Dundee and Whiterock REITs Enter Into Transaction Agreement
January 19, 2012
Dundee Real Estate Investment Trust and Whiterock Real Estate Investment Trust have entered into an agreement for the acquisition by Dundee of all the outstanding units of Whiterock REIT. Dundee will offer to purchase each Whiterock unit for either $16.25 in cash, or 0.4729 Dundee REIT units.
Michael Cooper, CEO of Dundee REIT, said of the transaction, “I am delighted to announce our agreement to acquire Whiterock. We have watched the evolution and growth of Whiterock with great interest for a number of years and are excited to add its attractive portfolio of assets to the Dundee portfolio. The Transaction is at a 6.5 per cent capitalization rate, not including an additional $4 million in property related management income.”
Dundee REIT proposes to acquire all of the issued and outstanding units of Whiterock for a mix of cash and Dundee REIT units. Whiterock unitholders can elect to receive either $16.25 in cash or 0.4729 units of Dundee REIT, subject to a maximum aggregate of 17.4 million units, which can be done on a tax-deferred basis.
The Transaction will be subject to the approval of two-thirds of Whiterock unitholders, who will vote at a meeting of Whiterock unitholders scheduled for February 27th, 2012.
The Transaction agreement contains a $20 million break fee payable by Whiterock to Dundee REIT, including the acceptance of Whiterock of an unsolicited superior proposal from a third-party. Dundee REIT has been granted a right-to-match any superior proposal that may arise.
“This Transaction offers Whiterock unitholders the opportunity to crystallize value and to participate in further appreciation of Dundee’s unit price through the unit option on a tax-deferred basis,” notes Jason Underwood, CEO of Whiterock. “The Board of Trustees of Whiterock is excited to bring this offer to Whiterock unitholders and unanimously recommends that unitholders vote in favour of the Transaction.”
Whiterock REIT’s portfolio is a strategic fit with Dundee REIT’s current portfolio. Dundee REIT benefits from the Transaction by the following:
- Improved Portfolio Diversification – the addition of Whiterock’s properties will enhance the geographic diversification of Dundee REIT’s portfolio
- Increased Scale – Dundee is currently the sixth largest REIT in Canada by market capitalization. Upon the completion of this Transaction it will move to being the fourth largest REIT by market capitalization.
- Strengthened Tenant Base: Dundee’s tenant roster will be further strengthened with the addition of stable, high credit quality tenants who have long-term leases.
- Potential for Accretive Financing: Whiterock’s current average interest rate is 5.3 per cent and its debt profile allows Dundee REIT to realize incremental accretion on debt refinancing.
The Transaction has been unanimously approved by the Board of Trustees of Dundee REIT.
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