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Partners REIT is cancelling a recent acquisition after an American activist investor called for a "forensic investigation" amid fears the company was misleading shareholders.

Orange Capital, a New York-based investor that currently owns shares in Partners, asked for a review of the REIT's recent affairs because it says management had demonstrated "poor disclosure and total disregard for the Canadian capital markets."

In November, Barrie, Ontario-based McCowan & Associates bought 14.95 per cent of the REIT, effectively taking control. A month later, the new owner announced Partners would acquire four properties, but would not state who the seller was.

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Two months later, Partners finally disclosed the properties were sold by Holyrood Holdings Ltd. In return, Holyrood received 18.7 per cent of the REIT's units.

After doing some digging, Orange alleged that Holyrood is a related party to Partners – something it says wasn't disclosed to shareholders. According to Orange, Laura Philp owns Holyrood, and she and Ron McCowan, who runs McCowan & Associates​, have been "business associates" for more than 20 years.

Of the connections Orange allege exist between Ms. Philp and Mr. McCowan, the chief concern is that Ms. Philp was listed as an officer and treasurer of Mr. McCowan's company in December 2013.

Initially Partners responded to the allegations by putting out a press release saying it would "respond in due course." Late Sunday the REIT provided an update, saying it hired independent legal counsel to investigate. After doing so, the REIT determined that Mr. McCowan and Ms. Phil have "a close business relationship." For that reason, the REIT has asked Holyrood to agree to unwind the transaction.

Partners has not yet returned a call to the Globe and Mail asking for additional comment.

In the latest release, Partners also announced Mr. McCowan has tendered his resignation as interim chief executive officer. His departure comes after the REIT announced on Friday that one of its directors was resigning from its board, extending a turbulent period of turnover.

Over the past year the REIT has replaced directors more than once. Last May League Assets Corp., which used to control the REIT, replaced a number of directors following a proxy contest. In the fall a different set of directors were brought in when Mr. McCowan bought out League's stake to gain control.

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The latest board news is that Lindsay Adam Weiss ​ resigned his board seat less than a month after he became a director.

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