Colliers enters commercial mortgage field RBC’s speed dating Nexen’s twist

Former TD real estate boss is heading unit

This

week,

Colliers

International Mortgage Corp. is expected to close its first financing, providing a first mortgage on an industrial building in Toronto.

The financing reflects a new business initiative taken by Colliers, which was acquired by First Service Corp., a Torontobased public company, this year.

CIMC has some major goals. “ We plan to do the same thing that we did at TD Bank,” said Ross Brennan, president of CIMC and the former president of Toronto-Dominion Bank’s commercial real estate unit.

Brennan, who left TD this year, said that, in time, CIMC will compete “ in all financing facets of the mortgage market, just as TD Securities does today.” He noted that before this initiative, Colliers confined its activities to brokerage, acting as a consultant and doing appraisals.

Colliers will provide first mortgages — either fixed-rate or floating — on a full range of property types. The funds for such activities will come from its new parent plus partners.

In time, when Colliers has provided enough commercial mortgages, it will consider issuing bonds against them.

On that front, Colliers has two ways to go: It can become an issuer in its own name or it can toss its mortgages into other pools being assembled prior to selling securities against the pool.

In February, Ottawa fundamentally changed the way in which the capital markets operate when it abandoned the foreign-content rule: From then on, non-taxable investors wouldn’t be required to keep 70% of their assets in Canadian securities. That action set in train a reaction: Since then, about $ 12- billion of Canadian dollar borrowings by non-Canadian issuers have been made.

And more may be on the way. Today, RBC Capital Markets hosts its second foreign bond issuers’ conference.

( The first was held this year, just prior to Finance Minister Ralph Goodale bringing down the government’s budget. The firm plans its second annual conference next February.)

At today’s session, at least 13 non- Canadian issuers will be presenting their wares to Canadian fixed-income investors. The issuers are from the United States, the U.K and the rest of Europe.

The session is known as the International Borrowers Symposium and the conference will be a variant of speed dating: Issuers have a defined period of time to generate an impression.

RBC Capital Markets has been active in the sector: It has led Canadian dollar-denominated offerings for issuers ranging from JPMorgan ($850-million) to Bank of America ($650- million), to Bear Stearns to Sallie Mae to Germany’s NRW Bank ($150-million) to LBW Bank ($150-million).

Other firms have been busy. Earlier this year, TD Securities held an issuer/ investor conference. That firm has been busy in the field. Its deals include two Canadian- dollar offerings ( which raised $350-million) for the Republic of Austria) and two offerings ( which garnered $650million for Depha Bank). Merrill Lynch and BMO have also led transactions.

A footnote to yesterday’s column on the intricacies of Nexen Inc. filing a prospectus for a secondary offering of its shares, the proceeds of which went to the Ontario Teachers’ Pension Plan Board. The footnote deals with complications that arise when an issuer wishes to do a bought deal under the so-called multijurisdictional disclosure system for a selling shareholder which owns less than 20% of the issuer.

In normal circumstances, meaning for a deal sold only in Canada, the issuer announces the terms of a bought deal (price and quantity) by way of a press release — and has two days to file a prospectus.

However, it’s not so easy when an issuer — or, in this case, a selling shareholder — wishes to sell into the United States under MJDS, the system that allows Canadian issuers access to the U. S. market via filing documents in Canada. In the United States, a different system prevails: Securities can only be sold after a prospectus has been filed.

But without a firm deal, issuers are loath to tell the world they plan to sell shares.

So a plan was hatched given that Teachers wanted to provide the underwriter — in this case TD Securities — with the ability to sell the shares in the United States.

(Apart from a large pool of investors, so-called price discovery is a key reason why sellers want access to U.S. investors.

Having U. S. investors on board means more investors have had a say in reacting to the price, which provides some comfort for Canadian buyers.)

Under that plan, Nexen would file a preliminary short-form prospectus without any reference to the key elements of the deal.

Shortly thereafter, Nexen would file a so-called amended and restated preliminary prospectus, with all the key information included.

The information would have been determined after Teachers and TD Securities agreed to terms of the deal: 7.5 million shares at $54.25 a share. Once that amended and restated prospectus was filed, the selling could begin. Within a few hours, all the selling was over.

“Lawyers and some investment bankers salivate over stuff like this,” noted one market participant.