Business
H&R REIT Announces Internalization of Property Management
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES ...
About this update from H&r Real Estate Investment Trust
[{"type":"text","content":"\n\n\n/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN\n THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY\n CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./\n\n\nTORONTO, July 30, 2013 /CNW/ - H&R Real Estate Investment Trust (\"H&R REIT\", \"H&R\" or the \"REIT\") (TSX: HR.UN; HR.DB.D; HR.DB.E and HR.DB.H) announced today that it has\n entered into an agreement with H&R Property Management Ltd., the REIT's\n external property manager (the \"Property Manager\"), to internalize the REIT's property management function (the \"Internalization\" or the \"Transaction\"). Closing is expected to occur in September 2013 with economic effect\n from July 1, 2013.\n\n\nUpon closing of the Transaction, a subsidiary of the REIT will acquire\n the Property Manager's REIT-related property management business in\n return for 9.5 million limited partnership units of that subsidiary,\n such units to be exchangeable on a one-for-one basis for stapled units\n of the REIT and H&R Finance Trust.  The terms of the Transaction were\n negotiated and unanimously recommended for approval by the independent\n trustees of the REIT (the \"Independent Trustees\").\n\n\nThe Independent Trustees and the Property Manager have been discussing\n the amendment, replacement or termination of the existing property\n management agreement for several months. Given H&R's recent acquisition\n of Primaris Retail Real Estate Investment Trust (\"Primaris\") and the inherent potential conflicts between the REIT and the\n Property Manager that now exist as a result of Primaris' internal\n management structure and other financial benefits as noted below, it\n became clear to the Independent Trustees that internalizing the\n property management business at an appropriate price was in the best\n interests of H&R and its unitholders. The consideration being paid for\n the Property Manager's H&R-related property management business closely\n approximates the amount that would otherwise have been payable to the\n Property Manager, net of the Property Manager's costs, under the\n current property management agreement (based upon certain assumptions\n considered by the Independent Trustees to be reasonable) which expires\n in January 2020. The REIT will incur a one-time charge equal to the\n value of the issu...