National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from provisions of section 8.4 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) permitting filer to include alternative financial disclosure in business acquisition report pursuant to section 13.1 of NI 51-102 -- filer acquired 27 properties and were unable to obtain financial statements for one of the properties -- filer obtained relief from the financial statement requirement in section 32.2(1) of Form 41-101F1 for its IPO prospectus -- audited annual carve-out financial statements and unaudited pro forma financial statements for properties provided.
Applicable Legislative Provisions
National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.4, 13.1.
Citation: Melcor Real Estate Investment Trust, Re, 2013 ABASC 294
July 11, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
MELCOR REAL ESTATE INVESTMENT TRUST
(the Filer or REIT)
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for relief from the requirement to include financial statement disclosure prescribed under section 8.4 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) in the business acquisition report (BAR) of the Filer relating to the Acquisition Transaction (as defined herein) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut; and
(c) this decision is the decision of the Principal Regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.
This decision is based on the following facts represented by the Filer:
1. The REIT is an unincorporated open-ended real estate investment trust established under the laws of the Province of Alberta pursuant to a declaration of trust with its head office in Edmonton, Alberta.
2. The REIT is a reporting issuer or the equivalent thereof under the securities legislation of each of the provinces and territories of Canada and is not in default of securities legislation in any jurisdiction to the best of its knowledge, information and belief.
3. The units of the REIT are listed and posted for trading on the Toronto Stock Exchange under the trading symbol "MR.UN".
4. On April 19, 2013, the Principal Regulator issued a receipt (the Receipt) in respect of the final long form prospectus of the Filer (the Prospectus) and the REIT completed its initial public offering (the IPO) on May 1, 2013 pursuant to the Prospectus.
5. The proceeds of the IPO were used by the REIT to indirectly acquire (the Acquisition Transaction) a real estate portfolio of 27 income-producing properties (the Acquisition Properties) from the REIT's promoter, Melcor Real Estate Developments Ltd. (Melcor) on closing of the IPO.
6. The Acquisition Properties comprised of 26 properties which were acquired by Melcor prior to December 31, 2010 (the Initial Properties), and one property acquired by Melcor on June 18, 2012 (the Subject Property).
7. The Subject Property is not significant to the Acquisition Transaction; its appraised market value represented 0.9 percent of the purchase price consideration of the Acquisition Transaction.
8. The Receipt evidenced the granting by the Principal Regulator of relief requested in a pre-filing waiver application, exempting the Filer from the financial statement requirements contained in item 32.2(1) of Form 41-101F1 Information Required in a Prospectus in respect of the Subject Property, namely the requirement to include in the Prospectus audited comparative annual financial statements for each of the three most recently completed financial years ended more than 90 days prior to the date of the Prospectus (with balance sheets only as at the two most recent year ends) for the Subject Property.
9. The Acquisition Transaction may be considered an "acquisition of related businesses" pursuant to section 8.1 of NI 51-102 and as a result the Filer has determined that the Acquisition Transaction is a "significant acquisition" for the purposes of section 8.3 NI 51-102. The Filer must therefore file a BAR within 75 days of completion of the Acquisition Transaction.
10. Unless otherwise exempted pursuant to Section 13.1 of NI 51-102, the BAR must include or incorporate by reference the financial statements set out in Section 8.4 of NI 51-102 requiring two full years of financial statements of the Acquisition Properties, with the most recent year being audited, and pro forma financial statements.
11. The Filer proposes that the BAR contain the following financial disclosure (the Proposed Disclosure):
(a) audited annual carve-out financial statements of the Acquisition Properties for the year ended December 31, 2012, including the Subject Property for the period commencing on June 18, 2012, and audited comparative financial statements reflecting the Initial Properties; and
(b) unaudited pro forma financial statements for the periods permitted by subsection 8.4(6) of NI 51-102 reflecting the Initial Properties and, for the period commencing on June 18, 2012, the Subject Property.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that the Filer disclose in the BAR the Proposed Disclosure.