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Artis Real Estate Investment Trust says it plans to stick to its strategy for boosting the value of its trust units, including proceeding with a spinoff of properties, despite harsh criticism levelled by an activist investor seeking to oust most of its board members.

Artis said Sandpiper Group, the Vancouver-based private equity firm agitating for change, has made false allegations about the trust in its proxy campaign, including questioning business transactions with a company tied to the family of Artis chief executive Armin Martens. It said it would demonstrate later why the statements are wrong.

Still, the commercial landlord has set a special meeting for Feb. 23, 2021, to vote on Sandpiper’s bid to replace five of Artis’s seven trustees with its own nominees, including Sandpiper CEO Samir Manji. Sandpiper, which has more than 5 per cent of Winnipeg-based Artis’s units, requisitioned the meeting last week.

“Sandpiper’s recent statements contain a number of mistruths and inaccurate statements about unidentified transactions (specifically with regard to allegations related to Marwest Group),” the trust said in a news release. “Artis will demonstrate these statements to be false in due course. At this time, the board wishes to assure unitholders it remains focused on unlocking unitholder value despite Sandpiper’s actions.”

Sandpiper has questioned the independence of Marwest Management Canada Ltd., pointing out that Artis has said in its annual information form that Marwest performs work for it, but also that transactions are not disclosed to unitholders. If it wins its bid for control, Sandpiper would eliminate such transactions, it said this week as it launched its drive to garner the support of other unitholders.

Artis has nearly 220 commercial properties in Canada and the United States. Its trust units had fallen by more than a third in 12 months, suffering a big drop after the COVID-19 outbreak. However, the units have climbed 10 per cent since Sandpiper announced its proxy fight on Oct. 1, closing up 15 cents at $8.80 on Thursday on the Toronto Stock Exchange.

In September, Artis announced a plan to spin off its Western Canadian retail real estate assets into a new trust, leaving it with industrial and office holdings in Canada and the U.S. Sandpiper has said it wants the plan scrapped, warning of undue risk because of the weak state of the region’s retail sector. Instead it wants Artis to start a process to sell the properties.

But Artis said on Thursday that the plan remains key to its strategy, which has also included selling $800-million of non-core assets to reduce debt and seeking a buyer for the entire company. It was in talks with potential suitors early this year, but those discussions ended when the coronavirus pandemic took its toll on corporate merger and acquisition activity in the spring.

The spinoff allows Artis to simplify its business while giving the market the ability to ascribe proper value to the retail assets, the company said. It also could make the resulting trust more attractive to buyers, the trust said. In addition, it would also be non-taxable to Artis, which would not be the case with a sale.

“The streamlined focus of Artis following the retail spinoff will increase the attractiveness of Artis to both public and private investors, and would not preclude the board from exploring a sale in the future,” it said. “Furthermore, the strategy does not prevent Artis Retail REIT from selling additional retail properties in the future to create unitholder value if opportunities arise.”

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