Ivanhoé Cambridge and Cominar in $1.527B property deal
Cominar Real Estate Investment Trust has entered into a definitive agreement with Ivanhoé Cambridge Inc., the real estate subsidiary of Caisse de dépôt et placement du Québec, for the acquisition by Cominar of a real estate portfolio of 15 properties in Québec and Ontario for a purchase price of $1.527 billion.
The acquired portfolio, comprising a total of approximately 5.7 million square feet of gross leasable area, consists of 11 retail properties (4.9 million square feet), three office properties (0.7 million square feet) including one property under development, and one industrial and mixed-use property (0.1 million square feet), with an occupancy rate of 96.7%.
Two of the properties are co-owned by third parties. The Cominar will make offers to acquire such third-party interests, which, if accepted, would increase its purchase price to $1.63 billion.
The approximately 120 Ivanhoé Cambridge employees dedicated to the properties involved in the transaction will transfer to Cominar.
The transaction is expected to close on or about October 1, 2014, following satisfaction of all customary closing conditions, or such later date as Cominar and Ivanhoé Cambridge may agree, but in any event no later than November 26, 2014.
To fund the acquisition, Cominar has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets to sell, on a bought deal basis, 13,158,000 Cominar trust units at a price of $19.00 per trust unit for gross proceeds of approximately $250 million. Cominar has also granted the underwriters an over-allotment option to purchase 1,973,700 additional trust units, representing 15% of the size of the offering. The closing of the offering is expected to take place on or about September 16, 2014.
Concurrently with the offering, Cominar has entered into a subscription agreement with Ivanhoé Cambridge, pursuant to which Ivanhoé Cambridge will purchase, at the time of closing of the acquisition, 13,158,000 trust units at $19.00 per trust unit for gross proceeds to the REIT of $250 million.
Assuming completion of the private placement and the offering, but not the exercise of the over-allotment option, Ivanhoé Cambridge will beneficially own, or exercise control or direction over, directly or indirectly, an aggregate of 13,158,000 trust units of Cominar, representing approximately 8.5% of the issued and outstanding trust units.
National Bank Financial and BMO Capital Markets are acting as financial advisors to Cominar. RBC Capital Markets Real Estate Group is acting as real estate advisor to Cominar in respect of the Acquisition. Davies Ward Phillips & Vineberg LLP is acting as legal counsel to Cominar. Norton Rose Fulbright LLP is acting as legal counsel to Ivanhoé Cambridge.
“This is an excellent transaction with a win-win result for both parties,” said Ivanhoé Cambridge’s Chairman and CEO, Daniel Fournier. “It allows us to encourage the expansion of Cominar by selling them quality assets that became available for strategic reasons. It also allows us to reinvest a substantial amount in Cominar’s equity capital, which attests to our confidence in and to our support of Cominar, a recognized leader in the Canadian real estate industry. We are proud of this new collaboration and to support Cominar’s national growth.”
“This transaction allows us to reach a key milestone in the implementation of our business plan for the commercial sector which calls for more strategic focus. As we have chosen to focus on our super-regional shopping centres, among others, Cominar possesses the right expertise to ensure the future success of the properties we are selling them,” added Fournier.