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.