TORONTO, Feb. 1, 2012 /CNW/ - NorRock Realty Finance Corporation ("NorRock") (TSX: RF.A; RF.PR.A; RF.WT) and Partners Real Estate Investment Trust ("Partners REIT") (TSXV: PAR.UN) announced today the closing of the previously announced acquisition of substantially all the assets of NorRock, consisting of cash, cash equivalents, mortgages and other assets from NorRock in exchange for the issuance of Partners REIT units, certain rights to acquire Partners REIT units and cash.
Closing Consideration Paid by Partners REIT
Partners REIT paid $41,742,531 (which amount includes a credit to NorRock of $1,425,000 on account of expenses and a payment of $1,200,000 in respect of certain cash equivalents) (the "Cash at Closing Payment") for the cash and cash equivalents held by NorRock. In addition, it has paid $9,422,980 (the "Assets at Closing Payment") for the non-cash assets of NorRock. Since October 17, 2011, NorRock has sold assets with a value of $3,177,020, which amount has been deducted from the Assets at Closing Payment and added to the Cash at Closing Payment.
Partners REIT made the Cash at Closing Payment and Assets at Closing Payment by transferring (or directing the transfer) to NorRock the following units and cash (excluding the stub period dividend payments and payments to stock appreciation rights holders which were funded by NorRock) to NorRock:
|(a)||for each NorRock preferred share, 13.72824 Partners REIT units, together with cash equal to any stub period dividend payment, or, if the holder has so elected, 12.71676 Partners REIT units and $1.75 in cash together with cash equal to any stub period dividend payment;|
|(b)||for each NorRock Class A share, 3.29445 Partners REIT units, a number calculated by determining the amount of the Cash at Closing Payment and Assets at Closing Payment, less an amount equal to the number of issued and outstanding NorRock preferred shares multiplied by $23.75, and dividing the result by the number of outstanding NorRock Class A shares (the amount per share being the "NorRock Class A Share Consideration") and then dividing by $1.73; and|
|(c)||for each of the 150,000 NorRock stock appreciation rights outstanding, $0.59 paid in cash per stock appreciation right, a number calculated by subtracting $5.11 from the NorRock Class A Share Consideration.|
The Partners REIT units payable to holders of NorRock Class A shares have a value of $6.33 based on the $1.92 closing price of the Partners REIT units on the TSX Venture Exchange on January 31, 2012. The Partners REIT units payable to holders of NorRock preferred shares who did not elect to receive some of the consideration in cash have a value of $26.36 based on the same closing price.
In connection with closing:
- 29,575,333 Units were issued (representing approximately 95% of the currently issued and outstanding Units) to holders of NorRock preferred shares and Class A shares;
- $344,050 was paid to those holders of NorRock preferred shares that elected to receive partial consideration in cash;
- $217,717 was paid on account of the stub period dividend payment for the NorRock preferred shares to holders of such shares;
- $88,500 was paid to holders of NorRock stock appreciation rights; and
- 3,074,160 Rights (as defined below) will be issued to holders of NorRock Class A shares and holders of NorRock stock appreciation rights.
Rights - Additional Consideration Payable by Partners REIT
In addition to the Partners REIT units issued and cash paid at closing as described above, at Closing Partners REIT issued 3,074,160 non-transferable rights ("Rights") to NorRock. Under the plan of arrangement, NorRock is obligated to distribute these Rights to the holders of its Class A shares and stock appreciation rights. See "Timing of Distributions of Partners REIT Units to Holders of NorRock Securities" below.
The Rights will entitle the holder to receive Partners REIT units (or, in Partners REIT's discretion, a cash payment in lieu of all or a portion of such units) corresponding to that holder's pro rata share of the Deferred Payment described below. The number of Partners REIT units to be issued, if any, will be calculated based on the five day volume weighted average trading price of the Partners REIT units determined at the time of issue.
Holders of the Rights may receive additional payments after closing in accordance with the terms of the Rights, which will be paid on a pro rata basis based upon the number of issued and outstanding Rights. The aggregate of such payments (the "Deferred Payment"), if any, will be equal to the (A) Liquidated Value plus the Retained Value (both as defined below) less (B) the Assets at Closing Payment less (C) 20% of the amount (if any) that the Liquidated Value exceeds the Assets at Closing Payment.
To the extent that the Deferred Payment is equal to or less than $0.01 per Right, a payment of $0.01 will be payable per Right.
After closing, Partners REIT may choose to sell the mortgages and other non-cash assets it has purchased from NorRock. If Partners REIT chooses to sell any of such assets before July 1, 2012, such assets will be valued at the net sale price (in the case of a sale to parties that are arm's-length to Partners REIT, or at a price equal to or above an independent valuation if such asset is sold to a party that is not arm's-length to Partners REIT) (the "Liquidated Value"). If Partners REIT continues to hold any such assets on July 1, 2012, it will have such assets valued as of July 1, 2012 by two independent and qualified valuators by August 1, 2012. The average valuation will be considered to be the "Retained Value" for such assets.
In accordance with the terms of the Rights, the Deferred Payment will be made up to 90 days following the earlier of:
- the liquidation of all non-cash assets acquired by Partners REIT from NorRock; and
- August 1, 2012.
The Rights are not and will not be listed on any stock exchange. The Rights are not transferable by an initial holder except by operation of law or to the heirs, executors and successors of an initial holder.
