Lakestreet Capital Partners is seeking to oust Palace Capital (PCA) executive chair Steven Owen unless he speeds up the wind-down of the UK property investment company and slashes his “excessive” pay.

The Swiss investment firm, which has a total stake of 22.5% in the £39m company, has requisitioned a general meeting of shareholders to remove Owen, a former chair of Primary Health Properties (PHP), saying it is “deeply troubled” by the value he is extracting from the company at the expense of shareholders. 

Shares in Palace Capital have dropped by a third since mid-2022 when a shareholder revolt forced the company to abandon plans for an ESG-focused strategy, instead adopting for a realisation of assets that has taken more than three years to accomplish. 

Lakestreet, which owns a direct 14.8% stake in Palace Capital with founders Christian Kappelhoff-Wulff and Valentin Pierburg holding a further 7.8%, says Owen has earned around £220,000 a year since becoming chair in December 2021. It says this is far too high given the previous five-strong board was paid a total of £195,000. 

Owen, whose only co-director on the board is PHP chief executive Mark Davies as senior independent non-executive, is on track to receive up to £720,000 in this financial year having “generously reallocated” units of the short-term incentive plan from “good leavers” to himself, Lakestreet said.

It claimed he had extended the company’s financial year from 31 March to 30 September this year to delay disclosure of this windfall and also the annual general meeting, thereby “robbing shareholders of a timely vote” on his position.

Lakestreet contrasted the £9m investment by its co-founders with Owen who holds no shares in Palace Capital.

The firm wants to replace Owen with Kappelhoff-Wulff and Pierburg but stressed it was not seeking to appoint itself as fund manager. It said it would rescind its requisition if Owen: 

• completed the sale of the two remaining properties in Newcastle and Northampton for a fixed fee of £40,000; 
• waived his “outrageous” 12-month notice period;
• reinvested his £720,000 into shares in the company and aligned himself with shareholders;
• reinstated the financial year-end of 31 March;
• held an annual general meeting by June;
• and started a buy-back programme for shares trading at a steep discount to net asset value to speed up the return of capital to shareholders that has so far been made through tender offers.

Kappelhoff-Wulff said: “There is a striking disconnect between the interests of Steven Owen versus the interests of shareholders in Palace Capital,” which he said Lakestreet would reverse.

Palace Capital said it would consider the proposals and respond in due course. Its shares hit a five-year peak of 287p in August 2022. Today they rose 5%, or 9.6p, to 203.6p.