Orange Capital issues statement regarding Partners REIT

  • Reiterates demand that the trustees of Partners REIT immediately resign;
  • Rejects the trustees reckless settlement offer; and
  • Urges fellow unitholders to contact their trustees in support of Orange Capital's proposal to balance the share register and restore credibility to the REIT.

TORONTO, May 5, 2014 /CNW/ - Orange Capital, LLC ("Orange Capital"), a concerned unitholder of Partners Real Estate Investment Trust (TSX: PAR.UN) ("Partners REIT" or the "REIT"), today issued the following statement in regards to the REIT:

In response to Orange Capital's call for a forensic investigation into Partners REIT, on May 4, 2014, the REIT announced that:

  • The REIT's board of trustees (the "trustees") obtained material "new" information in regards to the April 2014 transaction pursuant to which the REIT purchased three Ontario properties ("Ontario Property Acquisition") from Holyrood Holdings Limited ("Holyrood");

  • The trustees now believe that Mr. Ron McCowan, the former interim Chief Executive Officer of the REIT, and Ms. Laura Philp, the owner of Holyrood, have a close business relationship and should be considered to be acting together under applicable regulation;

  • The trustees have "asked" Holyrood  to unwind the Ontario Property Acquisition; and

  • Mr. McCowan has resigned as interim CEO of the REIT.

Prior to the closing of the Ontario Property Acquisition, Mr. Marc Charlebois and Mr. Joseph Feldman, two of the acting independent trustees, specifically "formed a committee for the purpose of intensively reviewing and assisting in the negotiation of the transaction."  Notwithstanding this "intense review", the Ontario Property Acquisition was allowed to close.

Yesterday's press release represents an admission by the acting trustees that they approved a transaction whereby two related party unitholders now control more than 35% of Partners REIT.  We believe this represents an unprecedented admission of incompetence by a board of trustees in the Canadian REIT industry.

Orange Capital has serious concerns as to the independence of Mr. Charleobois and Mr. Feldman and the integrity of the trustees.  We reiterate our view that the trustees have repeatedly demonstrated that they are unfit to serve and should immediately resign.

Orange Capital urges all minority unitholders to contact the independent trustees to (a) demand their immediate resignation and (b) faithfully negotiate a comprehensive agreement with Orange Capital in order to preserve the interests of all minority unitholders.  The trustee's contact information is included at the end of this press release.

Orange Capital believes the trustees are seeking to reverse the Ontario Property Acquisition in an attempt to deny responsibility for their irresponsible actions.  Much of the information Orange Capital presented in its May 1, 2014 press release was (a) freely available on the internet and (b) widely speculated about in the press and should have been scrutinized by the trustees prior to the closing of the Ontario Property Acquisition.  We believe the trustees have made a number of egregious errors and omissions of fact, including:

  • A neglectful review of the Ontario Property Acquisition;

  • Merely "asking" Holyrood to unwind the Ontario Property Acquisition;
  • Entering into a 10% second mortgage facility with a firm that has historically financed both Mr. McCowan and McCowan & Associates;

  • Allowing unitholders to trade on incomplete information by failing to provide timely disclosure around the investigation of the Ontario Property Acquisition; and

  • Failing to constructively engage with Orange Capital, a unitholder that has presented a comprehensive solution to address the REIT's failed governance, management structures and liquidity concerns.

In response to the crisis at Partners REIT, the trustees have offered one (1) board seat to Orange Capital.  Orange Capital has summarily rejected this proposal for the following reasons:

  • Orange Capital believes serving on a board with these trustees would send a false signal to the market that we endorse their actions.  We unequivocally do not;

  • A single board seat alone does not provide any counter-balance to Mr. McCowan's significant ownership in Partners REIT.  Even if the Ontario Property Acquisition is unwound, Mr. McCowan would remain by far the REIT's largest unitholder with ownership of approximately 18%; and

  • We believe that any settlement that would further entrench the same trustees should be dismissed.

Orange Capital is reviewing all available options, including legal action against the trustees.  Norton Rose Fulbright LLP has been retained by Orange Capital as its legal advisor.

Trustee Contacts:

Marc Charlebois: (416) 697-0199,

Joseph Feldman: (312) 961-2099,

Kevin VanAmburg: (226) 444-8611,


Orange Capital is a New York based investment firm. The firm is a value-oriented investor in event-driven securities. Orange Capital was co-founded in 2005 by Daniel Lewis and Russell Hoffman. Prior to founding the firm, Orange Capital's portfolio manager, Daniel Lewis, was a director with Citigroup's Global Special Situations Group.

SOURCE: Orange Capital, LLC

For further information:


Riyaz Lalani
Bayfield Strategy, Inc.

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Orange Capital, LLC

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