Temple REIT

Overview

The REIT is a SIFT trust (and not a REIT for income tax purposes) indirectly carrying on a hotel business. It holds a subsidiary real estate LP (Temple LP) through a subsidiary Ontario unit trust (TR Trust). It will convert to a public corporation (New Temple) under a CBCA plan of arrangement pursuant to s. 85.1(8).

Unit exchanges

Proposed Plan of Arrangement under the Canada Business Corporations Act under which all the outstanding units of the (TSX-listed) REIT are exchanged on a one-for-one basis for common shares of a recently-incorporated CBCA corporation (New Temple) (with the one initial share of New Temple heretofore held by the REIT cancelled.) Options and deferred units also are exchanged on a one-for-one basis for options on New Temple shares and "Deferred Shares."

Stated capital reduction

New Temple will reduce the stated capital of its shares.

REIT/Trust windings-up

TR Trust will be wound-up into the REIT, and the REIT will be wound-up into New Temple, with New Temple assuming all the convertible debenture obligations of the REIT. Following such wind-up, the principal asset of New Temple will be LP units of Temple LP.

Canadian income tax consequences

Provided the Plan of Arrangement becomes effective by December 31, 2012, the REIT unitholders will be deemed under s. 85.1(8) to have disposed of their units for their cost amount. No assurance is given that CRA will not consider the benefit rules in s. 85.1(8)(c) or (d) will apply.