VICTORIA, BRITISH COLUMBIA -- (Marketwired) -- 05/17/13 -- IGW Real Estate Investment Trust ("IGW") today advised other unitholders of Partners REIT ("Partners") to disregard claims in a May 16 letter from the non-management incumbent trustees Louis Maroun, Saul Shulman, John van Haastrecht, and Tim O'Neill ("Incumbent Trustees").
IGW REIT is a private real estate investment trust and, through its affiliates, is the largest unitholder of Partners REIT, with 14.7% of the units. On May 9, 2013 it filed a proxy circular with securities regulators providing reasons why four trustees of Partners REIT should be removed and replaced by four highly experienced real estate executives IGW REIT has nominated for election to the Board of Trustees at Partners' annual meeting scheduled for June 6, 2013.
"The Incumbent Trustees' letter is simply a malicious attempt to discredit the efforts and achievements of the manager," said Adam Gant, Trustee and President of IGW REIT. "We are confident that our fellow unitholders will recognize it as a desperate attempt by the Incumbent Trustees to entrench themselves, which is not in the best interests of Partners REIT. The decision facing unitholders is about the future growth of their REIT. It is certainly not about fees."
FACT: The non-management Incumbent Trustees' attempt to question the track record of the manager, LAPP Global Asset Management Corp. (LAPP), is not credible. The manager has achieved great success for Partners in the 33 months since it took over. The REIT has increased its asset base by more than 400% and delivered earnings of more than $48 million. It has provided unitholders with an aggregate total return of 97%, outperforming both the S&P TSX and the S&P TSX REIT Index, while seeing an increase in unit price of more than 54%. These results have been achieved by the efforts of the more than 30 members of the professional staff of the manager who have demonstrated their commitment to Partners' growth, prosperity and the increase in value for all unitholders.
FACT: IGW owns LAPP which was paid a management fee of $1.5 million in 2012, an amount that does not cover its costs. These fees help pay the employment costs of all those acting as manager of the REIT, including the CEO, COO, CFO and CIO. They are not direct profit to IGW. LAPP was paid just under $1 million in acquisition fees in 2012 which were approved by the Board for acquisitions that were accretive to Partners' unitholders and increased the quality and diversification of the portfolio. These fees are set at 0.5% of transaction value; below average market rates.
FACT: IGW's primary focus is in increasing the value of its investment in Partners REIT, not maintaining the fees paid to LAPP. With $28 million invested in Partners, IGW receives more income from Partners' distributions than from annual management fees. A 5% increase in the unit price of the REIT is far more valuable to IGW than the fees. Growth and value at Partners is IGW's only incentive.
FACT: The Incumbent Trustees never discussed internalization with the manager until after IGW advised them it would not vote for the re-election of Louis Maroun because of his conflict of interest and divergent views on the future of the REIT. The statement by the Incumbent Trustees in their May 16 letter that this was discussed earlier is flatly contradicted in The Globe and Mail (online) on May 7, 2013: "Mr. van Haastrecht confirmed that management wasn't aware of the internalization plans."
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