Centrefund Realty Corporation, a Canadian public real estate company, announced a series of transactions in May and June of 2001, under which it would sell its US operations to an affiliated company, Equity One of Florida, in exchange for 10.5 million common shares of Equity One (currently trading at approximately US$12 per share on the NYSE) at a gross net price of approximately $126 million. Almost immediately thereafter, Equity One would complete the acquisition of another US publicly traded real estate company, United Investors Realty Trust of Texas. Both Centrefund and Equity One are controlled by the Israeli publicly traded Gazit Group. Because of this, the transaction is subject to the valuation and majority-of-the-minority approval requirements under applicable Canadian securities legislation. The meeting of Centrefund shareholders is expected to be held on September 7, 2001, for this purpose; if approved, the transaction with Equity One is expected to close on September 20, 2001.
The transaction involves complex cross-border tax planning considerations including both tax reorganization rules as well as the taxation of US REITs. It also involves a number of novel securities law considerations, including the fact that an investor unrelated to the Gazit Group is a significant portfolio investor in both Centrefund and Equity One and therefore exemptive relief is required from both Ontario and Quebec to permit the affected portfolio investor to vote as part of the Centrefund minority.
Torys has acted as Canadian and US counsel for Centrefund, with a team that includes Patricia Koval, Corrado Cardarelli, William Estey, Rose Bailey, Dennis Mahony, Paul Noble, Ron Nobrega, Steven Blackburn,Valérie Lockerbie and Mark Adkins in Toronto, and Steve Curley, Peter Keenan, Jeff Gracer, Lee Hirsch, Gary Litke, Paula Brown and Marshall Sklar in New York. Equity One is represented by Greenberg Traurig LLP of New York and Miami, with a team that includes Gary Epstein, Phil Kushner, Charles (Skip) Stiver, Judy Fryer, Ira Rosner, Arthur Gallagher and Sheida Sahandy.