Property trust deal will cost Westons $3.9 billion

The Weston family is poised to create Canada’s largest real estate investment trust through a $3.9-billion deal for its publicly traded Choice Properties REIT to buy Canadian Real Estate Investment Trust (CREIT).

The combination of Choice Properties, which counts Loblaw as its principal tenant and largest unitholder, and CREIT will create a company with a diversified portfolio of 752 properties.

The Weston family — one of Canada’s wealthiest — controls the Loblaw food business and other retail operations, including Shoppers Drug Mart and the Joe Fresh fashion chain, through its holdings in George Weston Ltd (GWL).

“Loblaw and GWL continue to be fully committed to Choice Properties as a strong pillar of growth within the Weston Group of Companies,” said Galen G. Weston, who is chairperson and CEO of Loblaw and GWL. Under the arrangement announced Thursday, Choice Properties will pay about 42 per cent of the purchase price in cash — to a maximum of $1.65 billion — and the rest in Choice Properties units. On a pershare basis, CREIT unitholders are being offered $53.75 in cash or 4.2835 Choice Properties units for each CREIT unit held, subject to the overall cash and equity maximums.

Following the deal, Loblaw Companies Ltd. and George Weston Ltd. will own about 62 per cent and 4 per cent of the combined company respectively. Canadian REIT unitholders will own about 27 per cent.

The deal requires the approval of at least 66 votes from shareholders of Canadian REIT; the vote is expected in April. With files from Bloomberg