- Presentation reiterates compelling rationale for the acquisition plan set out in the management information circular filed by Cominar
November 24, 2021 , as well as numerous key considerations that make remaining as a publicly traded REIT a riskier proposition for Unitholders. - Offer by Canderel-led consortium represents a 63.2% premium to the closing Unit price on
September 15, 2020 , the last trading day prior to the announcement of Cominar's Strategic Review Process and a 16.3% premium to Cominar's 20-day volume-weighted average price per Unit on the TSX for the period ending onOctober 22, 2021 , the last trading day prior to the announcement of the Arrangement. - Following a comprehensive 13-month Strategic Review Process, the Arrangement has unanimous support of both the
Board of Trustees of Cominar and the Special Committee, comprised of independent trustees, and represents the most favourable outcome from Cominar's Strategic Review Process for Cominar, its Unitholders and other stakeholders. - Proxy voting deadline is
11:00 a.m. (Montréal time) onDecember 17, 2021
The presentation reiterates key information for Unitholders set out in the management information circular filed by Cominar on
Under the terms of the Arrangement, the consortium led by Canderel, a leading Canadian developer and manager, and which also includes
The presentation, which is available at www.cominar.com, reiterates the structure and rationale for the Arrangement and details the comprehensive process and rigorous corporate governance practices that led to the Arrangement. The presentation also clearly explains the numerous considerations described in the Circular that make attempting to pursue a status quo plan as a publicly traded REIT a riskier proposition for Unitholders.
Key takeaways of the Arrangement include:
- The Arrangement represents the culmination of an extensive and thorough strategic review process diligently pursued over 13 months (the "Strategic Review Process");
- Broad set of alternatives reviewed including: (i) status quo; (ii) select asset sales aimed at enhancing the status quo; (iii) structural alternatives aimed at surfacing value from asset classes; and (iv) a sale of the entire REIT;
- The Arrangement provides compelling value to Unitholders, including certainty and immediate liquidity;
- The Arrangement represents the highest actionable proposal and is the result of arm's-length negotiations following a robust dual-track process;
Desjardins Securities provided an independent valuation with a fair market value range of$11.00-$12.50 , in addition to a fairness opinion, whileNational Bank Financial andBMO Capital Markets each separately provided a fairness opinion;- The Arrangement represents the most favourable outcome from Cominar's Strategic Review Process for Cominar, its Unitholders and other stakeholders.
THERE ARE SIGNIFICANT CHALLENGES TO REMAINING A PUBLIC REIT
The Strategic Review Process was driven in large part by the structural challenges that Cominar faced in its operating environment prior to the COVID-19 pandemic, which has only exacerbated these challenges.
As part of the process, Cominar looked at options to maintain the status quo and continue as a publicly traded REIT. Due to a number of considerations, that path is challenging and riskier for Unitholders. Those considerations described in the Circular include:
- Cominar has the highest leverage level among Canadian REITs of a similar size;
- The REIT has significant debt maturities of more than
$1 billion by the end of 2022; - Cominar's liquidity is constrained by negative free cash flow and limited potential to increase the mortgages on its assets, Asset sales were considered as a way to enhance the status quo, but come with their own challenges, including significant leakage from factors such as tax, and A significant equity issuance may be required to right-size the REIT's debt levels and provide flexibility to pursue the REIT's status quo plan, which could result in significant unitholder dilution.
Furthermore,
- It would require considerable time, capital investments, and execution/market risks to potentially reduce the gap between Cominar's unit price and its IFRS Net Asset Value (NAV) over time or through an en bloc transaction;
- Unitholders should be aware that IFRS NAV is mainly based on appraisals that assume a stabilized level of operations for each property achieved over time, taken individually, under a private real estate market context with no consideration given to the broader financial situation of Cominar and the execution risks associated with achieving stabilized operations, its public market status as a diversified REIT and any potential breakup value and leakage including mortgage defeasance and property brokerage fees, or tax consequences, that could arise from attempting to sell assets individually at the IFRS NAV;
- The REIT continues to be impacted by exposure to the challenged brick-and-mortar retail sector, and there are uncertainties regarding structural changes in office and retail sectors further exacerbated by the COVID-19 pandemic;
- The structural challenges the REIT faces will remain even in a better economic environment, Cominar requires meaningful investments in key retail and office assets, and its industrial assets also require investment to maintain their income generating capabilities, and
- Meaningful investment would also be required to develop or redevelop assets.
These considerations, as well as more that are detailed in the presentation, limit the ability of the REIT to achieve its long-term objectives and meaningfully enhance the status quo. The value derived from the Arrangement is more favourable than what could have been realized through the continuation of the status quo.
Cominar Unitholders as of the close of business on November 10, 2021 (the "Record Date") are entitled to receive notice of, and to vote at, the special meeting of Unitholders to be virtually held on
To be counted at the Meeting, proxies must be received by the REIT's transfer agent,
If Unitholders hold Units as an objecting beneficial owner through an intermediary such as a broker, investment dealer, bank, trust company, trustee, clearing agency (such as CDS) or other nominee holder, and received a voting instruction form from your intermediary or Broadridge Financial Solutions, Inc., they should follow the instructions provided to ensure their vote is counted at the Meeting.
Unitholders who have any questions or need assistance in their consideration of the Arrangement or with the completion and delivery of their proxy, are urged to contact the REIT's strategic unitholder advisor and proxy solicitation agent,
ABOUT COMINAR
Cominar is one of the largest diversified real estate investment trusts in
ABOUT CANDEREL
Canderel is one of
ABOUT FRONTFOUR
FrontFour is a multi-strategy investment company based in
ABOUT ARTIS
Artis is a diversified Canadian real estate investment trust with a portfolio of industrial, office and retail properties in
ABOUT SANDPIPER
Sandpiper is a
ABOUT KREI
KREI is part of
ABOUT MACH
With a portfolio of over 170 properties representing approximately 30 million square feet and 10 million square feet of land,
ABOUT
Caution Regarding Forward-Looking Statements
Certain statements made in this news release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, statements with respect to the rationale of the Special Committee and the
Although the REIT believes that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond the REIT's control and the effects of which can be difficult to predict: (a) the possibility that the proposed Arrangement will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required Unitholder, court and regulatory approvals and other conditions of closing necessary to complete the Arrangement or for other reasons; (b) risks related to tax matters, including as regards the amount of ordinary income to be distributed by the REIT; (c) the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Arrangement; (d) risks relating to the REIT's ability to retain and attract key personnel during the interim period; (e) the possibility of litigation relating to the Arrangement; (f) credit, market, currency, operational, liquidity and funding risks generally and relating specifically to the Arrangement, including changes in economic conditions, interest rates or tax rates; (g) business, operational and financial risks and uncertainties relating to the COVID-19 pandemic; and (h) other risks inherent to the REIT's business and/or factors beyond its control which could have a material adverse effect on the REIT or the ability to consummate the Arrangement.
Readers are cautioned not to place undue reliance on the forward-looking statements and information contained in this news release. Cominar disclaims any obligation to update any forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE
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