DBRS Maintains Primaris Retail Real Estate Investment Trust Under Review with Positive Implications

DBRS has today maintained the Issuer Rating of BBB (low) for Primaris Retail Real Estate Investment Trust (Primaris or the Trust) Under Review with Positive Implications following H&R Real Estate Investment Trust’s (H&R) announcement yesterday of an amended offer to acquire the Trust for 1.166 stapled units of H&R or $28.00 cash per unit, subject to a maximum cash amount of $1.28 billion (the Transaction). This Transaction includes 26 of the 44 properties currently owned or soon to be acquired by Primaris and results in a value of $3.1 billion (including assumed debt of $1.4 billion).

A KingSett Capital-led consortium has agreed to acquire the balance of properties from Primaris prior to the completion of H&R’s proposed transaction for $1.9 billion (including assumed debt of $600 million). The previously announced KingSett Capital-led consortium offer has been withdrawn in accordance with its terms, and affiliates of KingSett Capital that own approximately 7% of Primaris’ units have agreed to support the Transaction. The Board of Trustees of Primaris and H&R have unanimously agreed to vote their units in favour of the Transaction and to recommend that their respective unitholders vote in favour of the Transaction.

Primaris was originally placed Under Review with Positive Implications on January 17, 2013, following H&R’s first offer to acquire all of the issued and outstanding units of Primaris (please see the January 17, 2013, press release).

DBRS confirmed the rating of H&R’s Senior Unsecured Debentures at BBB with a Stable trend following the announcement of the amended offer (please see the February 6, 2013, press release). Therefore, Primaris’ rating remains Under Review with Positive Implications until the successful completion of the Transaction. DBRS notes that the completion of the Transaction could result in the discontinuation of the Trust’s Issuer Rating as all of the Trust’s outstanding units, at the time of closing, would be acquired by H&R.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Real Estate Entities (April 2011), which can be found on our website under Methodologies.