FREDERICTON, NB and TORONTO, ON, April 9, 2013 /CNW/ - Plazacorp Retail
Properties Ltd. (TSXV: PLZ) ("Plazacorp") and KEYreit (TSX: KRE.UN) ("KEYreit") today reiterate the attractiveness of Plazacorp's offer to acquire
100% of the issued and outstanding trust units (the "Units") of KEYreit for $8.35 per Unit (the "Plazacorp Offer"). Under the Plazacorp Offer, KEYreit unitholders will have the option
to tender their Units for either $8.35 per Unit in cash, subject to a maximum aggregate cash amount of
approximately $62.1 million, representing approximately 50% of the
consideration, 1.7041 Plazacorp shares or any combination thereof,
subject to proration.
KEYreit reiterates to unitholders the superiority of the Plazacorp Offer
as compared to Huntingdon Capital Corp.'s ("Huntingdon") offer of $8.00 per unit ("Huntingdon's Amended Offer"), which Huntingdon announced yesterday was their best and final offer.
Unitholders should not tender to Huntingdon's Amended Offer and should withdraw Units that have already been tendered.
The Plazacorp Offer is attractive to holders of KEYreit Units and
provides the following advantages over Huntingdon's Amended Offer:
-
HIGHER CONSIDERATION PER KEYREIT UNIT THAN HUNTINGDON'S UNSOLICITED
OFFER
The cash component of the Plazacorp Offer of $8.35 per Unit is
significantly higher than the $8.00 per Unit offered by Huntingdon's
Amended Offer. Assuming full proration, the current weighted average
value of the Plazacorp Offer implies an $8.14 per Unit value for KEYreit unitholders based on the 1.7041 share
exchange ratio and Plazacorp's closing price on the Toronto Stock
Exchange ("TSX") of $4.65 per share on April 5, 2013. This is also superior to
Huntingdon's Amended Offer of $8.00 per Unit;
-
CURRENT PLAZACORP SHARE PRICE DEPRESSED BY ARBITRAGE ACTIVITY AND IS
EXPECTED TO BE STRONGER POST-CLOSING
Plazacorp has traded down from its closing price on the TSX of $4.85 per
share on March 22, 2013, the last trading day prior to the announcement
of Plazacorp's initial supported offer to acquire KEYreit, on
significantly higher than normal volume. This is a normal phenomenon
with acquisition proposals with a cash and share component where
arbitrage traders short the shares of the acquiror as a hedge against a
long position in the target. This activity adds significant volume to
the shares of both the acquiror and the target, which has been the case
with Plazacorp and KEYreit, and once an acquisition is completed, the
pressure on the shares of the acquiror is removed, which should result
in Plazacorp shares trading on a more normal basis and the value of the
share alternative under the Plazacorp Offer increasing in value;
-
TAX FREE ROLLOVER
A tax-free rollover will be available for eligible Canadian holders of
KEYreit Units who elect to receive Plazacorp shares if any cash
received on proration does not exceed the cost of their KEYreit Units,
whereas no tax-free rollover is available under Huntingdon's Amended
Offer;
-
SIGNIFICANT HIGH SINGLE DIGIT PERCENTAGE ACCRETION PROVIDES SUPPORT FOR
INCREASED PLAZACORP SHARE PRICE AND VALUE OF PLAZACORP OFFER
The acquisition is estimated to immediately deliver high single digit
percentage accretion to Plazacorp's 2013E Adjusted Funds From
Operations ("AFFO") per share. Such accretion assumes completion of
the acquisition, the secured term credit facility financing, and
anticipated synergies as a result of Plazacorp's internalized
management team. Given the higher coupon rates on many of KEYreit's
mortgages and its convertible debentures, it is expected that many
favourable refinancing opportunities will exist over time, which are
expected to further augment AFFO per share accretion;
-
ABILITY TO CONTINUE TO RECEIVE KEYREIT DISTRIBUTIONS
The Plazacorp Offer will remain open for acceptance for 35 days after
Plazacorp's take-over bid circular is mailed to KEYreit unitholders
later this week. Until the expiry of the Plazacorp Offer KEYreit
unitholders will receive an incremental $0.05 per Unit by way of
KEYreit's monthly distribution. Unlike the Plazacorp Offer,
Huntingdon's Amended Offer expires on April 11, 2013 and, as such,
would preclude KEYreit unitholders from participating in KEYreit's
distribution payable to unitholders of record on April 30, 2013.
