A few days after two dissident shareholders filed an information circular – under the banner “For a best in class REIT we need a best in class board, seeking change at Granite REIT” – the company has now filed a rejoinder.

In response to the claims made by FrontFour Capital and Sandpiper Group – which own 6.2 per cent of the company – Granite said Tuesday that a letter was required to help unit holders “see through the dissidents’ disingenuous arguments” and to set the record straight.

The dissidents, who met with the company and with one of its largest unit holders last week to try and reach a mutually agreed settlement, want three board seats at Granite.

They also want the company to take on more leverage, make more acquisitions and reduce general and administrative expenses. Reports have indicated that 25 per cent of Granite’s unit holders are “supportive of changes,” even though apparently none have committed their votes.

In that letter, that wasn’t published on SEDAR, Granite noted its “strong performance and prospects under your current board,” as well as the dissidents short-term strategy and poor track records in the real estate sector,” and that the dissidents’ nominees “have presided over related party transactions and are unsuitable to represent the interests of all unit holders.”

The company chose to rebut some of the claims of the dissidents with information contained in reports prepared by analysts from RBC, Scotia Capital and TD Securities. As expected none were positive on the claims made by the dissidents.

On Tuesday, Sam Damiani, the real estate analyst at TD, issued a flash note where he said that while Granite’s pace of asset growth has been below-plan, its “value creation has arguably exceeded expectations.” In that note, Damiani, argued that the $60 plus per unit – the target the dissidents think is achievable – is “unrealistic.”

The meeting is scheduled for June 15, though voting is required by June 13 for those supporting management and by June 12 for those supporting the dissidents.

The dissidents couldn’t be reached for comment. It’s most recent public comment occurred when it said that they “are committed, long term investors with a strong track record of alignment and value creation in Canada.” The statement added their belief “that the best is yet to come for Granite unitholders. There is significant upside potential in Granite’s unit price from here and we intend to continue applying constructive pressure to create value for all unitholders over time,”added the statement.

Financial Post
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