Partners Real Estate Investment Trust agreed to a buyout deal by real estate owner and developer McCowan and Associates Ltd. for 78 Canadian cents per unit in cash, concluding the REIT's strategic review launched earlier in 2019.
The statutory plan of arrangement excludes the approximately 9,229,704 units, or about 20.03% of the retail REIT's outstanding units, owned by the buyer and its affiliates.
Partners said the per-unit price represents a premium of 21.9% to its closing unit price on the Toronto Stock Exchange on Oct. 9 and a premium of 28.5% to the 30-day volume-weighted average price per unit on the TSX for the period ending Oct. 9.
McCowan entered into the deal to acquire 100% of the REIT's outstanding units on a fully diluted basis. The purchase of 100% of Partners' equity represents a total enterprise value of roughly C$102 million, including the assumption of existing debt.
The deal is anticipated to close in the fourth quarter, pending unit holder, court and regulatory approvals. The board recommends that the REIT's unit holders vote in favor of the transaction at a to-be-determined special unit holder meeting.
Partners said certain of its unit holders collectively owning a roughly 36.3% stake in the REIT agreed to vote their units in favor of the deal.
The REIT may terminate the deal if it opts to enter into a superior proposal in exchange for a C$1.4 million fee, payable to McCowan. McCowan, in turn, may terminate the deal under certain scenarios and pay a C$2 million fee to the REIT.
Upon deal closing, the REIT plans to seek delisting from the TSX and to cease to be a reporting issuer in all Canadian provinces and territories.
Partners has a portfolio of 12 retail and mixed-use community and neighborhood shopping centers spanning approximately 600,000 square feet of leasable space in the primary and secondary markets in Ontario and Manitoba.
BMO Capital Markets is financial adviser to the REIT, while McCarthy Tétrault LLP is acting as legal counsel to the REIT in connection with the deal. Blair Franklin Capital Partners Inc. is the independent financial adviser to the board's independent committee, with Blake Cassels & Graydon LLP acting as legal counsel to the committee in connection with the deal.
Bennett Jones LLP is legal counsel to McCowan.
