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Artis Real Estate Investment Trust is defending its business relationship with a company connected to chief executive Armin Martens’s family, saying a dissident shareholder’s criticisms of contracts between the two entities are just part of an “American-style smear campaign.”

Dealings between Artis and Marwest Group, a construction and management company owned by members of the Martens family, have been at the heart of complaints lodged by Sandpiper Group as it seeks to oust most of the board at the Winnipeg-based commercial landlord. Sandpiper has questioned Marwest’s independence, and suggested the family has benefitted at the expense of other investors.

Artis issued a riposte on Thursday, saying Sandpiper and its CEO, Samir Manji, have mischaracterized the relationship by suggesting unitholders are not being told about conflicts of interest. The statement said all transactions have been disclosed, and Marwest’s involvement has led to the creation of $200-million in value for Artis.

Marwest is one of several vendors to the company, and about two-thirds of maintenance and development capital spending has gone to other providers, Artis said. It also said its auditor, Deloitte, has signed off on its disclosure practices as meeting International Financial Reporting Standards rules.

“At a time when steady, experienced leadership is needed and expected by unitholders, Mr. Manji is attempting to destabilize Artis and disrupt value-creating initiatives," Mr. Martens said in the statement. "I want our investors to know we will not participate in the mud-slinging that Mr. Manji appears comfortable with.”

He called Sandpiper’s allegations “fictional” and said conflicts either do not exist, or are managed appropriately to make sure decisions are made in the best interest of unitholders.

Sandpiper officials were not immediately available for comment.

In what has turned into a heated proxy battle, Vancouver-based Sandpiper is seeking to replace five of Artis’s trustees with its own nominees. Among those Sandpiper aims to unseat is Mr. Martens. Unitholders are scheduled to vote at a special meeting on Feb. 23, 2021.

Besides the relationship with Marwest, the activist firm also opposes Artis’s plan to spin off its Western Canadian retail holdings into a new REIT, saying the move is too risky for investors, who have seen the value of their units skid amid weak economic conditions, especially in the Prairie provinces.

Units of Artis, which has almost 220 commercial properties in Canada and the United States, had fallen by more than a third over the past 12 months, including a plunge after the COVID-19 outbreak. The company was in talks with potential buyers early this year, but those discussions ended when the pandemic took its toll on corporate merger and acquisition activity in the spring.

The units are up more than 5 per cent since Sandpiper announced its proxy fight on Oct. 1. Earlier this month, Sandpiper won the backing of Jetport Inc., owned by the state of Tim Hortons co-founder Ron Joyce. It is Artis’s biggest holder, with 13.3 per cent of the units.

Artis took issue with Sandpiper’s complaints about the performance of the units, saying it has outperformed the S&P/TSX capped REIT index with a total unitholder return of 198 per cent since inception in 2005. It has also outperformed the index in 10 out of the last 15 years, the company said.

Artis has already said it plans to stay the course with its own strategies for reviving the value of its units, including proceeding with the spinoff.

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