Orange Capital Responds to Partners REIT Strategic Review Announcement

TORONTO, May 9, 2014 /CNW/ - Orange Capital, LLC ("Orange Capital" or "We"), a concerned unitholder of Partners Real Estate Investment Trust (TSX: PAR.UN) ("Partners REIT" or the "REIT"), today issued the following statement regarding the REIT's announcement of a strategic alternatives process designed to maximize value for unitholders ("Strategic Review"):

Notwithstanding that this is the REIT's second such Strategic Review in less than six months, Orange Capital welcomes the Trustees' decision to conduct a process where the sole objective is to maximize unitholder value.  We believe there are added benefits to the Strategic Review such that prospective buyers will require a "data room" to conduct due diligence, adding much needed transparency and discovery with respect to the REIT's:

  • Valuation and quality of assets along with the liabilities to be assumed, including the three (3) Ontario properties acquired from Holyrood Holdings Limited ("Holyrood") in April 2014 ("Ontario Property Acquisition");
  • Internal controls and information systems;
  • Past and existing arrangements with employees; and
  • Financial projections, assumptions, and forecasts.

On May 1, 2014, Orange Capital publicly raised very serious concerns regarding Partners REIT's recently closed Ontario Property Acquisition and requested an immediate independent forensic investigation. Within days of Orange Capital's public statements, the REIT announced it had obtained material "new" information with respect to the Ontario Property Acquisition that persuaded the Trustees to believe that Mr. Ron McCowan and Ms. Laura Philp, the owner of Holyrood, do indeed have a "close business relationship" and "should be considered to be acting together under applicable regulation." Meanwhile, Orange Capital believes the material "new" information that the Trustees obtained: (a) was at all times, readily accessible in the public domain; (b) was the subject matter of discussion in the press and by analysts; and (c) should have been considered before the transaction was concluded, had there been any reasonable due diligence."

Subsequent to this admission by the REIT, Orange Capital requested the Trustees immediately resign, deeming them unfit to serve on behalf of unitholders.  Orange Capital has received numerous expressions of support from other unitholders who are dismayed by the actions of Partners REIT's Trustees, including their failure to negotiate constructively with Orange Capital.

On May 6, 2014, the Trustees announced the Strategic Review and accused Orange Capital of pursuing an "opportunistic financing" and a "hostile campaign" against Partners REIT in response to our call for their immediate resignation.  In the press release we believe the Trustees went to great lengths to obfuscate the facts surrounding the appalling Ontario Property Acquisition and Orange Capital's role as a whistleblower and constructive unitholder. Alarmingly, the Trustees still refuse to disclose to unitholders why a $15 million, 10% second mortgage financing is necessary while the REIT pays its monthly distribution.

In their most recent release the REIT's Trustees also failed to disclose that Orange Capital's financing proposal:

  • Was structured on a subordinated and unsecured basis, in contrast to Firm Capital's secured second mortgage arrangement;
  • Provided the REIT flexibility to pay interest in cash or units - to our knowledge, Firm Capital's proposal is payable only in cash;
  • Limited Orange Capital's voting rights to 15%, regardless of whether a future unwinding of the Ontario Property Acquisition is completed - a clear demonstration that we are not seeking control of the REIT and are committed to preserving the interests of all unitholders; and
  • Sought those voting rights merely to balance the combined ownership of Holyrood and Mr. McCowan granted by this Board of Trustees.

Orange Capital reiterates that it has no interest in serving with this group of Trustees who have so spectacularly failed to preserve the interests of minority unitholders.  Orange Capital continues to review all available options to preserve its interests.

Orange Capital has a proven track-record of seeking improved governance and creating unitholder value in the REIT sector. Orange Capital continues to believe that the appointment of new trustees would restore credibility and protect all unitholders of Partners REIT. 


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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