* KEY calls on unitholders to reject Huntingdon proposal
* Says offer is inadequate, coercive and opportunistic
* To hold special unitholder meeting to approve poison pill
By Euan Rocha
TORONTO, Feb 15 KEYreit, a real
estate investment trust that owns small retail properties across
Canada, on Friday rejected an unsolicited partial takeover bid
from Huntingdon Capital Corp, saying the proposal was
inadequate and coercive.
Richmond, British Columbia-based Huntingdon, which already
owns 5.4 percent of KEY's issued and outstanding trust units,
made its offer in January. It wants to acquire a further 6.6
million, or 45 percent, of KEY's units for C$7 each in cash.
"The partial offer fails to provide unitholders with an
appropriate control premium for the units purchased, and
provides no premium for units not purchased," Donald Biback, who
heads KEY's board of trustees, said in a statement on Friday.
KEY's units have jumped more than 8 percent since the offer
was announced, but as the offer is only a partial bid, the units
continue to trade at C$6.70, well below the offer price.
This is the second takeover battle involving Canadian real
estate investment trusts in a span of two months.
A two-way battle for Primaris Retail REIT was
recently resolved after H&R Real Estate Investment Trust
and a consortium led by KingSett Capital agreed to
jointly bid for the shopping center owner and carve up its
REAL ESTATE BOOM
Canadian REITs, or real estate investment trusts, have
outperformed the broader stock market in the last 12 months,
driven by strong demand for both commercial and retail space.
Canada's benchmark S&P TSX composite Index has
risen less than 3 percent in the last twelve months, while the
S&P TSX Canadian REIT Index has risen 11.4 percent,
as U.S. retailers vie for prime retail space as they continue to
expand north, even as economic growth has heightened demand for
office space in Canada.
This, in turn, sparked a flurry of equity offerings from
REITs last summer and pushed Canada's largest grocer, Loblaw's
, to announce that it plans to spin off the vast majority
of its property assets into a REIT.
Toronto-based KEY owns over 225 retail properties in nine
provinces across Canada, with tenants that include fast-food
chains like KFC and Pizza Hut, and retailers like Shoppers Drug
Mart, Staples, Home Outfitters and others.
The vast majority of its properties are located in the
provinces of Ontario and Quebec, which account for almost 80
percent of its annual rent receipts.
KEY urged its unitholders to reject the Huntingdon proposal
in its statement on Friday, saying board and management, who own
about 17 percent of KEY's issued and outstanding units, will not
be tendering their units to Huntingdon's proposal.
"All this is, is a creeping takeover to try and control the
board," said KEY's Chief Executive John Bitove. "Huntingdon have
not disclosed any plans on what they intend to do to continue to
maximize value for our unitholders."
KEY said its financial advisor BMO Capital Markets said the
consideration offered by Huntingdon Capital is inadequate, from
a financial point of view, to unitholders other than the bidder
and its affiliates.
The company earlier this month adopted a poison pill in a
bid to stymie the Huntingdon offer and plans to hold a special
meeting of its unitholders on March 26 to approve the defensive
tactic adopted by its board.