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Dori Segal Sends Second Open Letter to Unitholders of First Capital REIT — Supports Announced Changes, More Needs To Be Done

TORONTO, Feb. 08, 2023 (GLOBE NEWSWIRE) -- Dori Segal, whose family is one of the largest individual unitholders of FCR (owning more than 1.5%), today issued the below open letter to unitholders of First Capital Real Estate Investment Trust (TSX: FCR.UN).

Dear Unitholders,

FCR’s business, in both the capital and real estate markets’ opinion, has been in limbo since early 2019. It seems that until the period just prior to the current surge of unit holders making their concerns public, FCR’s credibility and investors’ confidence, as well as its unit price, had hit rock bottom. It is disconcerting that FCR leadership ignored, or perhaps did not understand, the seriousness of the situation they put the REIT in. Even more troubling, they didn’t have the sense of urgency or humility to capitalize on the renewed investor interest in FCR, triggered by the recent activism, and didn’t diligently try to deal with it in a straightforward and expeditious manner. Equally concerning, as the board must know, this is an extremely volatile economic environment, not only in Canada but globally, so time is of the essence.

To be clear, I have been critical of the Enhanced Capital Allocation and Portfolio Optimization Plan, not because I disagree with REITs selling non-core assets as part of ongoing capital recycling to be reallocated for other balance sheet purposes. One of the most important leadership responsibilities of any capital- intensive business, including real estate, is to make capital allocation decisions continuously in an optimal manner. The need for such a plan, especially in a high quality business, is the symptom of a problem, not, as FCR has suggested, the solution. After all, the REIT wouldn’t need a plan to enhance capital allocation and optimize the portfolio if it was well managed to begin with.


I’m very pleased with yesterday’s announcement of the appointment of Paul Douglas as Chair, and Ira Gluskin as a trustee. These changes confirm that unit holders’ concerns and suggestions are finally being heard. Paul and Ira are highly respected, and Paul is an exceptionally good choice to lead the board. I expect they will both be tremendously constructive in their new roles, and we should all wish them much long-term success.

While I believe that yesterday’s announcement is a significant positive step in the right direction, I maintain that more needs to be done. Having reflected on the last five years (including the events that unfolded since the last AGM on June 21st, 2022) and the numerous examples of poor judgment by FCR leadership, and in light of the recent decision of the Ontario Superior Court, I now believe that what FCR needs is a much more independent board, free of the failed leadership of the past. Hence, I have come to the conclusion that the majority of the board, including Adam Paul and the governance and compensation committee chairs, should be replaced at the upcoming unit holders meeting. Only a board with an overwhelming majority of new truly independent directors, with broad investor support, who have no ties to the poor decisions of the past can ensure growth, restore FCR’s premium valuation and entrepreneurial culture for all stake holders. As I have previously stated, I’m prepared to make myself available to such board, if so requested, particularly in the transition period.

Today at 2:00 pm EST, the REIT will have its year-end conference call, and I encourage you all to listen in. In advance of the conference call, I sent Adam Paul the following note on February 7 which I thought would be of interest to unit holders (I did not receive a response):



Last week court’s decision was an embarrassment to First Capital REIT and indictment of your leadership, the governance committee chair and the board, on business judgement and governance processes (or lack thereof). You wasted the REIT’s resources on a matter that you ought to have taken a reasonable position on in the first place. I ask myself why did you do that? My guess as to the reasons: hubris, misalignment and poor judgment.

I think unitholders have a right to have some fundamental questions answered. On the last conference call, you refused to answer any questions about the activism, or even questions I had about the business itself. It’s time to stop hiding and to take accountability for your decisions and actions. Below are a few simple questions I would like answered (and I presume other unit holders would as well) during the conference call this Wednesday (Feb 8th 2023).

Please confirm to me by e-mail, no later than 12:00 pm EST tomorrow (Tuesday Feb 7th) that you will answer all of the following questions during the call:

  1. What was the total amount of direct and indirect expenses incurred on strategic activities including those related to the unitholder activism, actions and concerns voiced during 2022 and year to date (YTD can be an estimate). What are the projected expenses for legal counsel, proxy solicitors and all other advisors until the proxy fight is ultimately determined?

  2. What is the real reason the REIT decided to waste money by litigating the date of the proposed unit holders meeting rather than settle on a reasonable date (somewhere between March and April) with the activist?

  3. What was 2022 NOI of the 1100 King residential property? What was the forecasted 2023-2025 annual NOI? What was the sale price per Sq foot of the property and how does that compare to market and IFRS values of other similar properties in FCR’s portfolio, either owned or currently under development and/or construction?

  4. How many sq ft of properties under development (PUD) and their dollar value were transferred to income producing properties during 2022, and what is the expectation/forecast for 2023-2025 annual PUD delivery?

  5. All things being equal, is FCR planning to be a net buyer or seller of top suburban supermarket anchored shopping centres in 2023?

  6. What is your and the current Chair’s role in the board decision making process related to the current unitholders uprise? Why has the board not yet convened a special committee?

  7. We know from the litigation that on Dec 14th 2022 the board held a joint meeting with the governance committee and set a May 16th, 2023 meeting date. Why did it take until December 30th to make that announcement? Should unitholders be concerned that there is a culture of noncompliance with securities laws and/or lack of proper disclosure in the REIT?

  8. You have previously mentioned to a number of market participants that you have full support from a number of unitholders, including a large one in particular, can you name any of these unit holders?

Dori Segal
Cc: FCR board



This communication should not be construed as asking or soliciting FCR unitholders to authorize Mr. Segal or any third party to exercise their voting rights on their behalf with respect to matters to be presented at any meeting of FCR unitholders. Mr. Segal is by no means soliciting or requesting other unitholders to grant or deliver their proxies to him for any such meeting.

For further information:
Dori Segal