Securities Law & Instruments

Headnote

NI 44-101 Short Form Prospectus Distributions, s. 8.1 -- credit supporter wants relief from basic qualification criteria -- exemption granted subject to conditions including that credit supporter continue to comply with conditions of continuous disclosure relief.

NI 44-102 Shelf Distributions, s. 11.1 -- credit supporter wants relief from qualification criteria -- exemption granted subject to conditions including that credit supporter continue to comply with conditions of continuous disclosure relief.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions, s. 8.1.

National Instrument 44-102 Shelf Distributions, s. 11.1.

August 23, 2013

IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(THE JURISDICTION)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
GRANITE REIT HOLDINGS LIMITED PARTNERSHIP
(THE FILER)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) granting the Filer relief from:

(a) section 2.1 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) that an issuer shall not file a prospectus in the form of Form 44-101F1 Short Form Prospectus (Form 44-101F1) unless the issuer is qualified under any of sections 2.2 to 2.6 of NI 44-101 (the Short Form Prospectus Eligibility Requirements); and

(b) section 2.1 of National Instrument 44-102 Shelf Distributions (NI 44-102) that an issuer shall not file a short form prospectus that is a base shelf prospectus unless the issuer is qualified to do so under NI 44-102 (the Shelf Prospectus Eligibility Requirements),

collectively, the Exemption Sought.

Furthermore, the principal regulator has received an application from the Filer for a decision under the Legislation that the application for this decision, the supporting materials and this decision (collectively, the Confidential Material) be kept confidential pursuant to section 5.4 of National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (NP 11-203), as amended, from time to time until the earlier of: (i) the date on which the Filer issues and files a news release announcing the offering of Debt Securities (as defined herein); (ii) the date on which the Filer files a preliminary prospectus in connection with the offering of Debt Securities in reliance on the relief granted pursuant to Exemption Sought; (iii) the date that the Filer advises the principal regulator that there is no longer any need for the Confidential Material to remain confidential; and (iv) the date that is 90 days after the date of this decision (the Confidentiality Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for the Application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

General

1. Granite Real Estate Investment Trust (Granite REIT) is a Canadian-based real estate investment trust engaged, directly and through its subsidiaries, primarily in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe.

2. As part of a plan of arrangement providing for the conversion of Granite Real Estate Inc. (Granite), a corporation continued under the laws of Québec, from a corporate structure to a "stapled unit" real estate investment trust structure, through a series of steps, each holder of common shares of Granite exchanged such common shares for units of Granite REIT (Granite REIT Units) and common shares of Granite REIT Inc. (Granite GP) (Granite GP Common Shares) on a one-for-one basis.

3. Each Granite REIT Unit is stapled to a Granite GP Common Share (together, a Stapled Unit) and the two securities trade together as Stapled Units on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange (the NYSE) (the Stapled Structure). The Stapled Units are listed and posted for trading on the TSX and the NYSE. The Granite REIT Units and Granite GP Common Shares forming the Stapled Units are separately listed, but not separately posted for trading, on the TSX, as is the case with other stapled unit structures.

The Filer

4. The Filer is a limited partnership formed under the laws of Québec.

5. The Filer's registered office is located at 600 De Maisonneuve Boulevard, Suite 2200, Montreal, Québec, H3A 2J2, and its head office is located at 77 King Street West, Suite 4010, Toronto, Ontario, M5K 1H1.

6. The Filer is a reporting issuer, or the equivalent, in each province and territory of Canada.

7. All of the limited partnership units of the Filer (which will represent approximately 99.999% of the economic entitlement in the Filer) are held by Granite REIT, with the general partnership interest (which will represent not more than approximately 0.001% of the economic entitlement in the Filer) remaining held by Granite GP.

8. The only material assets of Granite REIT are the limited partnership interests in the Filer, and the only material asset of Granite GP is its relatively nominal general partner interest in the Filer. Granite REIT does not own any equity securities of Granite GP, and Granite GP does not own any equity securities of Granite REIT.

