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Choice Properties and CREIT Complete Transaction to Create Canada's Preeminent Diversified REIT

May 04, 2018

TORONTO, May 4, 2018 /CNW/ - Choice Properties Real Estate Investment Trust (TSX:CHP.UN, "Choice Properties") and Canadian Real Estate Investment Trust (TSX:REF.UN, "CREIT") today announced the successful completion of the previously announced plan of arrangement (the "Transaction"), which immediately results in the creation of Canada's premier diversified real estate investment trust. The combined entity will operate as Choice Properties and will continue to trade on the Toronto Stock Exchange under the symbol CHP.UN.  The enterprise value will be approximately $16 billion.

"Choice Properties will take an industry leading position as an owner, manager and developer of high-quality real estate", said Stephen Johnson, President and Chief Executive Officer. "This transformational Transaction provides a tremendous opportunity for growth.  We have a highly skilled team of real estate professionals ready to execute an exciting new strategy and create long term value for our Unitholders."

The total real estate portfolio includes 754 properties comprising approximately 69 million square feet of gross leasable area. The retail real estate is focused primarily on necessity-based retail tenants and therefore provides a solid foundation of stable and growing cash flows. The balance of the real estate portfolio is comprised of high-quality industrial assets and office assets concentrated in Canada's largest markets.

The consolidated development pipeline provides meaningful value creation opportunities. This includes the potential to grow an established retail development and intensification program, but more significantly, the combined entity has more than 60 sites for new development as residential-focused, mixed-use communities, many of which are in close proximity to public transportation.

Leadership and Governance

Stephen Johnson, Rael Diamond, and Mario Barrafato have assumed leadership roles at Choice Properties as President and Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, respectively. John Morrison has stepped down as President and Chief Executive Officer of Choice Properties and will serve as non-executive Vice Chairman providing guidance to the combined organization.

In connection with the completion of the Transaction, the Choice Properties Board of Trustees has appointed Stephen Johnson, Karen Kinsley and Michael Latimer, all former CREIT trustees, to serve on the Choice Properties board while Dan Sullivan, Lead Trustee for Choice Properties, has stepped down from the Choice Properties Board.

Transaction Details

CREIT Unitholders had the ability to choose whether to receive $53.75 in cash or 4.2835 Choice Properties units for each CREIT unit held, subject to proration. Unitholders that elected to receive Choice Properties units will not be subject to proration. Unitholders that elected to receive cash, or were deemed to have elected to receive cash, will receive Choice Properties units in respect of approximately 49% of their CREIT units as a result of proration. The total consideration pursuant to the Transaction consisted of approximately $1.65 billion in cash and the issuance of approximately 183 million Choice Properties units. Choice Properties now has approximately 277 million units outstanding. 

In connection with the Transaction, Loblaw Companies Limited ("Loblaw") converted all of its outstanding Class C LP units of Choice Properties Limited Partnership ("Choice Properties LP") with a face value of $925 million into a combination of Class B LP units of Choice Properties LP and cash on closing.

Loblaw and George Weston Limited have an effective interest of approximately 62% and 4% of the combined entity, respectively. Approximately 34% of Choice Properties units are now owned publicly, including former CREIT Unitholders which represent approximately 27% of the total ownership.

CREIT's units are expected to be delisted from the Toronto Stock Exchange at the close of trading on May 7, 2018. CREIT will apply to cease to be a reporting issuer in all of the provinces and territories of Canada. Prior to the closing of the Transaction, CREIT terminated its distribution reinvestment plan and unit purchase plan (the "Plans"), with all units administered under the Plans allocated in accordance with such plan and the plan of arrangement.

Choice Properties intends to maintain its current distribution of $0.74 per unit on an annual basis and recently announced that it has temporarily suspended its distribution reinvestment plan beginning with distributions declared in May 2018. CREIT Unitholders who received Choice Properties units as part of their consideration under the Transaction will benefit from an approximately 70% increase in their cash distributions, relative to their former annual distributions from CREIT.

Forward-Looking Statements

This press release for Choice Properties and CREIT contains forward-looking statements about the combined entity including: the combined entity's financial position; growth prospects of the combined entity; certain strategic benefits of the Transaction; distribution policy; intensification and development opportunities; and the combined entity's anticipated future results and projected growth. Forward-looking statements reflect current estimates, beliefs and assumptions, which are based on Choice Properties' and CREIT's perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. Choice Properties' and CREIT's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. Choice Properties and CREIT can give no assurance that such estimates, beliefs and assumptions will prove to be correct.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Choice Properties' and CREIT's expectations only as of the date of this release. Choice Properties and CREIT disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

For additional information, visit www.choicereit.ca or Choice Properties' issuer profile at www.sedar.com

SOURCE Choice Properties Real Estate Investment Trust

Kim Lee, Vice President, Investor Relations and Business Intelligence, 416-324-7899, kim.lee@choicereit.ca