- Orange Capital's highly qualified trustee nominees are committed to
bringing credibility and sound governance practices to Partners REIT
for the benefit of all unitholders
- The Partners REIT Board continues to mislead unitholders by issuing
incomplete press releases
- Orange Capital has extended the expiry date of its previously announced
$5.00 Premium Tender until Tuesday, June 24, 2014 and refers
unitholders to its press release dated June 9, 2014 for procedural
clarifications related to the Premium Tender
- Orange Capital's previously announced $5.00 Premium Tender continues to be open for acceptance by unitholders
TORONTO, June 10, 2014 /CNW/ - Orange Capital, LLC ("Orange Capital") announces that it has provided notice to the Board of Trustees (the "Board") of Partners Real Estate Investment Trust (TSX: PAR.UN) ("Partners REIT" or the "REIT") of its nomination of five highly qualified individuals to be considered for election to the Board (the "Nominees") at the upcoming annual and special meeting of unitholders of the REIT to be held on July 15, 2014 (the "Meeting"), pursuant to the terms of the REIT's Declaration of Trust.
Orange Capital will today be filing on SEDAR and disseminating to unitholders its information circular (the "Circular") providing detailed information about Orange Capital's Nominees and Orange Capital's unitholder-focused agenda for change at Partners REIT. Orange Capital will be soliciting proxies from unitholders in support of its Nominees pursuant to the Circular.
Orange Capital's Nominees are committed to bringing stability, independence and sound governance to the REIT for the benefit of all unitholders. Each Nominee brings the experience necessary to effect the immediate change required at the REIT. The Nominees have also pledged to take all measures necessary to hold parties accountable for the recent value-destroying actions at Partners REIT.
ORANGE CAPITAL'S HIGHLY EXPERIENCED NOMINEES
Edward Boomer - Mr. Boomer served as Chief Investment Officer of Partners REIT from March 2013 to November 2013 and has extensive knowledge of the REIT's property portfolio. Mr. Boomer has over 20 years of experience in the real estate industry previously holding leadership positions at Kimco Realty Corporation and GE Capital Real Estate.
Matthew Eby - Mr. Eby is presently Co-Founder and Managing Partner of Tengram Capital Partners, a consumer and retail focused private equity firm in New York. Prior to founding Tengram, Mr. Eby was the Chief Investment Officer of the private investment office of Barry Sternlicht, founder of Starwood Capital Group, where he led the $930 million Starwood Property Trust, Inc. (NYSE: STWD) IPO (one of the largest REIT IPOs in history).
Riyaz Lalani - Mr. Lalani is the founder of Bayfield Strategy, Inc., a communications and strategy firm focused on the financial and corporate communications industries. Mr. Lalani has extensive experience working with public companies, shareholders and the media. Before founding Bayfield, Mr. Lalani was Chief Operating Officer of Canada's largest proxy firm and worked with an international asset manager for 10 years.
Daniel Lewis - Mr. Lewis is co-founder and Managing Partner of Orange Capital. Mr. Lewis has 20 years of investment experience and, prior to Orange Capital, was a director in Citigroup's Global Special Situations Group. Mr. Lewis is currently the lead independent trustee at InnVest Real Estate Investment Trust ("InnVest REIT") (TSX: INN.UN).
Rick Turner - Mr. Turner is currently President and Chief Executive Officer of TitanStar Investment Group Inc., a private investment company, Chair of the Trustees of Pure Industrial Real Estate Investment Trust (TSX: AAR.UN), a trustee of Healthlease Properties Real Estate Investment Trust (TSX: HLP.UN), a member of the board of directors of WesternOne Inc. (TSX: WEQ.UN), a director of Vancouver Fraser Port Authority and former director of the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games.