KEYreit unitholders who elect to receive Plazacorp shares as
consideration and hold them until the record date of Plazacorp's next
dividend (mid-July), will also receive an additional approximately
$0.096 per KEYreit Unit (based on the 1.7041 exchange ratio);
-
PLAZACORP HAS AN OUTSTANDING TRACK RECORD
Plazacorp has a strong track record of generating dividend growth,
having increased its dividends at least once every year in the last 10
years. KEYreit unitholders electing to receive Plazacorp shares stand
to benefit from Plazacorp's sizable, sustainable, and growing
dividends;
-
PLAZACORP IS A HIGH QUALITY INVESTMENT VEHICLE
KEYreit unitholders electing Plazacorp shares will further benefit from
a larger company with a conservative debt level that has an experienced
and internal management team that is fully aligned with shareholders.
The pro forma company will have a market capitalization of
approximately 3.3x KEYreit's current market capitalization, providing
greater liquidity and access to capital. Plazacorp's management team
and board of directors will collectively own approximately 34% of
Plazacorp (based on estimated pro forma basic shares outstanding) upon
completion of the transaction, making them highly aligned with the long
term interest of Plazacorp shareholders and KEYreit unitholders
receiving Plazacorp shares;
-
OPPORTUNITIES FOR FURTHER VALUE CREATION
KEYreit unitholders who elect to take Plazacorp shares as part of this
transaction will benefit greatly from Plazacorp's ability to enhance
the value of KEYreit's property portfolio. The many near- and
longer-term benefits of the pro forma Plazacorp entity (including,
among others: immediate accretion, a compatible property portfolio,
enhanced geographic diversification, a sustainable AFFO payout ratio
and an improved operational and capital markets profile) provide
meaningful additional upside for KEYreit unitholders who elect to
receive Plazacorp shares. Further details regarding benefits of
electing to receive Plazacorp shares can be found in Plazacorp's April
5, 2013 transaction announcement press release and investor
presentation and additional information will be contained in the
take-over bid circular which will be posted to www.sedar.com later this week;
-
REINVESTMENT COSTS ASSOCIATED WITH HUNTINGDON'S AMENDED OFFER
The reinvestment of proceeds received from Huntingdon's Amended Offer
into other investment vehicles may be subject to transaction fees,
including brokerage commissions. Those receiving Plazacorp shares will
not be subject to such fees;
-
KEYREIT BOARD UNANIMOUSLY RECOMMENDS KEYREIT UNITHOLDERS ACCEPT THE
PLAZACORP OFFER AND REJECT HUNTINGDON'S AMENDED OFFER
The Board of Trustees (the "Trustees") of KEYreit, acting on the unanimous recommendation of its Special
Committee comprised solely of independent directors, has unanimously
approved the Plazacorp Offer and unanimously recommends that KEYreit
unitholders tender to the bid. The Trustees also continue to
unanimously recommend that unitholders reject Huntingdon's Amended
Offer. All Trustees of KEYreit intend to tender all of their Units to
the Plazacorp Offer;
-
JOHN BITOVE, KEYREIT'S LARGEST UNITHOLDER (16.3%), HAS AGREED TO ACCEPT
THE PLAZACORP OFFER
John Bitove, CEO of KEYreit and who beneficially owns or controls
approximately 16.3% of the issued and outstanding Units, has agreed to
tender all of his Units to the Plazacorp Offer;
-
PROPOSED REIT CONVERSION AND GRADUATION TO TSX PROVIDE ADDITIONAL
SUPPORT TO PLAZACORP SHARE PRICE AND VALUE OF PLAZACORP OFFER
Plazacorp recently announced its intention to convert to a REIT in 2013
and has received a positive ruling from the Canada Revenue Agency in
respect of such conversion. In conjunction with this expected
conversion, Plazacorp will move from a quarterly common share dividend
to a monthly distribution on units. In addition, and as previously
disclosed, Plazacorp intends to graduate from the TSX Venture Exchange
("TSXV") to the TSX, subject to TSX approval. Such graduation will not be
effective until following the completion of the Plazacorp Offer and any
subsequent acquisition transaction, although Plazacorp will seek to
complete this move as soon as practicable thereafter.
