RioCan Real Estate Investment Trust has announced:
that it has reached an agreement to issue to the public on a bought deal basis, subject to regulatory approval, 5.2 million Cumulative Rate Reset Preferred Trust Units, Series C (the “Series C Units”) at a price of $25 per unit for aggregate gross proceeds of $130 million.
The Series C Units are being issued by a syndicate of underwriters co-led by RBC Capital Markets, CIBC and TD Securities Inc. The Series C Units will pay fixed cumulative distributions of $1.1750 per unit per annum, yielding 4.70% per annum, payable on the last day of March, June, September and December of each year, as and when declared by the board of trustees of RioCan, for the initial approximately five and a half-year period ending June 30, 2017. The first quarterly distribution, if declared, shall be payable on December 31, 2011 and shall be $0.0998 per unit, based on the anticipated closing of the offering of Series C Units of November 30, 2011. The distribution rate will be reset on June 30, 2017 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.18%. The Series C Units are redeemable by RioCan, at its option, on June 30, 2017 and on June 30 of every fifth year thereafter.
Holders of Series C Units will have the right to reclassify all or any part of their units as Cumulative Floating Rate Preferred Trust Units, Series D (the “Series D Units”), subject to certain conditions, on June 30, 2017 and on June 30 of every fifth year thereafter. Such reclassification privilege may be subject to certain tax considerations (to be disclosed in the prospectus supplement). Holders of Series D Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.18%, as and when declared by the board of trustees of RioCan.
The Series C Units and the Series D Units will rank equally with each other and with the outstanding Series A Preferred Trust Units and the Series B Preferred Trust Units into which they may be reclassified.
DBRS Limited (“DBRS”) has assigned a preliminary rating of Pfd-3 (High) for the Series C Units. It is a condition of closing that Standard & Poor’s, a division of the McGraw Hill Companies, Inc. (“S&P”) assign a rating of P-3 (High) for the Series C Units.
RioCan has also granted the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase a further 780,000 Series C Units at the issue price which, if fully exercised, would result in additional gross proceeds of $19.5 million.
RioCan will use a portion of the proceeds from this offering to redeem its $120 million 5.70% Series K senior unsecured debentures due September 11, 2012 and the balance to repay certain indebtedness, for property acquisitions, to fund development and for general trust purposes.
The offering is being made under RioCan’s amended and restated base shelf short form prospectus dated December 21, 2010 amending and restating the base shelf short form prospectus dated July 6, 2010. The terms of the offering will be described in a prospectus supplement to be filed with Canadian securities regulators. The offering is expected to close on or about November 30, 2011.
DBRS has today assigned a rating of Pfd-3 (high) with a Stable trend to the new 5.2 million cumulative five-year rate-reset preferred trust units, Series C (the Preferred Units) issued by RioCan Real Estate Investment Trust (RioCan or the Trust) for total proceeds of $130 million.
The Preferred Units will rank pari passu with every other series and will rank prior to RioCan’s trust units as to the payment of distributions and return of capital in the event of the liquidation, dissolution or winding up of the Trust.
RioCan will use a portion of the proceeds from this offering to redeem its $120 million 5.70% Series K senior unsecured debentures due September 11, 2012, and the balance to repay certain indebtedness, for property acquisitions, to fund development and for general trust purposes.
- We assigned our ‘BB+’ global scale rating and our ‘P-3 (High)’ Canadian national scale rating to RioCan’s series C cumulative rate reset preferred trust units.
- The company plans to use net proceeds for general corporate purposes, including debt repayment, and to fund acquisitions and development.
- Our ratings on RioCan reflect the company’s leading market position as a retail landlord in Canada, the stability of its cash flow, and its adequate liquidity profile.
- The outlook is stable as the company’s well-leased portfolio should generate cash flow growth which, along with recent refinancing activity, supports our expectation for modest improvement to debt coverage measures over the next year.