ORANGE CAPITAL'S PLAN TO MAXIMIZE VALUE FOR PARTNERS REIT UNITHOLDERS
| (1) | Hire a new CEO: Hire a best-in-class CEO to bring much-needed leadership to the REIT. Partners REIT's executive suite has been a revolving door with six CEOs since 2009. |
| (2) | Reduce inappropriate unitholder influence: Reduce the influence of former CEO Ron McCowan and McCowan & Associates Ltd.'s ("McCowan") 16.91% interest in the REIT through new strategic partnerships. To restore credibility in the Canadian marketplace, it is critical to bring balance to the shareholder base and independently review the actions of McCowan since November 2013, including the actions that led to the REIT's acquisition of the three Ontario properties on April 23, 2014 (the "Ontario Property Acquisition"). |
| (3) | Deleverage the balance sheet immediately: The REIT's current financial leverage is approximately 75% debt to enterprise value. The new Board, working with its advisors, will prioritize asset sales to improve the REIT's stressed capital structure. |
| (4) | Reduce drain on cash resources: Repay the REIT's restrictive 10% second mortgage financing with Firm Capital. |
| (5) | Attract institutional capital: Leverage new, credible Board leadership and relationships to attract lower-cost institutional capital. With stable leadership, an optimized portfolio, improved finances and internal controls, and a compliance program to restore credibility with regulators, the REIT should be well positioned to raise attractively priced institutional capital. |
| (6) | Embark on a credible strategic review process: With an improved financial and governance profile, the REIT will be able to credibly evaluate all available alternatives, including: a sale of the REIT, attractively priced asset or portfolio sales, and real estate or other asset purchases. |
WHY SUPPORT ORANGE CAPITAL'S NOMINEES AT THE UPCOMING AGM
| (1) | While Orange Capital's Nominees will act as independent fiduciaries, they are fully supportive of Orange Capital's plan to maximize value for all Partners REIT unitholders; |
| (2) | Orange Capital's Nominees are highly experienced individuals with considerable expertise in real estate, asset management, corporate finance and corporate governance; |
| (3) | Orange Capital's Nominees are determined to hold all parties that approved the Ontario Property Acquisition accountable for their actions in order to reduce the significant costs required to unwind the transaction; |
| (4) | If the Orange Capital Nominees are elected at the Meeting, Orange Capital will not have "control" of the REIT as a majority of the proposed trustees will be independent. Orange Capital will be strongly aligned with other unitholders through its equity ownership acquired upon the successful completion of its previously announced premium tender offer (the "Premium Tender"); and |
| (5) | Orange Capital has a long track record of seeking improved governance and creating unitholder value in the REIT sector. Daniel Lewis, Managing Partner of Orange Capital, is currently the lead independent trustee of InnVest REIT. Orange Capital's campaign at InnVest REIT is widely regarded as a leading example of a successful unitholder-focused campaign for change. |
AN ENTRENCHED BOARD WITH A TRACK RECORD OF MISLEADING UNITHOLDERS
In Orange Capital's May 28, 2014 press release, Orange Capital detailed the track record of value destruction at Partners REIT presided over by the current Board. Now the existing trustees are entrenching themselves with an attempt to take away unitholders' right to choose a new Board. On June 5, 2014, Partners REIT issued a reckless and irresponsible press release stating an inaccurate position that Orange Capital is not entitled to nominate trustees for election, on behalf of all unitholders, at the upcoming Meeting. This represents the latest attempt by the current trustees to disenfranchise unitholders. Orange Capital intends to take all necessary legal or other action to ensure that its clear right to nominate trustees for election at the Meeting for the benefit of all unitholders is not impeded by Partners REIT.
On June 6, 2014, Partners REIT issued yet another confusing press release announcing that it had reached an agreement with Holyrood Holdings Ltd. ("Holyrood") to "rescind" the Ontario Property Acquisition. The press release provided few details on the unwind other than it remains subject to a number of conditions being satisfied including "consent from Holyrood's lender to the release of its security with respect to the units in Partners LP and the REIT that were issued to Holyrood". Orange Capital questions whether the REIT will actually be able to effect the unwind on behalf of all unitholders.
The current Board's continued disrespect for unitholders, regulators and other stakeholders does not surprise Orange Capital.
It is time for a change at Partners REIT - together, unitholders can replace the existing trustees with a new team to restore credibility and focus on the future of the REIT.
