First Capital said it filed a complaint over fund manager Ewing Morris & Co. Investment Partners Ltd.’s attempt to build support for replacing the real estate company’s chair, Bernard McDonnell, and add a trustee to its board
by attempting to enlist support from securities regulators, while the property company’s institutional investors continue to critique its financial performance and governance.
The investors supporting Ewing Morris’s campaign for new leadership include First Capital founder and former chief executive Dori Segal. By working together, the two investors’ “conduct appeared to be in violation of securities laws,” said First Capital. “Given the seriousness of these concerns, First Capital brought these issues to the attention of the Ontario Securities Commission.”
First Capital recently increased its distributions to unitholders, after cutting its payout during the COVID-19 pandemic. On Friday, the company said it plans to sell up to $1-billion of properties and redeploy that capital to new developments and other measures aimed at improving financial performance. First Capital’s market capitalization is $3.3-billion, and the price of its units has declined by 25 per cent over the past five years.
On Friday, First Capital said it has renewed its board in recent years with executives who bring real estate skills and experience, with five of its nine trustees appointed since 2018. In recent years, activist fund managers, including Ewing Morris, have successfully put directors on boards at a number of REITs, triggering shifts in leadership and strategy, and the sale of some real estate companies.
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