Timing of Distributions of Partners REIT Units to Holders of NorRock Securities
Under the plan of arrangement, NorRock is obligated to distribute any cash, Rights and Partners REIT units received from Partners REIT to its security holders, as set out above.
The distribution of Partners units and cash to holders of NorRock preferred shares will be made by Computershare Investor Services Inc., the depositary for the arrangement, as soon as practicable after closing.
The distribution of Rights to holders of NorRock stock appreciation rights will be made by Computershare Investor Services Inc., the depositary for the arrangement, as soon as practicable after closing.
The distribution of Partners units and Rights to holders of NorRock Class A shares will be made to these shareholders of record as of the close of trading on February 6, 2012 and will be made by Computershare Investor Services Inc., the depositary for the arrangement, on or about February 14, 2012.
A total of 29,575,333 Partners REIT units were issued at closing (representing approximately 95% of the currently issued and outstanding Partners REIT units). The maximum number of Partners REIT units issuable under the Rights agreement is 3,000,000, representing approximately 10% of the currently issued and outstanding Partners REIT units.
Trading of NorRock Preferred Shares and Class A Shares on the TSX
As part of the plan of arrangement completed today, the NorRock preferred shares were cancelled, so certificates representing the NorRock preferred shares represent only the right to receive the Partners REIT units to which such holder is entitled and, if elected by the holder prior to January 31, 2012, cash.
The Toronto Stock Exchange has advised NorRock that it expects that the NorRock preferred shares will be delisted from the Toronto Stock Exchange on or about February 3, 2012. The TSX has also advised NorRock that it expects that the NorRock Class A shares will be halt traded as at the opening of the markets on or about February 6, 2012. Trading in the NorRock Class A shares will continue to be halted until such time as the NorRock Class A shares are delisted.
Upon closing of the Transaction, NorRock will have substantially sold all of its assets. As a result, NorRock is required to meet the original listing requirements of TSX in order to remain listed. NorRock does not expect to meet the original listing requirements of TSX. If NorRock does not voluntarily delist from TSX by March 1, 2012, TSX may delist NorRock's securities.
To maintain liquidity in the NorRock Class A shares, NorRock intends to apply to list its Class A shares on NEX. NEX is a separate board of the TSX Venture Exchange ("TSX-V") that provides a trading forum for listed companies that have low levels of business activity or have ceased to carry on an active business. Only companies that were formerly listed on TSX or TSX-V are eligible to list on NEX. NEX companies are subject to the same disclosure standards as all Canadian public companies and trading on NEX takes place on the same fully electronic system used by TSX-V and is governed by the same trading rules.
NorRock's board of directors and management continue to explore options which they believe will be in the best interests of NorRock and its shareholders. Any proposed transaction will be subject to receipt of all necessary regulatory approvals. The business of NorRock may remain in the commercial real estate lending industry or be in a different industry.
Consolidation of Partners REIT Units
In addition, the previously announced consolidation of Partners REIT units on the basis of one post-consolidation unit for every four pre-consolidation units held is now expected to occur on or about February 16, 2012. More information will be disseminated to Partners REIT unitholders closer to that time.
NorRock is a mutual fund corporation incorporated under the laws of the Province of Ontario. It was created to obtain exposure to the investment performance of an actively managed portfolio of mortgages and secured loans in the Canadian commercial real estate sector on a tax-efficient basis.
About Partners REIT
Partners REIT is a growth-oriented real estate investment trust, which currently owns (directly or indirectly) 21 retail properties located in British Columbia, Ontario, Manitoba and Quebec, aggregating approximately 1.7 million square feet of leaseable space. Partners REIT focuses on expanding and managing a portfolio of retail and mixed-use community and neighbourhood shopping centres located in both primary and secondary markets across Canada.
Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "believe", "expect," "will", "offers the opportunity", "intend, "look forward" and similar expressions to the extent they relate to Partners REIT and NorRock. The forward-looking statements are not historical facts but reflect Partners REIT's and NorRock's current expectations regarding future results or events. 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, including the anticipated value to be received by holders of NorRock Class A shares and stock appreciation rights; our ability to obtain regulatory and other approvals; the fulfillment of conditions precedent to closing the transaction and the successful completion of the transaction; our expectations regarding an increase in funds available to Partners REIT as a result of the acquisition, our expectations regarding the retention or sale of the mortgages and other assets acquired by Partners REIT in connection with the transaction; Partners REIT's status as a "real estate investment trust" after the closing of the transaction; our expectations regarding an additional payment to the holders of NorRock Class A shares and stock appreciation rights after the closing of the transaction; Partners REIT's intention to continue to grow and diversify its portfolio; the continued listing of the NorRock preferred shares and Class A shares on the TSX; intended acquisitions to be made by Partners REIT; any proposed changes to the business of NorRock that its directors believe will be in the best interests of NorRock and its shareholders; and general economic and industry conditions. Although each of Partners REIT and NorRock 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.
The forward-looking statements contained in this press release reflect our current views with respect to future events and are also subject to certain other risks and uncertainties and other risks detailed from time-to-time in Partners REIT's and NorRock's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com. Neither Partners REIT nor NorRock undertakes any obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information:
Patrick Miniutti, President and Chief Operating Officer (250) 940-5500
NorRock Realty Finance Corporation:
Jacqueline Boddaert, Chief Executive Officer (416) 479-9510 ext. 305