Slate Retail REIT adopts new exchangeable unit methodology

The Slate U.S. Opportunity (No. 2) Realty Trust ("SUSO 2"), which is an unlisted mutual fund trust holding US rental properties through an Ontario holding limited partnership (which is a corporation for Code purposes) and subsidiary Delaware LPs of the Ontario holding LP, will be merged into the similar No. 1 Fund ("SUSO 1") under s. 132.2, with SUSO 1 then being listed on the TSX and being renamed Slate Retail REIT (the "REIT").

The REIT will also acquire three partnerships indirectly holding similar US rental properties.  The Canadian unitholders of one of these partnerships (GAR B) can seek Canadian rollover treatment by electing to receive exchangeable units.  However, rather than selling GAR B to the Ontario holding LP of the REIT in exchange for exchangeable units of that LP, GAR B effectively will be synthetically converted into a subsidiary of an indirect Delaware subsidiary LP of the REIT, and the GAR B units of the Canadian rollover-seeking unitholders will be amended to be exchangeable units rather than being transferred.

Unlike most pre-March 2013 exchangeable structures, these exchangeable units do not have any exchange rights against the REIT.  Instead they are only retractable for proceeds paid by GAR B, with a right of the general partner to decide whether such proceeds are paid by GAR B in REIT units or in cash.

Neal Armstrong.  Summary of Circular of Slate U.S. Opportunity (No. 2) Realty Trust and the Slate U.S. Opportunity (No. 1) Realty Trust under Mergers -& Acquisitions – Section 132.2 Mergers – REIT Mergers.