REIT market lights up after bid
Investors expect the bidding for Primaris Retail REIT to heat up in the wake of a surprise $2.4 billion takeover offer for the shopping mall owner from a group led by KingSett Capital.
In heavy trading Wednesday on the Toronto Stock Exchange, Primaris’s units soared $3.36 apiece or nearly 15 per cent to close at $26.40, on volume of more than 11.1 million units.
The closing price was 40 cents above KingSett’s $26-per-unit offer, suggesting that investors expect a richer offer to emerge, either from KingSett and its backers or a rival bidder.
The KingSett consortium includes Edmonton-based AIMCo, Alberta’s $70-billion pension fund manager; Ivanhoe Cambridge, a major Canadian shopping mall owner and the Ontario Pension Board.
The all-cash offer from KingSett, a Toronto-based real estate private equity firm, represents a premium of 13.3 per cent over the volume-weighted average trading price of Primaris’s units over the prior 20 trading days. Torontobased Primaris owns 35 largely second-tier shopping malls across Canada. The properties, which include St. Albert Centre as well as Calgary’s Northland Village Mall and Sunridge Mall, are more than 97 per cent occupied.
Primaris’s anchor tenants already include many of the top names in Canadian retailing, including Hudson’s Bay Co., Shoppers Drug Mart and Canadian Tire. A push by Target and other big-name United States retailers to enter the Canadian market is expected to intensify competition for prime retail space.
“This is a strong and compelling offer, providing unitholders with a premium price at a time of peak valuations in the sector,” says Jon Love, KingSett’s managing partner and former CEO of Oxford Properties.
Oxford, which was sold in 2001 to the Ontario Municipal Employees Retirement Board (OMERS), was founded in Edmonton in 1960 by Love’s father, Don Love.
Jon Love went on to form KingSett in 2002.
In a related deal, RioCan REIT, the country’s largest shopping mall owner, has agreed to pay KingSett $1.1 billion for certain undisclosed Primaris properties, pending completion of the offer for Primaris.
The prospect of a bidding war for Primaris lit a fire under the entire REIT sector Wednesday on the TSX. Other big movers included Allied Properties REIT, Artis REIT, Calloway REIT and Cominar REIT.
Ross Bricker, the veteran head of AVAC Ltd., a not-for-profit, government-backed firm that has invested in scores of promising Alberta startup companies, has resigned.
Longtime AVAC board member Michael Raymont has stepped in as interim CEO and the search for a permanent chief is expected to get underway soon.
“It was a perfectly amicable parting of the ways,” says Raymont. “There had been discussions between Ross and the board over several weeks and he made the decision to resign from AVAC.”
Bricker couldn’t be reached for comment.
“Ross had served as a wellregarded and well-respected CEO of this organization for six years. We have nothing but good things to say about the work he did for AVAC in that time and AVAC’s track record speaks for itself. He just felt it was time to move on to other things.”
Raymont said Bricker is currently considering job opportunities in the private sector. As for his future with AVAC, Raymont made it clear he has no interest in taking on the CEO’s role permanently.
“I have aspirations of being able to play golf in golf season when it starts again in Calgary next May.”
AVAC’s success stories include financial support for such firms as Spitz Sunflower Seeds, Afexa Life Sciences (acquired last year by Montreal’s Valeant Pharmaceuticals), Baby Gourmet Foods and Radient Technologies.