Securities Law & Instruments

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 a property that have been owned by multiple owners over previous two years -- comparative period financial statements impractical to prepare -- recent audited interim financial statements for the property will be provided.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.4, 13.1.

February 10, 2015

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 CHC REALTY CAPITAL CORP. (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for an exemption from the financial statement requirements in Section 8.4 of National Instrument 51-102 -- Continuous Disclosure Obligations ("NI 51-102") for the business acquisition report ("BAR") to be prepared and filed by the Filer in connection with the Filer's acquisition of a property in London, Ontario, on the condition that acceptable alternative financial information be provided for such acquisition (the "Exemptive Relief 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 this application, and

(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 British Columbia and Alberta.

Interpretation

Terms defined in National Instrument 14-101 -- Definitions, MI 11-102 or NI 51-102 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:

1. The Filer is a corporation incorporated under the laws of the Province of Ontario. The head and principal offices of the Filer are located at 53 Yonge Street, 5th Floor, Toronto, Ontario M5E 1J3 and its registered office is located at 365 Bay Street, Suite 800, Toronto, Ontario M5H 2V1.

2. The common shares in the capital of the Filer are listed and posted for trading on the TSX Venture Exchange under the symbol CHC.

3. The Filer is a reporting issuer in British Columbia, Alberta and Ontario and, to the best of its knowledge, is not in default of any requirements of the securities legislation of the jurisdictions, other than with respect to the filing of the BAR in connection with the Filer's acquisition of the Property (as defined below).

4. The Filer is an owner and operator of student rental housing properties. The Filer's strategy is focused on acquiring high quality properties in close proximity to universities and colleges in primary and well understood secondary markets, with a focus on contemporary, purpose-built student housing properties, with the goal of becoming the leading consolidator of high quality student housing assets in Canada.

5. On November 19, 2014, the Filer completed the acquisition of a student rental housing property located in London, Ontario (the "Property") from Kanco-673 Richmond Ltd. and Kanco-675 Richmond Ltd. (collectively, the "Vendor"), an arm's length vendor, through an asset purchase transaction pursuant to a purchase and sale agreement dated August 7, 2014 between the Filer and the Vendor. The purchase price for the Property was $55.0 million, subject to closing adjustments. The Filer satisfied the purchase price through mortgages of $46.75 million, a debt facility of $2.5 million and the payment to the Vendor of the balance of the purchase price in cash.

6. The Property consists of land and one building located at 675 Richmond Street, London, Ontario, containing 368 beds in 187 student housing apartments and 12,642 s.f. of commercial space. The Property is a traditional apartment building tenanted primarily by students at the University of Western Ontario.

7. The acquisition of the Property constitutes a "significant acquisition" for the Filer for the purposes of NI 51-102 as of the Filer's interim period most recently completed before the acquisition date ended September 30, 2014 (exceeding the 40% threshold of the significance tests as determined in accordance with section 8.3 of NI 51-102), requiring the Filer to file a BAR with respect to the acquisition pursuant to section 8.2 of NI 51-102. The deadline for filing the BAR under NI 51-102 is February 2, 2015.

8. The fiscal year-end for the Property is December 31.

9. Pursuant to section 8.4 of NI 51-102, the BAR relating to the acquisition of the Property must include certain financial statements for the Property, being:

(a) financial statements as at and for the years ended December 31, 2013 and December 31, 2012, being the most recently completed financial year of the Property ended on or before the acquisition date and the financial year immediately preceding such financial year, with the financial statements as at and for the year ended December 31, 2013 being audited, in accordance with subsections 8.4(1) and 8.4(2) of NI 51-102;

(b) unaudited financial statements for the 9 month interim periods ended September 30, 2014 and September 30, 2013, being the most recently completed interim period of the Property ended on or before the acquisition date and the comparable period in the preceding financial year, in accordance with subsection 8.4(3) of NI 51-102; and

(c) pro forma financial statements as at September 30, 2014 (the date of the Filer's most recent interim financial statements filed), that give effect to the acquisition of the Property as if it had taken place as at such date, in accordance with subsection 8.4(5) of NI 51-102,

(collectively, the "Required BAR Financial Statements").

10. The Filer, being aware of the requirements under NI 51-102 to include certain financial statements in the BAR in respect of the acquisition of the Property, included covenants in the purchase agreement for the acquisition of the Property for the Vendor to provide the Filer with access to the books and records of the Property and to cooperate with the Filer in obtaining and delivering any financial information, or other information, in respect of the Property that the Filer may require for the BAR both before and after closing of the acquisition of the Property.

11. In connection with the acquisition of the Property and the preparation of the Required BAR Financial Statements, management of the Filer obtained from the Vendor certain financial records relating to the Property, including financial statements for the Property as at and for the year ended December 31, 2013 and the 9 month interim period ended September 30, 2014. During this process, however, it was determined that the Vendor, and therefore the Filer, only has access to financial records for the Property in respect of the year ended December 31, 2012 beginning on July 1, 2012 (the "Vendor Acquisition Date"), which is the date on which the Vendor purchased the Property from another party.

12. The Vendor, and therefore the Filer, does not have access to, and is not entitled to obtain access to, financial information in respect of the Property for any period prior to the Vendor Acquisition Date. The Filer has, without success, made every reasonable effort to obtain copies of, or reconstruct the historical accounting records in respect of the Property for the period prior to the Vendor Acquisition Date. Accordingly, the Filer is unable to prepare financial statements for the full comparative year ended December 31, 2012 that are required to be included in the Required BAR Financial Statements.

13. Consequently, the Filer wishes to seek an exemption which would permit it to include only six months of financial results for the Property during the comparative period to the year ended December 31, 2013 (i.e. the comparative period being the six months from July 1, 2012 to December 31, 2012). In connection with the same, and as a condition to obtaining such relief, the Filer intends to include audited financial results for the 9 month interim period ended September 30, 2014, such that the BAR would include audited financial statements for a total period of 21 months, being the year ended December 31, 2013 and such 9 month interim period ended September 30, 2014. As such, the BAR would include the following financial statements in lieu of the Required BAR Financial Statements:

(a) audited financial statements as at and for the year ended December 31, 2013, and comparative unaudited financial statements as at and for the 6 month period ended December 31, 2012;

(b) audited financial statements as at and for the 9 month interim period ended September 30, 2014, and comparative unaudited financial statements as at and for the 9 month interim period ended September 30, 2013; and

(c) unaudited pro forma financial statements consisting of a consolidated balance sheet as at September 30, 2014 and statements of income (loss) and comprehensive income (loss) of the Filer reflecting the acquisition of the Property for the 9 month interim period ended September 30, 2014 and for the period from April 12, 2013 (date of incorporation of the Filer) to December 31, 2013,

(collectively, the "Alternative BAR Financial Statements").

14. In connection with the acquisition of the Property, management of the Filer obtained an independent appraisal with respect to the Property (the "Appraisal"). A description of the Appraisal will be included in the BAR in accordance with the provisions of Item 2.5 of Form 51-102F4.

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 Exemptive Relief Sought is granted, provided that the BAR for the acquisition of the Property includes the Alternative BAR Financial Statements.

"Sonny Randhawa"
Manager, Corporate Finance
Ontario Securities Commission