KingSett seeks to buy Primaris real-estate trust for $4.4B, sell chunk to RioCan

TORONTO – A group of Canadian pensions operating through KingSett Capital is proposing a $4.4-billion takeover of Primaris Retail Real Estate Investment Trust (TSX:PMZ.UN), one of Canada’s largest shopping mall operators.

In a related transaction, RioCan Real Estate Investment Trust (TSX:REI.UN) has conditionally agreed to buy five regional malls and three other shopping centres currently owned by Primaris.

RioCan values that part of the Primaris portfolio at $1.1 billion.

So far there’s no been no public comment from Primaris on either of the proposals, announced Wednesday morning by KingSett and RioCan.

The lack of a comment in either press release suggests the trustees of Primaris haven’t agreed to the deal.

KingSett says its offer of $26 per Primaris unit is a record price for the trust’s units and 12.8 per cent above the closing market price on Tuesday.

“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.”

KingSett is a branch of the Ontario Pension Board and is making the offer for Primaris in partnership with two other pension asset managers based in Quebec and Alberta — Ivanhoe Cambridge and AIMCo.

RioCan, which is making its purchase offer conditional on KingSett successfully acquiring Primaris, is already Canada’s largest operator of shopping malls and retail-oriented properties.

It has offered to acquire a 100 per cent interest in six Primaris properties and a 50 per cent in two of the trust’s properties.

“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.”