Cominar REIT announces the closing of its acquisition in a hybrid transaction

After the purchase of a portion of the assets of the Cominar REIT (a closed-end unit trust and mutual fund trust holding mostly Quebec real estate directly and through subsidiaries (mostly LPs)) by Group Mach and Blackstone purchasers, the REIT declared a special in-kind distribution to push out all the gains (which was expected to not include more than $43M of net recapture income) resulting from such sales and a s. 111(4)(e) designation, with such special distribution paid by way of issuing units (followed immediately by a unit consolidation). The Purchaser (a limited partnership) then subscribed for REIT units in consideration for cash and “Subscription Notes” issued by it to the REIT. The cash was then used to redeem the units of the public unitholders.

The other unitholders (being entities associated with the consortium owning the Purchaser) had their REIT units redeemed for notes which were set-off against notes that they owed for their subscription for units of the Purchaser once such subscription notes were assigned by the Purchaser to the REIT in repayment of Subscription Notes owing, in turn, by it to the REIT.

Neal Armstrong. Summary of Circular of Cominar Real Estate Investment Trust regarding its acquisition by Iris Acquisition II LP (the “Purchaser”) under Mergers & Acquisitions - REIT/Income Fund/LP Acquisitions - LP Acquisitions of Trusts.