ORANGE CAPITAL'S PREMIUM TENDER HAS BEEN EXTENDED AND REMAINS OPEN FOR ACCEPTANCE
Orange Capital's Premium Tender remains open for acceptance by Partners REIT unitholders and has been extended until June 24, 2014 to allow unitholders the time required to review and consider the disclosure in the Circular. Orange Capital refers unitholders to its press release dated June 9, 2014 for important procedural clarifications related to the Premium Tender, and also the Premium Tender offer dated May 28, 2014 that has been mailed to unitholders and is filed on SEDAR at www.sedar.com. Orange Capital reminds unitholders of the following reasons to deposit their units to the Premium Tender:
| (1) | Unitholders will receive immediate liquidity at a significant 15% premium to the volume weighted average trading price for the 30 trading days preceding the Premium Tender announcement at a time when Partners REIT faces significant financial and legal challenges. |
| (2) | The actions of the current Board over the last six months has destroyed considerable equity value and there is a very real risk that the units will continue to trade well below the offer price of the Premium Tender if the current Board remains in place. |
| (3) | It is highly likely that the REIT's distribution will be reduced in the very near future. The REIT has an unsustainable payout ratio, excessive financial leverage (at approximately 75% debt to enterprise value), and limited access to low cost debt and equity capital. |
| (4) | Orange Capital believes that the current strategic review process will not result in an en-bloc sale of the REIT at a premium or any other attractive alternative for unitholders. Partners REIT ran a similar strategic review process just six months ago, led by the same financial advisor, without a successful transaction. |
| (5) | It is still highly uncertain that the REIT will be able to unwind the value-destroying Ontario Property Acquisition. Notwithstanding the REIT's announcement regarding a "conditional" agreement with Holyrood on June 6, 2014, the unwind remains highly conditional, highly uncertain and likely very costly to unitholders. |
| (6) | The TSX recently advised the current Board that it would not be approving any further transactions of the REIT until the Compliance and Disclosure department of the TSX has completed a review of the REIT and is satisfied that the business of Partners REIT can be conducted in compliance with the rules and regulations of the TSX, as well as the best interests of the REIT's security holders and the investing public. |
Most importantly, by supporting Orange Capital's Premium Tender, fellow disenfranchised unitholders will help facilitate, and will have an opportunity to benefit from, an operational and financial turnaround at the REIT in partnership with Orange Capital. Orange Capital encourages unitholders who want to see change at Partners REIT to deposit some portion of their unitholdings to the Premium Tender. Unitholders who wish to add to their unitholdings after supporting Orange Capital's Premium Tender may purchase additional units in the open market.
Kingsdale Shareholder Services ("Kingsdale"), the depositary for the Premium Tender and Orange Capital's information agent, can provide unitholders with assistance in depositing units and can answer any other questions unitholders may have. Please contact Kingsdale at 1-855-682-9437 (North American Toll Free Number) or at 1-416-867-2272 (collect outside North America).
PROXY VOTING INSTRUCTIONS
Regardless of how many Partners REIT units you own, it is important that you vote your BLUE proxy. We encourage unitholders to vote the control number found on your BLUE proxy, by no later than 12:00 p.m. (noon) (Toronto time) on July 10, 2014.
For more information or assistance in voting your BLUE proxy, please contact Kingsdale at 1-855-682-9437 (North American Toll Free Number) or at 1-416-867-2272 (collect outside North America), or by email at contactus@kingsdaleshareholder.com.
ABOUT ORANGE CAPITAL
Orange Capital is a New York based investment firm. The firm is a value-oriented investor in event-driven securities. Orange Capital was co-founded in 2005 by Daniel Lewis and Russell Hoffman. Prior to founding the firm, Orange Capital's portfolio manager, Daniel Lewis, was a director with Citigroup's Global Special Situations Group.
INFORMATION CONCERNING THE NOMINEES
The table below sets out, in respect of each Nominee, his or her name, province or state and country of residence, his or her principal occupation, business or employment within the five preceding years, and the number of Partners REIT units beneficially owned, or controlled or directed, directly or indirectly, by such Nominee.
| Name, Province or State and Country of Residence1 | Present Principal Occupation, Business or Employment and Principal Occupation, Business or Employment During the Preceding Five Years | Number of Units Beneficially Owned or Controlled or Directed (Directly or Indirectly) |
|
Edward Boomer Ontario, Canada |
Corporate Director at Innvest Real Estate Investment Trust (since June
2013) and Timbercreek Senior Mortgage Investment Corporation (since
September 2013) (real estate investment) Former President of Partners Real Estate Investment Trust (August 2013 - November 2013) (real estate investment) Former Chief Investment Officer of Partners Real Estate Investment Trust (March 2013 - November 2013) (real estate investment) Former President of Reference Realty Inc. (January 2010 - March 2013) (real estate investment) Former Managing Director of Kimco Realty Corporation (September 2003 - December 2009) (real estate investment) | Nil |
|
Matthew Eby New York, United States |
Co-Founder and Managing Partner of Tengram Capital Partners, LLC (since
June 2010) (private equity, investment management) Former Chief Investment Officer of J.A.W.S. Estates Capital, LLC (October 2003 - June 2010) (private equity, investment management) | Nil |
|
Riyaz Lalani Ontario, Canada |
Founder and Chief Executive Officer of Bayfield Strategy, Inc. (since
February 2013) (public relations) Former Chief Operating Officer at Kingsdale Shareholder Services, Inc. (February 2010 - February 2013) (corporate advisory services) Former Research Analyst at Acqua Capital Management Company (September 2003 - February 2010) (investment management) | Nil |
|
Daniel Lewis New York, United States | Co-founder and Managing Partner of Orange Capital, LLC (since 2005) (investment fund) | 1,0002 |
|
Richard Turner British Columbia, Canada | President, Chief Executive Officer and Director of TitanStar Properties Inc. (since 2008) (real estate investment) | Nil |
Notes
- Information set out in the table above has been provided by each Nominee of Orange Capital.
