BTB Real Estate Investment Trust T.BTB.DB.H

RE:RE:RE:BTB REIT - Proposals for Upcoming AGM

[b919191]

b919191 wrote:
Hi Gary

Thanks for your feedback,

The dividend and the AFFO have declined or been stagnant when you consider a longer time horizon than 3 years, and note that its easy to do well over 3 years from the lower disastrous base you put yourself in after messing up for the eon years before that..  current management has been running the show for 16+ years.

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We encourage you to read through the whole document when you have a chance.

We show in there how poorly the REIT has performed on all relevant metrics (including vs. its peers based on the index the Board itself feels is adequate), and how disconnected management compensation has been vs. that underperformance.



Highlights if you don't have time

1- Mgmt gets paid in full even when they demonstrably fail to meet targets

2- Board is using companies that are on average 10x larger than this REIT to set comp for management, DESPITE stating that they do not use peers larger than 3x

3- Board keeps changing the targets mgmt needs to meet every year, and these targets are rarely even disclosed, and when they are, the achievements aren't.

4- Board uses shorter-term targets for its LT plan than in its ST plan - something that is just unbelievable.

5- And it's just getting worse, the vesting periods are getting shorter, it's not going in the right direction on any front

and its just goes on and on and on... they claim that Crescent street is not in Downtown Montreal? I mean come on...!

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Now keep in mind that unitholders who voted at the last 2 AGMs sent a strong message to the Board: We are unhappy!.... Votes went from ca. 99% for all trustees in 2020, to ca. 90% in 2021 and to 80% in 2022... that's never a good sign

The votes for all the trustees has been collapsing... and how does the Board choose to address that dis-satisfaction? Well by raising the CEO's comp by 18% from 2021 to 2022. Why not?

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Bottom line:

Are there REITs that are even more poorly managed that this one?

Most likely yes

Are there REITs with executive compensation more detached from management performance?

The answer is a resounding NO...

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To be clear, we are trying to encourage a healthy debate here, and are cognizant that folks may have different opinions even on the same facts. That's what shareholder democracy is, however please check our work, the facts and the analysis before shaping your opinion. And by all means, if you find mistakes in our analysis, incorrect facts and things that may be interpreted differently, do share it all with us.

Take good care and best of luck in your investing endeavors




 

From the Open Letter...

 

Dear Fellow BTB Unitholder,

 

Over the past few years, we have indicated our displeasure with the board of trustees (‘Board’) of BTB by voting in increasing numbers against the re-election of its members. Against rules of common sense, after recording our warning at the 2022 annual general meeting of unitholders (‘AGM’), the Board increased the compensation of BTB CEO, Michel Leonard (‘Leonard’), by 18% that year. Predictably at the 2023 AGM, trustee re-election support fell even further.

 

We are losing patience with our investment in BTB shares, and this is ignored by the Board as management compensation keeps diverging from the Company’s pedestrian financial performance. The table below highlights the problem.

 

 

 

 

 

I believe that our investment in BTB can be salvaged provided some important steps are taken. Over time, these should help trim the significant discount at which the Company’s units trade vs. their intrinsic value.

 

I am presenting the proposals below for unitholder votes at the next AGM (the ‘Proposals’):

1. Independent investigation of BTB Governance and Human Resource (‘GHR’) committee to establish how material mis-statements appeared in past management information circulars;

2. Change in focus of GHR to reward management for long-term performance instead of short- term performance;

3. Binding annual vote on adequacy of compensation offered to BTB leadership (‘Say-on-Pay’) with predetermined consequences for results below certain thresholds;

4. Mandatory abstention from voting on any proposal by BTB leadership members having a personal interest in the proposal being voted upon (for the avoidance of doubt, the Proposals are all considered to fall in this category);

5. Prohibition from serving on any other board for BTB trustees, unless such a role is pro bono, uncompensated and related reimbursed expenses do not exceed CAD$5,000 annually.

  ___________________ 

 

Based on past experience, I had no alternative but to submit the Proposals in this public manner. I urge unitholders who see value here to themselves submit equivalent proposals to increase the odds of their implementation since the Board could continue ignoring me. Please join me in explaining to proxy advisors, such as ISS and Glass Lewis, why urgent change to emphasize the long-term health of BTB is required to salvage our investments.

  ___________________ 

 

Most fundamental institutional investors long ago sold their BTB units and understandably so: one gets tired of repeatedly getting Fiat quality while paying Ferrari prices. There is however hope for BTB if we can all send a strong message to the Board that status quo just won’t do, in other words: Enough is enough!