Skip to main content
Complete Olympic Games coverage at your fingertips
Your inside track on the Olympic Games
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Complete Olympic Games coverage at your fingertips
Your inside track onthe Olympics Games
$1.99
per week
for 24 weeks
// //

Samir Manji, founder and chief executive officer of Sandpiper Group, is seen in Vancouver, on Dec. 19, 2018.

DARRYL DYCK/Globe and Mail

Sandpiper Group has launched a bid to oust most of the board of Artis Real Estate Investment Trust, partly in response to the commercial landlord’s plan to spin off $779-million of retail assets into a new trust.

Sandpiper, the Vancouver-based activist real estate investment firm, wants to replace five of the seven trustees on Artis’s board, including chief executive Armin Martens, with its own slate. Sandpiper has more than 5 per cent of the trust units in Winnipeg-based Artis, having initially bought a stake in 2017, and has requisitioned a special vote for its proxy fight.

“There’s just been, in our view, over these last few years that we’ve been involved, examples that have been of concern to us from a governance and stewardship standpoint that we don’t believe can continue any longer, and that unit holders shouldn’t have to put up with any longer,” Sandpiper CEO Samir Manji said in an interview. He is one of the firm’s five nominees for the board of Artis, which has properties in Canada and the United States.

Story continues below advertisement

Artis said it received Sandpiper’s requisition and plans to comment on specifics in the coming days after reviewing the situation with its advisers. “In the meantime, there is no need for unitholders of the REIT to take any action,” it said.

Last month, Artis said it would spin off Western Canadian retail properties in an effort to gain a higher worth in a stock market it says undervalues the assets. Artis said the move would simplify its business and allow it to concentrate on industrial and office holdings.

The trust units have declined by more than a third this year, suffering a big drop after the COVID-19 outbreak. But they climbed nearly 5 per cent to close at $8.33 on the Toronto Stock Exchange Thursday, after Sandpiper’s announcement. That gives Artis a market capitalization of about $1.1-billion.

“We don’t know … what value we’re getting for our retail in our portfolio. Some people say little or no value. It might be negative value,” Mr. Martens told analysts after announcing the spinoff. “It’s better for our retail portfolio to be in a separate retail REIT. It’s better for our investors, better for the portfolio, better for everybody involved.”

However, Mr. Manji said the move is fraught with risk, given Artis’s concentration of retail assets in Western Canada, where the market had been under economic pressure even before the pandemic. Instead, he said, Artis should have launched a process for outright sales of the assets.

“Nobody has interest in owning a retail REIT in today’s environment,” he said. “Saddling unitholders with an illiquid, orphan, Western Canadian, externally managed REIT, we don’t think is the solution, and as a result are going to vote against it.”

Mr. Manji also raised questions about the independence of a construction, property acquisition and management company, Marwest Management Canada Ltd., controlled by Mr. Martens and members of his family. Artis said in its annual information form that Marwest performs work for it from time to time, but Mr. Manji pointed out that such transactions are not disclosed to unitholders.

Story continues below advertisement

Mr. Manji founded Sandpiper in 2016, and the private equity company made a name for itself after it launched a proxy fight at industrial property company Granite REIT in May, 2017, and won support from influential proxy advisers for its slate of directors. Since then, Sandpiper has pushed for change at other publicly traded entities, including Extendicare, Agellan and Hudson’s Bay Co.

Diversified REITs such as Artis have been under pressure since the start of the pandemic, and the company is a victim of a murky outlook for cash flow, said Jenny Ma, analyst with BMO Capital Markets. It’s unclear how much value a spinoff can generate given the state of the retail sector, but Sandpiper’s proposal for asset sales would also be tough, Ms. Ma said.

“I’m not sure that idea is something you could execute in a short amount of time right now, because with the pandemic, everything’s on hold,” she said “We’ve heard about multifamily [property] transactions – in fact that seems to one of the more buoyant parts of the private market. But, certainly with retail assets, I spoke to somebody who basically said every retail property is for sale.”

Artis’s largest shareholder is the estate of Tim Hortons founder Ron Joyce, which had 10.7 per cent of the trust units as of Aug. 10, according to S&P Capital IQ. Mr. Manji said he has not sought support from the estate or other unitholders yet.

Mr. Martens, along with current Artis trustees Edward Warkentin, Victor Thielmann and Wayne Townsend have all been on the board for 16 years. Sandpiper is seeking their ouster along with Bruce Jack, a trustee for three years. Another board member, Lauren Zucker, is a Sandpiper nominee named to the board in 2018.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies