Canada's Minto Apartment Real Estate Investment Trust plans to raise gross cash proceeds of C$200.0 million in its IPO.
The newly created, open-ended REIT expects to sell between 13.8 million and 16.0 million units in the offering, based on an estimated price range of C$12.50 to C$14.50 per unit. The trust has yet to determine the volume of units that will be subject to a 30-day overallotment option granted to the underwriters.
The REIT, through an Ontario limited partnership, will own a portfolio of income-producing multi-residential rental properties in urban markets in Canada. It will initially indirectly purchase a portfolio of 22 multi-residential rental properties totaling 4,279 units in Toronto, Ottawa, Calgary and Edmonton from Minto Properties Inc., which is part of the Canadian fully integrated real estate company Minto Group Inc.
Based on the midpoint of the projected price range, an entity owned and controlled by Minto Properties would hold about 22.9 million class B units of the limited partnership, or a roughly 60.7% stake in the REIT on a fully diluted basis assuming all class B units are exchanged for the REIT's units.
Additionally, a Minto Properties-controlled entity would hold all of the limited partnership's outstanding class C units with respect to about C$229.8 million in debt to be retained by Minto Properties. The retained debt is part of the approximately C$520 million in estimated aggregate debt of the initial portfolio.
Minto Group plans to keep a significant stake in the REIT over the long term and to fully internalize its asset management and property management functions into the REIT without payment of any termination fees once the REIT's assets have a gross book value of C$2.0 billion.
After completing its IPO, the REIT said it will be able to buy up to about C$200 million of assets without accessing equity markets.
TD Securities Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., National Bank Financial Inc., Canaccord Genuity Corp., Desjardins Securities Inc., Raymond James Ltd. and Industrial Alliance Securities Inc. are the underwriters for the IPO.
