OTTAWA: The capital markets are set to welcome back one of the country’s smaller real estate investment trusts, but one with the most colourful recent past.
Partners REIT, which last raised capital in the public markets in March 2013, is returning with a rights offering. If fully taken up, the rights offering — rarely used in Canada — will raise $20.4 million. The proceeds will be used to reduce debt and provide some of the necessary funding to repay an upcoming issue of convertible debentures. The rights’ subscription price of $3.10 was set at a discount to the recent trading price of $3.36. The units closed Wednesday at $3.09.
Partners REIT, “a growth-oriented” real estate investment trust that owns and manages 36 properties across Canada, has been frozen out of the public markets because of the impact of a deal it did in early 2014. Partners REIT said it chose to raise capital rights offering because that approach treats all shareholders equally.
Known as the Holyrood transaction, the REIT spent $83 million to acquire three properties in Ontario. The REIT financed the deal by issuing units and assuming existing mortgages.
Shortly after the acquisition closed, the company became aware “that Ron McCowan, the REIT’s interim chief executive officer at the time (and holder of 15 per cent of the REIT’s outstanding units) had a sufficiently close business relationship with Laura Philp, Holyrood’s owner, that they could be considered as acting together under applicable regulation.”
Had the firm known that information at the time, it would not have approved the deal.
