This morning brought me news of attempted malfeasance at Partner’s REIT. The Interim CEO Ron McGowan
packed up his toys and went home. resigned. Here is the list of allegations by Orange Capital LLC.
I don’t think it’s a coincidence that League Assets is in CCAA and that the other company formerly run by Adam “Value Destroyer” Gant and Emanuel “Don’t Know The Numbers” Arruda has a culture of going along to get along and looking the other way when ethics violations are in play.
Orange Is Calling For An Independent Forensic Audit
From what I’ve learned observing League and their unwinding. Here’s what they should be looking for and at.
- Building Valuations and Appraisals
- Inappropriate Loans with excessively high interest payments that benefit related parties.
- Intercompany loans
- Excessive Leverage
- Mortgages and then second and third mortgages.
- Non arms length transactions
- Understated vacancy
- General bad building performance
- Neglect and lack of fiduciary responsibility
- Lack of maintenance and basic building care
The same sickness and ineptitude coupled with bad practices in building management that were responsible for the League failure must have also been reflected at Partner’s REIT. There is evidence of that, the revolving door of staff, the loans to League that would get paid back before the quarter was up, the hiring and firing of the trustees, poor governance at LAC, and the subsequent announcement that Partner’s would be hiring from the freshly fired employees that worked at League. All point to a culture of deceit and dishonesty.
If Partner’s is to survive it’s well past time for a “Come To Jesus” with new governance and new focus on asset performance. That is how REIT’s make money. They buy assets and lease out all the space and upgrade their assets.
I for one do not believe their latest financial statements with their claims of 100% occupancy of most of their assets. I just don’t believe that Adam “Value Destroyer” Gant and Emmanuel ” Don’t Know Numbers” Arruda were capable of that kind of governance at Partner’s REIT while completely stripping all the assets at League of any equity and neglecting their buildings to the point of unleasability. The League mall in Langley that was recently sold had a 28% occupancy rate or a 72% vacancy rate. I don’t even know how that’s possible.
Partner’s REIT needs to rise from the ashes, but it will be a long time before these buildings get turned around and perform the way they should. For now I commend Orange. I really really do. Know you are awesome.
Trustee Lindsay Weiss gets the hell out of dodge a mere 27 days after taking the job of trustee on.
Then poor little Partner’s REIT was pressured into taking money from big bad Orange and Orange is even calling them daily. Whew sounds really hard.
A forensic audit is well overdue at Partner’s REIT and may well find it already insolvent but if there is any hope of saving the company, hard truths must be realized. After all how do you work on a problem that you refuse to admit exists?