-- H&R to become Canada's largest REIT by enterprise value-- Combines two unique REITs consisting of high quality, low risk properties, to form a fully diversified commercial portfolio emulating the real estate investment model adopted by large Canadian pension plans-- Provides Primaris unitholders a tax-deferred rollover for substantially all of the unit portion of the consideration-- Offers Primaris unitholders the ability to continue to participate in the future growth and value creation of the combined REIT-- Retains the valuable platform created by Primaris over the last 10 years to acquire, develop, and manage premium enclosed shopping centres in Canada-- Has unanimous approval by the Boards of Trustees of both H&R and Primaris
Investor conference call scheduled for January 17 at 8:00 am Eastern - see below for details. A detailed presentation regarding the transaction will be available at www.primarisreit.com and www.hr-reit.com.
H&R Real Estate Investment Trust and H&R Finance Trust (collectively "H&R") (TSX: HR.UN) and Primaris Retail Real Estate Investment Trust ("Primaris") (TSX: PMZ.UN) are pleased to announce that they, together with PRR Investments Inc., have entered into an arrangement agreement whereby H&R will acquire 100 per cent of the issued and outstanding units of Primaris.
Unitholders of Primaris will be entitled to elect to receive 1.13 stapled units of H&R or $28.00 cash per unit, subject to a maximum cash amount of $700 million.
The Boards of Trustees of Primaris and H&R have unanimously agreed to both vote their units in favour of the transaction and to recommend that unitholders vote in favour of the transaction.
Benefits to H&R:
-- A unique opportunity to acquire a professional retail platform, with an irreplaceable Canadian enclosed shopping centre portfolio-- This transaction will create the largest REIT in Canada by enterprise value-- Increased market capitalization will result in substantially enhanced liquidity for unitholders-- Broader portfolio diversification geographically, by asset class, and by tenant base-- A deleveraging of the balance sheet to 51.9 per cent Debt/FV (assuming full take-up of the cash consideration)-- Combines two businesses having similar philosophies with respect to asset and tenant qualities and their disciplined approach to real estate investing-- With expected savings from synergies of up to $10 million over the next two years, the transaction will be accretive to FFO
Benefits to Primaris:
-- The transaction offers superior value to the hostile bid currently in the market-- Provides Primaris unitholders the option to retain ownership in the enclosed shopping centre asset class or to elect to receive immediate cash payment, subject to proration-- Offers Primaris unitholders the opportunity for a tax-deferred rollover for substantially all of the unit portion of the consideration-- Improves Primaris distributions by 20 per cent from the current annualized rate of $1.27 to $1.53 pro forma ($1.35 H&R distributions x 1.13 exchange ratio) for those Primaris unitholders who elect to receive unit consideration-- Preserves the substantial value of the asset and employee platform developed over the last 10 years-- H&R is a credible and reputable real estate investor with the financial capability and operational expertise to complete the transaction and successfully integrate the businesses