Unitholders who have tendered Units to Huntingdon's Amended Offer and
who wish to obtain advice or assistance in withdrawing their Units are
urged to contact their broker or Kingsdale Shareholder Services Inc.,
the information agent retained by KEYreit, at 1-888-518-1562.
Alternatively, unitholders who have tendered their Units to Huntingdon
by submitting a Letter of Transmittal to Huntingdon can withdraw their
Units before they have been taken up by Huntingdon by sending a written
notice of withdrawal to the Canadian Stock Transfer Company Inc. at its
office in Toronto, Ontario specified in Huntingdon's Letter of
Transmittal.
NON-IFRS OR NON-GAAP MEASURES
Adjusted Funds From Operations (AFFO) is an industry measure widely used
to help evaluate dividend or distribution capacity. AFFO as calculated
by Plazacorp may not be comparable to similar titled measures reported
by other entities. AFFO primarily adjusts FFO for non-cash revenues
and expenses and operating capital and leasing requirements that must
be made merely to preserve the existing rental stream. Most of these
maintenance capital expenditures would normally be considered investing
activities in the statement of cash flows. Capital expenditures which
generate a new investment or revenue stream, such as the development of
a new property or the construction of a new retail pad during property
expansion or intensification would not be considered as maintenance
capital expenditures and would not be included in determining AFFO.
ABOUT PLAZACORP
Plazacorp is a mutual fund corporation and is one of Atlantic Canada's
leading retail property owners and developers. Plazacorp's current
portfolio includes interests in 119 properties totaling 5.2 million
square feet and additional lands held for development. Plazacorp's
properties include a mix of strip plazas, stand-alone small box retail
outlets and enclosed shopping centres anchored by approximately 90%
national tenants including Shoppers Drug Mart, Dollarama, Staples,
Mark's Work Warehouse, Sobeys, and others. Our top ten tenants
contribute just over 53% of total rent. Plazacorp is fully
internalized, therefore providing shareholders directly with the
synergies that come with an internalized management structure.
Plazacorp has proven its strong "value-add" capabilities to develop,
redevelop and acquire retail real estate throughout Atlantic Canada,
Quebec and Ontario. Plazacorp has a strong track record of generating
growth in distributions, having increased its distributions at least
once every year in the last 10 years. As a result of its capabilities,
its performance and its ability to increase dividends, Plazacorp's
share price has also increased significantly since inception.
More information about Plazacorp can be found on our website at
www.plaza.ca or at www.sedar.com.
ABOUT KEYreit
KEYreit (TSX: KRE.UN) is Canada's premier small-box retail property
owner with 225 properties in nine provinces across Canada. KEYreit's
properties are well located and geographically diverse across Canada
with the majority of all properties containing long-term quadruple net
leases.
To find out more about KEYreit (TSX: KRE.UN), visit our website at www.keyreit.com.
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION
This news release contains forward looking statements relating to our
operations and the environment in which we operate, which are based on
our expectations, estimates, forecasts and projections. These
statements are not future guarantees of future performance and involve
risks and uncertainties that are difficult to control or predict.
Therefore, actual outcomes and results may differ materially from those
expressed in these forward looking statements. Readers, therefore,
should not place undue reliance on any such forward looking statements.
Further, a forward looking statement speaks only as of the date on
which such statement is made. We undertake no obligation to publicly
update any such statement, to reflect new information or the occurrence
of future events or circumstances, except for forward-looking
information disclosed in prior disclosures which, in light of
intervening events, requires further explanation to avoid being
misleading.
Neither the TSXV nor its Regulation Services Provider (as that term is
defined in policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE: PLAZACORP RETAIL PROPERTIES LTD.
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