positions, the firm more than quadrupled its stake in communications REIT SBA Communications Corp. during the quarter, bringing it to the firm's eighth-largest holding by market value, at $28.7 million.

Land & Buildings also upped its share count in industrial REIT Prologis Inc. by 74.7% during the quarter, along with a 60.9% share-count increase in theme park operator Six Flags Entertainment Corp.

On Nov. 2, Six Flags announced its plan to merge with Cedar Fair LP. The same day, Land & Buildings released a public statement opposing the proposed merger, claiming it did not maximize value for shareholders. The investor instead believes that the best path forward for Six Flags is to monetize its real estate, which alone can potentially be worth nearly $30 per share.

Exits and position decreases

Land & Buildings sold its stake in advertising REIT Lamar Advertising Co. during the quarter, a roughly $31.5 million position purchased in the previous quarter.

The firm also exited its stake in self-storage REIT Public Storage, valued at $26.9 million the quarter prior. Its other exits during the quarter included its roughly $9.4 million stake in Independence Realty Trust Inc. and its $9.1 million stake in hotel REIT Host Hotels & Resorts Inc.

Land & Buildings sold 67.2% of its stake in real estate services company CBRE Group Inc. as well as more than half of its share count in single-family rental REIT American Homes 4 Rent.

The firm also sold 38.7% of its shares in industrial REIT Rexford Industrial Realty Inc. along with 27.1% of its stake in casino REIT VICI Properties Inc.

Largest holdings

Multifamily REIT Aimco remained the firm's largest holding by market value at $49.3 million as of Sept. 30.

Apartment Income REIT Corp. fell one spot to the firm's third-largest holding at $40.8 million. The new purchase into Tricon Residential was the second largest.

Healthcare REIT Ventas Inc. marked the firm's fourth-largest holding at $38.6 million. On Sept. 11, Land & Buildings issued a public letter to Ventas shareholders pushing for meaningful change to the REIT's board. In the letter, Land & Buildings claimed Ventas continued to underperform relative to its peer Welltower Inc., with the valuation gap between the two widening year to date.

Overall, Land & Buildings held the highest exposure to residential real estate companies at $175.8 million in aggregate. Holdings in healthcare REITs followed at $50.3 million, then industrial REITs at $46.6 million.