9. On December 21, 2012, Granite received (i) on behalf of itself and Granite REIT and Granite GP, exemptive relief (the Parent CD Relief) from a number of the continuous disclosure requirements of the securities legislation in the Jurisdiction including, in particular, those relating to financial statement and management's discussion and analysis (MD&A) disclosure to permit Granite REIT and Granite GP to prepare, file and deliver one set of financial statements prepared on a combined basis (Combined Financial Statements) using the accounting principles applicable to Granite REIT and Granite GP pursuant to the securities legislation of the Jurisdiction (Applicable Accounting Principles), and related MD&A, to reflect the financial position and results of Granite REIT and Granite GP on a combined basis, instead of each of them preparing, filing and delivering their own stand-alone financial statements, while the Stapled Structure is in place, and (ii) on behalf of itself and the Filer, exemptive relief (the LP CD Relief) from a number of the continuous disclosure requirements of the securities legislation in the Jurisdiction, subject to certain conditions including that any reference to "parent credit supporter" in section 13.4 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) shall be deemed to include both Granite REIT and Granite GP, taken together.

The Prospectus

10. It is proposed that the Filer will distribute non-convertible debt securities (Debt Securities), which will be fully and unconditionally guaranteed by each of Granite REIT and Granite GP, from time to time pursuant to a base shelf prospectus (collectively, the Base Shelf Prospectus) to be filed in each of the provinces and territories of Canada, as supplemented by one or more prospectus supplements (collectively, each a Prospectus Supplement and, together with the Base Shelf Prospectus, the Prospectus) to be filed in each of the provinces and territories of Canada. The Prospectus will be prepared pursuant to the short form procedures contained in NI 44-101 and the shelf procedures contained in NI 44-102 and will comply with the requirements set out in Form 44-101F1 that would apply to a credit support issuer as provided by Items 12 and 13 of Form 44-101F1.

11. It is proposed that each of Granite REIT and Granite GP will provide a full and unconditional guarantee of the payments to be made by the Filer in respect of any Debt Securities distributed pursuant to the Prospectus, and that the holders of such securities will be entitled to receive payment from each of Granite REIT and Granite GP within 15 days of any failure by the Filer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in NI 51-102.

12. Accordingly, as contemplated by the LP CD Relief, Granite REIT and Granite GP will together constitute a "parent credit supporter" (as defined in NI 51-102), the Filer will be a "credit support issuer" (as defined in NI 51-102), and the Debt Securities will be "designated credit support securities" (as defined in NI 51-102).

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

1. at the time of filing any prospectus or prospectus supplement in connection with an offering of Debt Securities:

(a) the prospectus is prepared in accordance with the short form prospectus requirements of NI 44-101, and except as permitted by the legislation;

(b) the Filer satisfies every qualification criteria set out in Section 2.4 of NI 44-101, other than the qualification criteria set out in paragraph 2.4(1)(c) of NI 44-101;

(c) the Stapled Units are listed and posted for trading on a short form eligible exchange; and

2. the Filer continues to satisfy all the conditions set forth in the Parent CD Relief and the LP CD Relief, including that each Granite GP Common Share is stapled to a Granite REIT Unit and they trade together as a Stapled Unit.

Furthermore, the decision of the principal regulator is that the Confidentiality Sought is granted until the earlier of: (i) the date on which the Filer issues and files a news release announcing the offering of Debt Securities; (ii) the date on which the Filer files a preliminary short form prospectus in connection with the Offering in reliance on the relief granted in respect of the Short Form Prospectus Eligibility Requirements and Shelf Eligibility Prospectus Requirements; (iii) the date that the Filer advises the principal regulator that there is no longer any need for the Confidential Material to remain confidential; and (iv) the date that is 90 days after the date of this decision.

"Sonny Randhawa"
Manager, Corporate Finance Branch