A dissident group of unitholders led by Sandpiper Group, seeking to oust five board members of Artis REIT and stop its planned spinoff of retail properties into a separate trust, has the support of the REIT’s largest unitholder Jetport Inc.
Jetport is controlled by the estate of Ron Joyce, who co-founded the Tim Horton donuts chain, and owns 13.3 per cent of Artis (AX-UN-T) units. In a letter released by Sandpiper this morning, Jetport and its current CEO Steve Joyce offer support for both Sandpiper’s “action plan” for the trust and its five nominees for the board.
It also expresses “disappointment” at the five-month delay in setting up a special meeting of unitholders to vote on the matter. In its release, Jetport states it “will be alert to any entrenchment actions by current management or the Board during the interim period which we would strenuously oppose.”
The special meeting was scheduled by Artis for Feb. 23, 2021.
Support for Sandpiper plan
“As the largest unitholder of Artis, we agree that the Sandpiper Plan contains those steps which we believe are necessary in order to enhance unitholder value,” the Jetport release states.
“We have confidence that the Sandpiper Nominees, together with the two existing nominees whom we support, are the appropriate individuals who possess the combination of experience and expertise that is required in order to expeditiously implement the Sandpiper Plan.”
Sandpiper wants to oust CEO Armin Martens, chair Edward Warkentin, Bruce Jack, Victor Thielmann and Wayne Townsend from Artis’s current board of trustees. All but Jack, who joined the board three years ago, have been board members since the REIT’s 2004 inception.
The move would replace them with Sandpiper CEO Samir Manji, Heather-Anne Irwin, Mike Shaikh, Aida Tammer and Lis Wigmore.
The other trustees are Lauren Zucker, placed on the board two years ago by Sandpiper, and RFA Capital managing partner Ben Rodney. They have the support of both Sandpiper and Jetport.
Artis responds to latest development
Ian Robertson of Kingsdale Advisors, which has been retained by Artis to handle communications regarding the dispute, emailed this response in reply to a request for comment from RENX: “Artis is reviewing the statements Sandpiper has made to the market and looks forward to clarifying and correcting the numerous errors, misstatements, and mischaracterizations contained therein for its unitholders in due course. ”
Sandpiper has pledged to increase distributions, and cut operating costs, if its nominees gain control of the board.
“We appreciate the support we received today from Jetport and the significant confidence they, as the largest unitholder of Artis, have conveyed in confirming their intention to vote in favour of all five of our nominees and against the proposed retail REIT spin-off,” said Manji in a written statement.
“Based on the significant number of inbound calls and words of encouragement we have received, we anticipate many other unitholders, who share in our concerns, will also support us at the special meeting that Artis’ board of trustees has chosen to delay until February 2021.”
Sandpiper owns about five per cent of Artis’s units.
Artis REIT retail spinoff plan
Manji also called on Artis management to call off its attempt to create a separate Artis Retail REIT, which would contain the trust’s retail assets and leave the office and industrial assets with the original trust.
”Given that the REIT’s proposed retail spin-off will fail in a vote, we call on the board to cancel the proposed special meeting to consider the retail REIT spin-off,” Manji said in the statement.
In a statement earlier this month, Sandpiper staked out its position and took issue with recent decisions of the board of trustees, stating it believes the board has not always acted in the best interests of Artis unitholders.
Specifically, Sandpiper alleged undisclosed business dealings between the trust and companies connected to Martens.
This was refuted by Artis in a statement released a few days later.
“Sandpiper’s recent statements contain a number of mistruths and inaccurate statements about unidentified transactions (specifically with regard to allegations related to Marwest Group). Artis will demonstrate these statements to be false in due course,” the statement says.
Artis is based in Winnipeg and owns and operates a portfolio of 214 properties comprising 23.7 million square feet of GLA in Canada and the United States. Of those properties, 142 are in Canada and 72 in the U.S.
Its retail assets currently comprise 42 properties with about 2.9 million square feet of GLA in Western Canada.
EDITOR’S NOTE: This article was updated to include a comment from Artis representatives Kingsdale Advisors.