Confirms Receipt of Final Order for Amended
Reorganization to Simplified REIT Structure
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DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH
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TORONTO, March 22, 2018 /CNW/ - H&R Real Estate
Investment Trust ("H&R REIT" or "H&R") and
H&R Finance Trust ("H&R Finance Trust" and, together
with H&R REIT, the "Trusts") (TSX: HR.UN) have announced
today that they have received a final order from the Court of
Queen's Bench of Alberta (the
"Court") approving the previously announced amended internal
reorganization of the Trusts (the "Amended
Reorganization").
The original proposed reorganization of the Trusts (the
"Original Reorganization") was described in the joint
management information circular of the Trusts dated October 31, 2017 and had been intended to
continue the benefits of the Trusts' existing stapled unit
("Stapled Unit") structure that has been in place since
2008. Joint meetings of unitholders ("Unitholders") of the
Trusts were held on December 7, 2017
and Unitholders approved the Original Reorganization, with
approximately 99.8% of the Unitholders of each of H&R REIT and
H&R Finance Trust, respectively, voting in favour of the
Original Reorganization. On December
14, 2017, the Trusts received a final order from the Court
approving the Original Reorganization. However, as a
result of certain considerations, including the enactment in late
December 2017 of the U.S. federal
income tax legislation originally referred to as the Tax Cuts and
Jobs Act, the Trusts concluded that the Stapled Unit structure is
no longer necessary and that the Amended Reorganization should
instead be implemented.
The Amended Reorganization will be effected by way of plan of
arrangement involving H&R REIT, H&R Finance Trust and
certain of H&R REIT's subsidiaries resulting in, among other
things, (i) H&R Finance Trust transferring debt owed to it by
H&R REIT's U.S. subsidiary, H&R REIT (U.S.) Holdings Inc.
("U.S. Holdco"), to H&R REIT and (ii) Unitholders
subsequently transferring their units of H&R Finance Trust to
H&R REIT for nominal consideration and retaining their units of
H&R REIT. Following completion of the Amended Reorganization,
investments that are currently held through H&R REIT and
H&R Finance Trust will instead be held solely through H&R
REIT. The units of H&R REIT are expected to trade on the TSX
under the ticker symbol "HR.UN" and H&R Finance Trust will be
dissolved. The Amended Reorganization will remove certain steps
contemplated in the Original Reorganization, including: the
establishment of H&R Finance (2017) Trust ("H&R F17
Trust") to replace H&R Finance Trust, the transfer of
indebtedness of U.S. Holdco by H&R REIT to H&R F17 Trust,
and the stapling of units of H&R REIT with units of H&R F17
Trust.
The Amended Reorganization remains subject to the receipt by the
Trusts of an advance income tax ruling from the Canada Revenue
Agency in form and substance satisfactory to the Trusts and other
customary closing conditions. The Amended Reorganization is
expected to be implemented by August
2018.
The boards of trustees of the Trusts believe that the proposed
Amended Reorganization is fair and reasonable to the Trusts and
Unitholders. As a result of the Amended Reorganization, H&R
REIT expects it will be more comparable to other Canadian real
estate investment trusts due to its simplified structure. The
Amended Reorganization is expected to occur without adverse tax
consequences to Unitholders resident in Canada. In fact, Unitholders resident in
Canada will benefit from the
simplified structure of H&R REIT, which is expected to result
in more straightforward Canadian tax reporting for Unitholders.
In addition, the Amended Reorganization will place
Unitholders resident in the United
States ("U.S. Unitholders") in a better position
relative to the Original Reorganization from a Canadian withholding
tax perspective. Specifically, distributions by H&R F17 Trust
to U.S. Unitholders would not have been eligible for reduced rates
of Canadian withholding tax pursuant to the Canada-United States
Tax Convention (1980), whereas, after the Amended Reorganization,
all distributions will be paid by H&R REIT and such
distributions may benefit from reduced rates of withholding tax
under such convention.
Registered Unitholders will be mailed a new letter of
transmittal instructing them to surrender their certificate(s)
representing Stapled Units for replacement certificate(s)
representing units of H&R REIT. Such registered Unitholders
should complete the letter of transmittal and return it, along with
the certificate(s) representing the Stapled Units, to AST Trust
Company (Canada), the depositary
for the Amended Reorganization, in accordance with the instructions
set forth in the letter of transmittal. The letter of transmittal
will also be available on SEDAR at www.sedar.com and can be
obtained by contacting AST Trust Company (Canada) toll free at 1-888-433-6443 or via
e-mail to fulfilment@astfinancial.com.
For more information on the Amended Reorganization, please see
the amended and restated plan of arrangement, which will be
available on H&R REIT's profile on SEDAR at www.sedar.com.
About H&R REIT and H&R Finance
Trust
H&R REIT is Canada's
largest diversified real estate investment trust with total assets
of approximately $14.6 billion at
December 31, 2017. H&R REIT is a
fully internalized real estate investment trust and has ownership
interests in a North American portfolio of high quality office,
retail, industrial and residential properties comprising over 45
million square feet.
H&R Finance Trust is an unincorporated investment trust,
which primarily invests in notes issued by a U.S. corporation which
is a subsidiary of H&R REIT. The current note receivable
balance is US$223.9 million. In 2008,
H&R REIT completed an internal reorganization which resulted in
each issued and outstanding H&R REIT unit trading together with
a unit of H&R Finance Trust as a "Stapled Unit" on the TSX.
Forward-looking Statements
Certain statements in this news release contain forward-looking
information within the meaning of applicable securities laws (also
known as forward-looking statements). These forward-looking
statements include, but are not limited to the Trusts' plans,
objectives, expectations and intentions, including concerning the
ability to obtain the income tax ruling from the Canada Revenue
Agency on the terms and timing contemplated by the parties, to
complete the Amended Reorganization on the terms and on the timing
contemplated by management, the income tax consequences of the
Amended Reorganization, comparability of H&R REIT's structure
to other Canadian real estate investment trusts upon completion of
the Amended Reorganization and the assumption that all necessary
conditions will be met for the completion of the Amended
Reorganization. Such forward-looking statements reflect the Trusts'
current beliefs and are based on information currently available to
management. These statements are not guarantees of future
performance and are based on the Trusts' estimates and assumptions
that are subject to risks and uncertainties, including those to be
set forth in the management information circular of the Trusts
dated October 31, 2017 and in H&R
REIT's materials filed with the Canadian securities regulatory
authorities from time to time, which could cause the actual results
and performance of the Trusts to differ materially from the
forward-looking statements contained in this news release. Although
the forward-looking statements contained in this news release are
based upon what the Trusts believe are reasonable assumptions,
there can be no assurance that actual results will be consistent
with these forward-looking statements. All forward-looking
statements in this news release are qualified by these cautionary
statements. These forward-looking statements are made as of today
and the Trusts, except as required by applicable law, assume no
obligation to update or revise them to reflect new information or
the occurrence of future events or circumstances.
Additional information regarding H&R REIT and H&R
Finance Trust is available at http://www.hr-reit.com and on
www.sedar.com.
SOURCE H&R Real Estate Investment Trust