FAM

Documents
(SEDAR filing: 18 December 2012) Final prospectus for FAM Real Estate Investment Trust (the "REIT") (7960 K). Goodmans/McCarthy Tétrault
Summaries
Summary Under
Tax Topics - Public Transactions - Offerings - REIT, Trust and LP Offerings - Domestic REITs
IPO of FAM REIT using notes and exchangeable units
Overview

The REIT, which initially will indirectly hold a portfolio of industrial, office and retail rental properties mostly in western Canada (23 out of 27) will acquire its initial properties through the acquisition of a property LP ("FAM LP") from Huntingdon Capital Corp. (Huntingdon"), which will hold an approximate 18% indirect interest in the REIT through exchangeable units in FAM LP, and also will be the manager.

Structuring steps
  • Huntingdon will directly or indirectly contribute its interests in the initial properties to FAM LP in consideration for Class A and B units, the assumption of $99.2M of mortgages and the issuance of a non-interest bearing promissory note of $9.2M
  • The REIT will issue units under the offering for gross proceeds of $58.8M (before over-allotment) and use a portion of the proceeds to purchase Huntingdon's Class A units and promissory note - and will also issue special voting units to Huntingdon
  • The Class B units will be amended to be exchangeable units (representing an approximate 27% interest if the over-allotment option is exercised) with the same economic entitlements as REIT units
  • The REIT will contribute the promissory note to FAM LP in consideration for the issuance of additional Class A LP units
Distributions

Monthly distributions approximating 95% of AFFO (a yield of 7.5%). An optional DRIP with a 3% bonus distribution. Tax deferral percentage for 2013 is estimated to be 100%.

Management fees

Base management fee of 0.3% of gross book value; property management fees of 5% of gross revenues collected; acquisition fees of 1.0% ranging down to 0.50%; financing fees of 0.25%; leasing fees of 5.0% of base rent for all new leases and 2.0% for renewed leases; construction management fee of 5%

Tax disclosure

The REIT is expected to qualify as a REIT under both the current and proposed rules.