Rivals groups reach compromise on Primaris, to carve up property portfolio

TORONTO – The two rival groups that have been competing to buy Primaris Retail Real Estate Investment Trust (TSX:PMZ.UN), one of Canada’s largest shopping mall operators, have reached a $4.6-billion compromise.

Under the deal announced Tuesday, some of the Primaris properties will be bought by the KingSett Capital consortium but H&R Real Estate Investment Trust (TSX:HR.UN) will end up owning Primaris and the rest of its portfolio.

The CEOs for all three companies — Primaris, H&R and KingSett —all described the deal as a win-win-win for their stakeholders.

The KingSett consortium, which had started the bidding last year but was rejected in favour of H&R, will acquire 18 Primaris properties — worth about $1.9 billion in total, including assumed debt.

H&R is offering Primaris unitholders $27.98 per unit — about 65 cents per share above a previous friendly agreement between the two income trusts.

Through that part of the deal, worth a total of $2.7 billion in cash and equity, H&R will acquire 17 existing Primaris shopping centres plus nine other properties that Primaris has agreed to purchase.

Primaris units edged up $46 cents to $27.39 on the Toronto Stock Exchange after the announcement. H&R units fell 24 cents to $23.42 and units of RioCan REIT (TSX:REI.UN), a member of the KingSett consortium, rose seven cents to $26.86.

H&R has agreed to pay up to $1.28 billion of the purchase price in cash and the rest in units of the real estate trust.