The rationale provided by Artis (AX.UN) for its RFA merger has been buzzy adjectives (compelling compounding disciplined diversified durable organic inorganic successful sustainable strategic structurally-advantaged transformational) missing meaningful numbers or nouns that define any value for investors.
I don't follow how Halcyon/Steven Joyce is not an interested party in this transaction and their votes shouldn't count. As of December 2024, "RFACHIL is owned directly by RFA Capital Holdings Inc. (RFA) and indirectly by RFA's largest shareholder, Halcyon International and Mr. Steven Joyce." If Ben Rodney is excluded from voting for this transaction, then shouldn't RFA's largest shareholder also be excluded? Arguably, Sandpiper should also be excluded as Samir will be the Board Chair following this transaction (CEO to Chair seems like it is also an insider on this transaction). The independents getting cash for deferred units instead of locked up stock is also pretty bad (if it is such a good deal, then hold the stock and pay the tax on your DSU's). https://www.newsfilecorp.com/release/232258/RFA-Capital-Holdings-International-Ltd.-Successfully-Closes-the-Previously-Announced-51-Interest-in-Five-Continents-Financial-Limited-in-the-Cayman-Islands
I agree! Joyce has a larger stake in RFA than he does in AX so he benefits from an unfair deal. Rodney might just be his pawn. High volume again today and relative strength in a weak market - I find it hard to believe that somebody is buying AX because they love the deal.
I don't think Rodney is a pawn as he is a beneficiary given his stake in RFA. He appears to have proposed the transaction in January 2025 and will receive 2.1 Million RFA RSUs as a Carried Payment from RFA as a result of this transaction "(which will be exchanged for Replacement Resulting Issuer Restricted Share Units pursuant to the Plan of Arrangement)". The irony is that the Board has said that this does not require the majority of the minority: "Following disclosure by each of the trustees and senior officers of Artis of the number of securities of Artis held by them and upon consultation with its legal counsel and financial advisors, the Artis Board has determined that the Arrangement is not considered a “business combination” for the purposes of MI 61-101, and as a result, no formal valuation or “minority approval” is required for the Arrangement. Of course, the web site announcing the transaction is titled: "Artis REIT and RFA Capital - Proposed Combination Transaction" (https://www.artisreit.com/artis-reit-and-rfa-capital/). What's painful is that the independent trustees that formed the special committee negotiating this deal only owned 0.1% of the units outstanding (less than 100k - and I don't count the DSU's since they are getting it as cash payment) and through only negotiated Rodney down from his initial 33% to 32% ownership.
Good article. Would be funny, to see the deal blocked by a corporate raider (Manji was supposed to the "corporate raider.") Studied Artis pretty extensively and luckily never lost money on it despite being down for some time over a couple year hold period. Embarrassed a bit to admit I was bullish on it and thought a SIB could be coming at one point. Thought the insider buying was bullish then came the index deletion. Was great to follow all their transactions to see how liquid the markets were in various asset classes. Really liked Manji’s idea of selling assets to private market to invest in other out of favor REITs but he chose the wrong pony in Dream Office & also the Cominar portfolio. Still think he did a good job getting out of his self-imposed hole but this latest maneuver adds depths to sketchiness. An office REIT with a sub prime lender, hard to imagine how that will be received positively. It seems the US offices have no transaction liquidity until now. If there is, why wouldn't Samir be selling those? Ultimately no hard feelings on Samir Manji, as I got out unscathed, but if I stuck with him I'd be pretty livid over that deal as I believe Artis could 'easily' be liquidated at least $10 or higher based on recent market comparables.
I don't follow how Halcyon/Steven Joyce is not an interested party in this transaction and their votes shouldn't count. As of December 2024, "RFACHIL is owned directly by RFA Capital Holdings Inc. (RFA) and indirectly by RFA's largest shareholder, Halcyon International and Mr. Steven Joyce." If Ben Rodney is excluded from voting for this transaction, then shouldn't RFA's largest shareholder also be excluded? Arguably, Sandpiper should also be excluded as Samir will be the Board Chair following this transaction (CEO to Chair seems like it is also an insider on this transaction). The independents getting cash for deferred units instead of locked up stock is also pretty bad (if it is such a good deal, then hold the stock and pay the tax on your DSU's). https://www.newsfilecorp.com/release/232258/RFA-Capital-Holdings-International-Ltd.-Successfully-Closes-the-Previously-Announced-51-Interest-in-Five-Continents-Financial-Limited-in-the-Cayman-Islands
I agree! Joyce has a larger stake in RFA than he does in AX so he benefits from an unfair deal. Rodney might just be his pawn. High volume again today and relative strength in a weak market - I find it hard to believe that somebody is buying AX because they love the deal.
I don't think Rodney is a pawn as he is a beneficiary given his stake in RFA. He appears to have proposed the transaction in January 2025 and will receive 2.1 Million RFA RSUs as a Carried Payment from RFA as a result of this transaction "(which will be exchanged for Replacement Resulting Issuer Restricted Share Units pursuant to the Plan of Arrangement)". The irony is that the Board has said that this does not require the majority of the minority: "Following disclosure by each of the trustees and senior officers of Artis of the number of securities of Artis held by them and upon consultation with its legal counsel and financial advisors, the Artis Board has determined that the Arrangement is not considered a “business combination” for the purposes of MI 61-101, and as a result, no formal valuation or “minority approval” is required for the Arrangement. Of course, the web site announcing the transaction is titled: "Artis REIT and RFA Capital - Proposed Combination Transaction" (https://www.artisreit.com/artis-reit-and-rfa-capital/). What's painful is that the independent trustees that formed the special committee negotiating this deal only owned 0.1% of the units outstanding (less than 100k - and I don't count the DSU's since they are getting it as cash payment) and through only negotiated Rodney down from his initial 33% to 32% ownership.
Good article. Would be funny, to see the deal blocked by a corporate raider (Manji was supposed to the "corporate raider.") Studied Artis pretty extensively and luckily never lost money on it despite being down for some time over a couple year hold period. Embarrassed a bit to admit I was bullish on it and thought a SIB could be coming at one point. Thought the insider buying was bullish then came the index deletion. Was great to follow all their transactions to see how liquid the markets were in various asset classes. Really liked Manji’s idea of selling assets to private market to invest in other out of favor REITs but he chose the wrong pony in Dream Office & also the Cominar portfolio. Still think he did a good job getting out of his self-imposed hole but this latest maneuver adds depths to sketchiness. An office REIT with a sub prime lender, hard to imagine how that will be received positively. It seems the US offices have no transaction liquidity until now. If there is, why wouldn't Samir be selling those? Ultimately no hard feelings on Samir Manji, as I got out unscathed, but if I stuck with him I'd be pretty livid over that deal as I believe Artis could 'easily' be liquidated at least $10 or higher based on recent market comparables.