- By virtue of his role as Managing Partner of Orange Capital, Mr. Lewis has control or direction over all of the units beneficially owned by Orange Capital, which are held by Orange Capital Master I, Ltd., which is an investment fund managed by Orange Capital.
Except as provided below, to the knowledge of Orange Capital, no Nominee is, at the date hereof, or has been, within 10 years before the date hereof:
| a) | a director, chief executive officer or chief financial officer of any company that (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days (each, an "order"), in each case that was issued while the Nominee was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after the Nominee ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; |
| b) | a director or executive officer of any company that, while such Nominee was acting in that capacity, or within a year of such Nominee ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or |
| c) | someone who became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such Nominee. |
Matthew Eby was a director of Ellen Tracy, until it was acquired in March 2013. While a director of Ellen Tracy, in October 2009, the U.S. Bankruptcy Court for the Southern District of New York granted a petition for bankruptcy against a subsidiary of Ellen Tracy, Ellen Tracy LLC, under Chapter 7 of the U.S. Bankruptcy Code.
To the knowledge of Orange Capital, no Nominee has, within 10 years before hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such proposed director.
To the knowledge of Orange Capital, no Nominee has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation, or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed trustee.
To the knowledge of Orange Capital, no Nominee is to be elected under any arrangement or understanding between such Nominee and any other person or company.
ADDITIONAL INFORMATION
The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Although Orange Capital has provided notice to the Board that it intends to nominate trustees to the Board of Partners REIT at the Meeting, Orange Capital will be filing and disseminating to unitholders its Circular containing required disclosure regarding the Nominees in compliance with applicable securities laws. Any proxies solicited by Orange Capital will be solicited pursuant to a Circular sent to unitholders of Partners REIT.
Notwithstanding the foregoing, Orange Capital is voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 - Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast solicitations.
This press release and any solicitation made by Orange Capital in advance of the Meeting is, or will be, as applicable, made by Orange Capital, on behalf of Orange Capital Master I, Ltd., and not by or on behalf of the management of Partners REIT. All costs incurred for any solicitation will be borne by Orange Capital, provided that, subject to applicable law, Orange Capital may seek reimbursement from Partners REIT of Orange Capital's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with any successful reconstitution of the Board of Partners REIT.
Solicitations may be made by or on behalf of Orange Capital, by mail, telephone, fax, email or other electronic means, and in person by directors, officers and employees of the Orange Capital or its proxy advisor or by the Nominees. Orange Capital has also retained Kingsdale as its proxy advisors. Kingsdale's responsibilities will principally include providing strategic advice, liaising with proxy advisory firms, developing and implementing unitholder communication and engagement strategies, and advising Orange Capital with respect to the Meeting and proxy protocol. Kingsdale will receive a proxy solicitation fee of $100,000 for its services plus disbursements.
Any proxies solicited by Orange Capital in connection with the Meeting may be revoked by instrument in writing by the unitholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law.
None of Orange Capital and its directors and officers, or, to the knowledge of Orange Capital, any associates or affiliates of the foregoing, or to the knowledge of Orange Capital, any of the Nominees or their respective associates or affiliates, has any material interest, direct or indirect, in any transaction since the commencement of Partners REIT's most recently completed financial year, or in any proposed transaction which has materially affected or will materially affect Partners REIT or any of its subsidiaries. None of Orange Capital and its directors and officers, or, to the knowledge of Orange Capital, any associates or affiliates of the foregoing, or to the knowledge of Orange Capital, any of the Nominees or their respective associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, other than the election of trustees.
Partners REIT's principal business office is 158 Dunlop Street East, Barrie, Ontario, L4M 1B1.
A copy of this press release may be obtained on Partners REIT's SEDAR profile at www.sedar.com.
Partners REIT unitholders with questions on how to vote their BLUE proxy or those who may wish to deposit units to the Premium Tender, should contact Kingsdale at, 1-855-682-9437 (North American Toll Free Number) or at 1-416-867-2272 (collect outside North America), or by email at contactus@kingsdaleshareholder.com.
SOURCE Orange Capital, LLC
