TORONTO, April 16, 2012 /CNW/ - GT Canada Medical Properties Real Estate Investment Trust (TSX-V: MOB.UN) ("GT Canada") announced that it has entered into a definitive agreement with NorthWest Value Partners Inc. ("NorthWest") pursuant to which NorthWest will offer to acquire all of GT Canada's outstanding units for $2.05 per unit (the "Offer"). The Offer price is subject to adjustment for dilution that may result from the issuance of additional units pursuant to GT Canada's rights offering (the "Rights Offering") that expires on April 24, 2012.
As a condition of the Offer, GT Canada's existing portfolio of eleven medical office buildings, as well as a 25,313 square foot fully leased medical office building in Port Hope, Ontario which GT Canada is scheduled to acquire on May 1, 2012 (collectively, the "GT Canada Portfolio"), will be sold to NorthWest Healthcare Properties Real Estate Investment Trust ("NorthWest Healthcare Properties REIT") (TSX: NWH.UN) for $87.3 million on terms consistent with the Offer.
"This is a great opportunity for GT Canada unitholders", said Andrew Shapack, CEO of GT Canada. "The transaction provides liquidity, good value and affirms our disciplined focus on creating a portfolio consisting exclusively of medical office properties."
GT Canada's Board of Trustees, following the recommendation of its Special Committee in consultation with its financial and legal advisors, has unanimously determined that the Offer and accompanying sale of the GT Canada Portfolio is in the best interests of all unitholders and unanimously recommends that GT Canada's unitholders (i) tender their units to the Offer; and (ii) approve the accompanying sale of the GT Canada Portfolio as part of the tender process.
Details of the Transaction
Under the terms of the transaction agreement, NorthWest proposes to offer to acquire all of the issued and outstanding units of GT Canada for $2.05 per unit, subject to the adjustment detailed below, by way of a take-over bid made to all unitholders. This represents a 61.4% premium to the closing price of $1.27 for the units on the TSX Venture Exchange ("TSXV") on Friday, April 13, 2012.
The Offer is subject to a number of conditions including acceptance of the Offer by the holders of at least 66 2/3% of the outstanding units. In the event that the minimum tender condition is met, NorthWest has agreed to extend the expiry date of the Offer by ten 10 days to allow unitholders who have not tendered, the opportunity to do so. Pursuant to the transaction agreement, GT Canada has the right to seek superior offers for the units for a period of fourteen (14) days (the "Go-Shop Period"). In the event that a superior offer for the units is received during the Go-Shop Period or thereafter which the GT Canada Trustees approve, and NorthWest does not exercise its right to match the superior offer, then a $1.9 million break fee is payable by GT Canada to NorthWest. Similarly, in certain circumstances, including if NorthWest fails to make the Offer and GT Canada is not in breach of the transaction agreement, a $1.9 million break fee is payable by NorthWest to GT Canada.
The subsequent sale of the GT Canada Portfolio to NorthWest Healthcare Properties REIT will be for a purchase price of $87.3 million, which represents an approximate 7% cap rate on in-place net operating income. The purchase price will be satisfied through the assumption of existing debt, cash and/or the issuance of NorthWest Healthcare Properties REIT units. The subsequent sale is subject to unitholder, exchange and other regulatory approvals.
Support for the Transaction
The Trustees of GT Canada have unanimously resolved to recommend that unitholders tender their units to the Offer and support of the sale of the GT Canada Portfolio. Each of the Trustees of GT Canada have agreed to support the transaction by tendering their units to the Offer and indicating their support of the sale of the GT Canada Portfolio. A Trustee's circular recommending the Offer and related sale transaction will be mailed to unitholders in due course.
The Trustees also recommend that unitholders exercise their rights under the Rights Offering to ensure that their ability to participate in the Offer is not diluted. Materials in relation to the Rights Offering, including instructions on how to exercise your rights, were mailed to unitholders on April 3, 2012.
The Special Committee of the Board of Trustees (the "Special Committee") engaged Raymond James Inc. ("Raymond James") as its financial advisor and Borden Ladner Gervais LLP as legal counsel. The Special Committee has received a fairness opinion from Raymond James, to the effect that, as of the date of such opinion and subject to the assumptions, limitations and qualifications set forth therein, the consideration offered to GT Canada unitholders under the Offer is fair, from a financial point of view, to all GT Canada unitholders.
Potential Impact of the Rights Offering
Assuming that all rights issued by GT Canada are exercised under the Rights Offering and the maximum of 3,880,212 new units are issued by GT Canada, the Offer price will be adjusted to $1.87 to reflect this additional dilution. Should fewer rights be exercised and fewer units issued, the reduction applied to the Offer price will be smaller. In addition, as part of the transaction agreement, the Trustees and Management of GT have agreed to limit their participation in the Rights Offering to a maximum of approximately $250,000, representing the total value of their basic subscription entitlements.
A complete description of the Offer and related sale transaction will be provided to GT Canada's unitholders in NorthWest's take-over bid circular. The Offer is expected to be completed in the second quarter of 2012. Specific details and timing of the Offer, related sale transaction and instructions on how to accept the Offer will be provided in the take-over bid circular.
GT Canada Medical Properties REIT
As Canada's only publicly traded issuer focused exclusively on medical office buildings, GT Canada Medical Properties Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT's objectives are to: (i) provide its unitholders with stable and growing cash distributions from investments focused on medical office buildings, on a tax efficient basis; (ii) enhance the value of the REIT's assets and maximize long-term unit value; and (iii) expand the asset base of the REIT.
This news release contains "forward-looking statements" within the meaning of applicable securities laws, including those relating to the acquisition and the opportunities for expansion. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations.. The statements in this news release are made as of the date of this release. Although the REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. A discussion of the risk factors applicable to the REIT is contained under the heading "Risk Factors" in the REIT's prospectus dated December 17, 2010, a copy of which may be obtained on the SEDAR website at www.sedar.com.
Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) has approved or disapproved the contents of this press release.
For further information:
Andrew I. Shapack
Chief Executive Officer
GT Canada Medical Properties REIT