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Manji, Sandpiper jump into First Capital REIT controversy

Samir Manji, founder and owner of Sandpiper Group, and CRO of Artis REIT. (Courtesy Sandpiper Group)
Samir Manji, founder and owner of Sandpiper Group, and CEO of Artis REIT. (Courtesy Sandpiper Group)

UPDATED: Samir Manji is no stranger to corporate shakeups and the latest target for the founder and owner of Sandpiper Group is embattled First Capital REIT (FCR-UN-T), 

Manji, also the CEO of Artis REIT, has requisitioned a special meeting of FCR shareholders (which will be held on Tuesday, May 16 in conjunction with its annual meeting), nominated four “highly qualified nominees” to the FCR board of trustees and published what he calls a strategy to maximize value for unitholders.

In a release Monday morning, Manji throws his support behind FCE founder and former board chair Dori Segal, who with investor Ewing Morris and Co. has publicly raised concerns about the REIT's management in recent months.

Investor Ewing Morris and Co. has also publicly supported Segal.

“FCR has a tremendous history, and it was the extraordinary long-term vision during the REIT’s infancy that enabled FCR to become the highest-quality, necessity-based retail portfolio in Canada,” Manji states in the release.

“But over the past several years, the incumbent board and management have lost unitholder value and today they are pursuing strategies that will dismantle FCR’s irreplaceable portfolio – a portfolio that had been strategically curated over the past two decades. 

“We cannot allow these actions to continue any further.” 

In a brief release on Tuesday morning, FCR management acknowledged receipt of the requisition. Without commenting on the allegations of its dissatisfied unitholders, FCR management stated: "The Board is reviewing and considering the requisition with its professional advisors and will respond appropriately in due course."

FCR has brought in Kingsdale Advisors to act as its "strategic shareholder advisor". Gagnier Communications is acting as communications advisor; Stikeman Elliott LLP is acting as legal counsel to the board; and RBC Capital Markets is acting as financial advisor. 

Calls for special meeting by March 1

The Manji/Sandpiper release demands the special meeting take place no later than March 1, 2023. In conjunction with the release, an extensive alternate plan for FCR is published at

Manji also references Segal’s campaign in his comments.

“We thank the FCR unitholders who, over the past couple of months, have publicly shared their feedback on FCR,” he states. "We echo many of their thoughts and sentiments, but most importantly, we agree with FCR founder Dori Segal and unitholder Ewing Morris that substantial change is required at the REIT.”

Manji has led several campaigns to change the corporate direction or management at entities in which his firm is invested.

The most public was in 2020 with Artis, where he led a highly public ouster of its previous senior management in the wake of allegations of underperformance and other concerns.

“We did not become investors of FCR seeking a proxy fight, but without immediate substantial change at the REIT, the current record of underperformance at FCR will continue,” he states in Monday’s release.

“As one of the largest unitholders of FCR, we believe our trustee nominees are fully aligned with all of the REIT’s owners and are committed to exploring all options available to maximize value for all unitholders.” 

Manji’s Sandpiper Group, in conjunction with Artis REIT, owns about nine per cent of the outstanding units of FCR. Sandpiper began acquiring FCR shares prior to the onset of the pandemic.

Segal, Ewing Morris and FCR

Segal founded First Capital in 1997, led it through its transition to a public company and left the board in 2021.

Segal’s family owns about 1.5 per cent of First Capital REIT’s outstanding shares, making them one of its largest individual shareholders.

In his own most recent salvo, Segal called for the immediate resignations or removals of CEO Adam Paul and board chair Bernie McDonell.

Manji calls for the ousters of McDonell,  as well as trustees Andrea Stephen, Annalisa King and Leonard Abramsky.

The four candidates proposed for the FCR board are Manji; K. Adams and Associates Ltd., founder and president Kerry Adams; lawyer and Definity Financial director Elizabeth DelBianco, who has expertise in M&A activity, communications strategy and branding; and Blake, Cassels & Graydon LLP partner Jacqueline Moss who has an extensive background in human resources, legal, strategy and corporate development functions.

Among other concerns, Segal cited what he considers the REIT’s performance during the past five years – saying it is the worst-performing Canadian retail REIT during that period at -13 per cent average total return. 

He’s also critical of a decision to divest FCR’s interest in the residential portion of the three-tower King High Line property in Toronto.

Segal claims the stake in the “generational core asset” at 1100 King St. W., in Toronto is being liquidated at below replacement cost for $149 million.

Sandpiper's five-point plan for FCR

Sandpiper offers a five-point counter plan for the REIT.

  • Preserve super-urban status: Pursue only acquisitions and dispositions that are consistent with the super-urban strategy.
  • Performance optimization: Align management compensation to key performance indicators and thresholds consistent with unitholder value maximization.
  • Purposeful dispositions: Significantly reduce planned dispositions from FCR’s current $1 billion target to a more conservative $400 million, to be completed by the end of 2023. Net proceeds will primarily be allocated toward the normal course issuer bid program. Such dispositions would only include assets that have a low growth profile and are not consistent with the super-urban strategy.
  • Prudent capital allocation: Focus on returning capital to unitholders and maintaining current debt levels in the near-term.
  • Potential for strategic review: At an “appropriate time" the strategy could call for a strategic review to ensure all avenues are pursued to maximize unitholder value. 

First Capital REIT’s management has vigorously defended itself against the allegations, and in its own media release on Oct. 11 claimed Segal and Ewing Morris “cannot be trusted” and are advancing “a self-serving, short-term agenda” in order to place two of their own candidates on the firm’s board of trustees. 

First Capital has yet to make a public response about the initiative by Manji, Sandpiper and Artis.

The trust holds interests in a Canadian portfolio of 145 properties totalling 22.2 million square feet of GLA and valued at $9.8 billion as of Sept. 30, 2022.

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