One of Canada’s largest shopping-centre owners, First Capital Real Estate Investment Trust FCR-UN-T, reached a truce late Thursday in a five-month proxy battle with two activist shareholders.
Toronto-based First Capital, which owns a $10-billion property portfolio, agreed to add former CIBC and TMX Group executive Richard Nesbitt to its board, the second new trustee to join the REIT in recent months. Fund managers Ewing Morris & Co. Investment Partners Ltd., which put forward two candidates for the REIT’s board last year, and Vision Capital Corp. agreed to support the appointment, which expanded the board to 10 members.
“First Capital is pleased to have entered into a support and co-operation agreement with each of Vision and Ewing Morris that the board believes is in the best interests of all unitholders,” said Paul Douglas, First Capital’s chair, in a press release.
Mr. Douglas was appointed chair in early February, when investment executive Ira Gluskin joined the board. A former executive at Toronto-Dominion Bank, Mr. Douglas said recent appointments mean “First Capital’s board is well-positioned with an excellent mix of skills, experience and fresh perspective.”
The agreement undermines support for another activist, Vancouver-based Sandpiper Group, in its campaign to put four new trustees on the First Capital board. Unitholders in the REIT are scheduled to vote on the Sandpiper proposal at a March 28 meeting.
On Friday, Sandpiper chief executive Samir Manji said in a press release that First Capital offered the fund manager one board seat – for a new trustee who worked outside of Sandpiper – and up to $1-million to cover its expenses, in return for dropping its request to name four trustees, including a new chair.
Sandpiper turned down the settlement offer, and said: “A cosmetic offer of a single board seat resulting in no legitimate unitholder representation will not suffice.”
First Capital’s units underperformed those of real estate peers over the past five years. In October, fund managers and the REIT’s retired founder, Dori Segal, challenged First Capital’s board over plans to improve performance by selling up to $1-billion of properties in the next two years to finance new developments.
Prior to Thursday’s agreement, analysts said the campaigns against First Capital could end with the sale of the REIT to a real estate rival. Now, most activists are supporting the REIT’s rejigged board.
“First Capital has a unique and exceptional real estate portfolio. We are assured this refreshed board will execute on a plan that ensures the value of the portfolio is reflected in the market,” said Darcy Morris, the co-founder and CEO of Ewing Morris, in a press release.
First Capital owns more than 140 properties in British Columbia, Alberta, Ontario and Quebec, mainly grocery-store-anchored strip malls in large cities.
Mr. Nesbitt, First Capital’s new trustee, was previously chief operating officer at CIBC and CEO at the parent company to the Toronto Stock Exchange. He currently serves on the advisory board at Vision Capital, a fund manager that specializes in real estate investments.
Andrew Willis