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KingSett consortium offers to buy Primaris REIT for $4.4B, sell chunk to RioCan

TORONTO – A consortium led by KingSett Capital and including the Ontario Pension Board has launched a $4.4-billion takeover offer for Primaris Retail Real Estate Investment Trust (TSX:PMZ.UN), one of Canada’s largest shopping mall owners.

“This is a strong and compelling offer, providing unitholders with a premium price at a time of peak valuations in the sector,” said Jon Love, managing partner of KingSett Capital.

“The all-cash offer provides Primaris’ unitholders with an attractive opportunity to obtain immediate liquidity in the face of economic uncertainty and volatile markets. We firmly believe that this offer will be very appealing to unitholders.”

The deal, if successful, would also see RioCan Real Estate Investment Trust (TSX:REI.UN) buy five regional malls and three other shopping centres currently owned by Primaris for $1.1 billion.

KingSett said its offer, which requires at least two-thirds of Primaris’s units to be tendered and for the trust’s unitholder rights plan to be cancelled, is worth $26 in cash per Primaris unit.

Primaris was the most active issue on the Toronto Stock Exchange Wednesday morning with 7.2 million units changing hands. However, units were up $3.16 or nearly 14 per cent to $26.20, suggesting at least some investors believed a richer offer may be possible.

The RioCan offer, which is conditional on KingSett successfully acquiring Primaris, includes a deal for a 100 per cent interest in six Primaris properties and a 50 per cent in two others.

“The properties we have committed to purchase are fully aligned with our strategy,” said Edward Sonshine, RioCan’s chief executive.

“We look forward to completing this transaction with KingSett Capital and to building on our existing strong relationship with them.”

The consortium already own a seven per cent stake in Primaris or about 6.9 million units.

Investors in KingSett, a private equity real estate investment fund, include Alberta Investment Management Corp. and Ivanhoe Cambridge.

Note to readers: This is a corrected story. An earlier version erroneously described KingSett as an arm of the Ontario Pension Board.