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Minority investors seek to pause Sachem and IRG reverse merger

The investors, involved in a private arbitration, say the merger would move about $3B of industrial assets into a new public entity before an April or May 2027 arbitration trial, potentially gutting any damages award.

Reported · Written up by our desk · REITs

Bisnow reports that 17 longtime minority investors are asking a Los Angeles court to pause a planned reverse merger between mortgage REIT Sachem Capital Corp. and private landlord Industrial Realty Group, arguing the deal would shift key assets before they can recover damages in an ongoing dispute. The investors say they have been trying for years to redeem their stakes in IRG Master Holdings, and that the merger would move nearly $3B in industrial real estate into a new publicly traded entity. They argue those assets would then be out of reach in the private arbitration where they are seeking millions in damages.

According to Bisnow, the companies have said the merger is scheduled to close by the end of 2026, while the arbitration trial is not set until April or May 2027. The investors contend that completing the merger first would make any future award substantially smaller because IRG’s most valuable assets would already have been transferred.

Bisnow also reports that the investors are seeking damages in excess of $350M, along with the establishment of a constructive trust over their funds, profits, and proceeds under IRGMH control. They argue, citing the potential impact on their ability to collect, that the transaction would render any arbitration award virtually meaningless if it proceeds on the current timeline.

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