Transglobe Apartmant Reit Competes Offering Of Subscription Receipts And Debentures, Acquisition Of Properties And Management Internalization

TransGlobe Apartment Real Estate Investment Trust (the “REIT”) completed a public offering of subscription receipts and $50 million aggregate principal amount of 5.40 per cent extendible convertible unsecured subordinated debentures. The offering, which raised gross proceeds of approximately $244 million, was underwritten by a syndicate of underwriters co-led by CIBC and TD Securities Inc. and including RBC Dominion Securities Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., Desjardins Securities Inc., Dundee Securities Ltd., GMP Securities L.P. and National Bank Financial Inc. A total of approximately 17.25 million subscription receipts were sold at a price of $11.25 per subscription receipt (which included approximately 1.7 million subscription receipts issued as a result of the exercise of the over-allotment option by the underwriters) representing gross proceeds of approximately $194 million.

Each subscription receipt entitled a holder thereof to receive one REIT unit upon completion of the indirect acquisition by the REIT of a portfolio of 57 properties (and related assets) operated and owned or co-owned by affiliates of TransGlobe Investment Management Ltd., comprising approximately 7,500 residential suites located in the Provinces of Alberta, Ontario, Québec and Nova Scotia. The debentures are convertible at the option of the holder into REIT units at a conversion price of $15.75 per REIT unit and had an initial maturity date of the earlier of (i) the termination of the acquisition and (ii) October 31, 2011, which maturity date would extend to September 30, 2018, upon completion of the acquisition.

For the offering, the REIT was represented by Blake, Cassels & Graydon LLP, with a team led by William Fung that included Matthew Merkley and Julia Tomson (securities) as well as Chris Van Loan and Jesse Brodlieb (tax).

The underwriters were represented by Torys LLP with a team led by Patricia Koval that included Simon Knowling, Michael Zackheim and Christian Thatcher (corporate/securities); Graham Rawlinson and Elise Sieradzki (real estate); Corrado Cardarelli and Grace Pereira (tax) and Michael Fortier (environmental). Daniel Raglan and Christopher Roehrig of Torys LLP, New York, also acted as special US securities counsel to the REIT and the underwriters.

On September 1, 2011, the REIT completed the acquisition. The aggregate acquisition price of approximately $740.4 mil-lion was satisfied by a combination of: (i) approximately $394.8 million of cash, funded using approximately $216.8 million from the net proceeds of the offering and approximately $170 million of proceeds from new mortgage debt secured against certain of the acquired properties, among other sources; (ii) the assumption of approximately $262.6 million aggregate principal amount of existing mortgage debt secured against the acquired properties; and (iii) the issuance of approximate-ly $83 million of Class B limited partnership units of new limited partnerships formed by the REIT to hold the acquired properties (which are economically equivalent to and exchangeable for REIT units) and accompanying special voting units of the REIT. In connection with the acquisition, the REIT terminated certain commercial relationships with TransGlobe Investment Management Ltd. and its affiliates and assumed responsibility for the day-to-day administration and operation of its properties (collectively, the “management internalization”).

For the acquisition and management internalization, the REIT was represented by Blake, Cassels & Graydon LLP, with a team led by William Fung that included Matthew Merkley (securities); Frank Guarascio, Kurt Sarno, Guy Amini and Thomas Rowe (corporate); Iris Tam and Lauren Temple (real estate); Chris Van Loan and Jesse Brodlieb (tax); Anto-nio Turco (intellectual property); Connie Reeve (employment) and Deborah Salzberger and Cassandra Brown (competi-tion).