Activist Sandpiper Launches Board Fight at First Capital REIT

Activist investor Sandpiper Group is seeking board changes at First Capital Real Estate Investment Trust, heaping more pressure on the Canadian real estate company to improve its performance.

The Vancouver-based activist investor has accumulated a nine per cent position in First Capital and has requisitioned a shareholder meeting, according to a statement Monday, confirming an earlier report by Bloomberg News. 

Representatives for First Capital weren’t immediately available for comment. 

First Capital shares have fallen about 11 per cent since the start of the year and closed Friday at $16.80 in Toronto, giving the company a market value of $3.7 billion. The company owns, operates and develops grocery store-anchored shopping centres in Canada, including in Toronto’s Liberty Village and Yorkville neighborhoods. 

Sandpiper is the investment vehicle of Samir Manji, who has previously launched successful proxy fights at other Canadian real estate firms, including one that saw him take control of Artis Real Estate Investment Trust. Artis’s previous management accused him of “mudslinging” and a “smear campaign”, but he won the fight, took over as chief executive officer and began to sell assets. 

“The incumbent board and management have lost unitholder value and today, they are pursuing strategies that will dismantle FCR’s irreplaceable portfolio – a portfolio that had been strategically curated over the past two decades,” Manji said in a statement. “We cannot allow these actions to continue any further.” 

Sandpiper is the second investor to push for changes at First Capital. Another firm, Ewing Morris & Co., is also seeking to replace the company’s chairman and elect another representative to the board.

Toronto-based Ewing Morris urged First Capital in October to elect two new directors and replace Bernard McDonell as chairman with industry veteran Kelly Marshall. The firm said the changes were necessary to improve the REIT’s performance, refocus its strategy and rein in executive compensation. It argued that First Capital trades at the largest discount to the value of its underlying assets relative to its peers.

First Capital shares have returned minus one per cent over a five-year period, including dividends, compared with a 29 per cent gain for the S&P/TSX Real Estate Investment Trusts index. 

Kelly Marshall is also the chairman of industrial property owner Granite Real Estate Investment Trust. He was appointed to that role in 2017 following another proxy fight led by Sandpiper and its partner, FrontFour Capital Group.

First Capital said in an October statement that it continues to take steps to create value for shareholders. It also lodged a complaint with the Ontario Securities Commission, alleging that Ewing Morris and former First Capital chief executive officer Dori Segal were working in co-ordination without adequate disclosure. Segal co-founded First Capital and is acting as an adviser to Ewing Morris.

Bloomberg.com