Senator Investment Group Takes a Massive Stake in Trade Street Residential Inc (TSRE)

Senator Investment Group, a fund managed by Douglas Silverman and Alexander Klabin, has initiated a position in Trade Street Residential Inc (NASDAQ:TSRE). According to a filing with the Securities and Exchange Commission, Senator Investment Group now holds 9.32 million shares of Trade Street, which are equal to 25.6% of the common stock.

The position held by Senator is activist by nature, so we might expect some actions from the investor. As a first step, according to an agreement between the Senator Investment Group and Trade Street Residential Inc (NASDAQ:TSRE), the shareholder is allowed to nominate two representatives to be elected to the company board. The fund had nominated Michael Simanovsky, who a couple of days ago joined the board.

The fund purchased the shares under a private placement worth $50 million, under the terms of which, Senator agreed to purchase the securities under the price of $6.33 apiece, and also to acquire all shares that had not been bought in another rights offering. According to a press release, the offering involved the recapitalisation of the company by $150 million, and involved offering 15.80 million common shares granted to the existing stockholders. Also, the CEO and President of Trade Street, Michael Baumann and David Levin, the Vice Chairman agreed to acquire another $1.8 million worth of common stock in the aggregate.

Trade Street Residential Inc (NASDAQ:TSRE) is an owner and operator of apartment properties in the U.S. The company has recently completed the purchase of two new communities with over 600 unites, with a price of $81.0 million, expanding its primary markets in the Southeast of the country, according to a statement.

The stock of the company has been gaining ground and since January 2013, jumped by a whooping 7,000%, although it currently trades at around $8.19, which is way below its 52-week high of $20 per share.

J. Alan Reid, Jr.’s Forward Management is another shareholder of Trade Street Residential Inc (NASDAQ:TSRE), which at the end of September held around 1.14 million shares. Some other hedge funds from our database hold less significant stakes in the company.

Disclosure: none

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