Cominar Real Estate Investment Trust Unit T.CUF.UN

Primary Symbol: CMLEF

Real Estate REIT - Diversified

Cominar Real Estate Investment Trust is a Canadian REIT involved in the ownership and management of properties throughout the Canadian provinces. Cominar's real estate portfolio comprises a mix of office, retail, and industrial and mixed-use properties. While industrial and mixed-use assets are the most numerous and command the most square footage in the company's portfolio, office and retail locations combined represent the vast majority of the portfolio's total value. Most of Cominar's properties are located in the Greater Quebec City and Montreal areas. The company derives nearly all of its revenue from rental income from its investment properties. The source of this revenue is largely split between Cominar's office and retail locations.

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Cominar Real Estate Investment Trust Unit

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Post by gwplanton Sep 24, 2012 8:53pm

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Post# 20409033

Scotia comments on latest PR

Cominar REIT (CUF.UN-T C$23.86) Pammi Bir, CA, CFA - (416) 863-7218
(Scotia Capital Inc. - Canada)
Temporary Financing to Fund CJD Phase II
Event
¦ CUF and the Dallaire family announced that the family has arranged $74M of temporary
financing via monetization of 3M of its 9M CUF units (held by private holding company
"AM Total Investissements").
Implications
¦ Family to use proceeds to fund CJD Phase 2 project in Q. City. As a reminder, Phase 2 incl.
10 storeys of office space and ~200 condo units on 15 floors and is being developed at the
family's risk. Upon completion of the project, the office component is expected to be sold to
the REIT. Note that the family is not selling down its interest in the REIT (currently holds
7.3% equity stake), but effectively providing 3M units as collateral for the loan and
retaining all the associated ownership and voting rights. To arrange the loan, a CDN bankowned
dealer announced a bought deal secondary offering for 3M units at $24.15/unit (2%
discount to $24.65 Sept. 20 close, effectively selling units short; note monetization involves
a forward contract between the dealer and AM Total based on Sept. 20 closing price). We
also highlight a similar $21M monetization was done in Sept. 2010 for 1M units.
Recommendation
¦ Positive view and estimates intact. That said, the somewhat convoluted means of arranging
financing for the family may cause investor confusion and raise questions as to whether an
alternative arrangement could have been arranged. We note, however, that the family
remains economically aligned via its substantial unit holdings. We continue to view
valuation as attractive (15.2x 2013E AFFO/6.3% implied cap vs. 16.3x/6.6% sector).