STAMFORD, CT—Locally-based Land and Buildings has rejected an overture made by apartment REIT Associated Estates to place Douglas Crocker on the Board of Directors.

"Land and Buildings believes Associated Estates' appointment of Doug Crocker to the Board does not represent a sincere effort at change, but instead demonstrates an effort by management to further entrench themselves," was the hedge fund's response to the offer.

Associated Estates has also retained Citigroup to help it evaluate its options, including, presumably, a sale, but even that move did not pass muster with Land and Building. The hedge fund appeared irked with the REIT's vague language as it had said it would consider a sale if its operations were appropriately valued.

"We believe … engaging Citigroup for a 'business review', falls well short of genuinely evaluating strategic alternatives to maximize value for shareholders," the fund said in its letter. "Associated Estates stated they are 'not opposed' to selling the company for less than its worth. Associated Estates should state what they believe the company is worth. Land and Buildings' previously disclosed net asset value estimate was $29 per share.

The hedge company is making the case that the REIT has been underperforming for more than 20 years. It has also persistently undervalued itself, engaged in poor capital allocation and poor governance, Land and Buildings charged.

"AEC has traded at a nearly 30% average discount to NAV over the trailing 10 years and prior to investor activism beginning in November of 2013, Associated Estates was trading 33% below its IPO price of $222 while the share prices of the proxy peers who IPO'd in 1993/1994 are up on average 254% through the same date."

Last month the fund informed the REIT of its plan to nominate seven independent directors to replace the current Board.  Associated Estates response was to name Crocker and engage Citigroup.

It is unclear what Land and Building's next steps will be, although the tone in the letter was pointed, calling Associated Estates' offers "too little, too late."

This is not the first REIT with which Land and Building has tangled; indeed the REIT industry is taking increasing notice of this tiny fund that is pushing for change at various companies.

In October Founder and Chief Investment Officer Jonathan Litt sent a letter to Pennsylvania Real Estate Investment Trust, urging the REIT to sell off 17 noncore assets in order to increase its share price. PREIT politely declined.

"We appreciate Land & Buildings' ideas and agree that our portfolio quality is misunderstood," the REIT said in a letter released publicly. "We have continued to make progress in executing a transformation through strategic divestitures of non-core assets. However, we disagree with the implementation of a disposition program in a manner which would entail a tremendous amount of execution risk for the company and potentially destroy shareholder value."

That story, like the one with Associated Estates, is still unfolding. Earlier this month, Land and Buildings tried again with PREIT, asking it to use Goldman Sachs, which the REIT had retained, to run a publicly announced auction process to sell the 17 least productive malls in the portfolio.

"Land and Buildings has received (unsolicited) indications of interest from multiple qualified buyers for the entire 17 mall 'liquidation' portfolio since making our views public several weeks ago. …Pricing for these assets appears to be in the low double digit cap rates, consistent with the valuation work we outlined in our presentation."

Land and Buildings has been contacted by multiple qualified buyers interested in acquiring the remaining 16 malls, or the 'Keeper' portfolio, as well as the entire company, it noted.