Exemption Orders (Discretionary)

RETIREMENT RESIDENCES REAL ESTATE INVESTMENT TRUST


2001 BCSECCOM 567


Headnote

Mutual Reliance Review System for Exemptive Relief Applications – Issuer is a “connected issuer,” but not a “related issuer,” of the registrants that are to act as underwriters in a proposed distribution of trust units of the Issuer – Issuer is not a “specified party” as defined in proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts – Registrant underwriters exempted from independent underwriter requirements provided that, at the time of the distribution, the issuer is not a “specified party” as defined in the proposed Instrument, and, in the case of each registrant, is not a “related issuer.”

Applicable British Columbia Provisions

Securities Act,R.S.B.C. 1996, c. 418, s. 48
Securities Rules, B.C. Reg. 194/97, s. 78(2)(b)


IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA, ALBERTA, QUÉBEC AND NEWFOUNDLAND

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF RETIREMENT RESIDENCES REAL ESTATE INVESTMENT TRUST

AND

IN THE MATTER OF CIBC WORLD MARKETS INC.

HSBC SECURITIES (CANADA) INC.

TD SECURITIES INC. RBC DOMINION SECURITIES INC.

DECISION DOCUMENT

WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of Ontario, British Columbia, Alberta, Québec and Newfoundland (the “Jurisdictions”) has received an application from CIBC World Markets Inc. (“CIBCWM”), HSBC Securities (Canada) Inc. (“HSBC”), TD Securities Inc. (“TDSI”), and RBC Dominion Securities Inc. (“RBCDS”), (collectively, the “Filers”) for a decision, pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the Filers are exempt from the requirements (the “Independent Underwriter Requirement”) contained in the Legislation which restricts a registrant in acting as an underwriter in connection with a distribution of securities of an issuer made by means of a prospectus where the issuer is a connected issuer (or the equivalent) of the registrants, shall not apply to the Filers in respect of the proposed initial public offering (the “Offering”) of Units (the “Units”) of Retirement Residences Real Estate Investment Trust (the “REIT”) pursuant to a prospectus;

AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS the Underwriters have represented to the Decision Makers that::

1. Each of the Filers is registered as a dealer under the Legislation of the Jurisdictions.

2. The REIT was created by declaration of trust under the laws of the Province of Ontario on December 28, 2000. The REIT will not carry on operations until the closing of the Offering which is expected to be on or about March 31, 2001.

3. The REIT’s head office is located in Toronto, Ontario. An application will be filed with The Toronto Stock Exchange for the listing of the Units on that exchange.

4. The REIT currently has no material assets or liabilities. Upon the closing of the Offering, the REIT will own a number of retirement homes in Canada and the United States.

5. The REIT has never been a “reporting issuer” under to the Legislation, however, it is expected that the REIT will become a reporting issuer (of the equivalent) in the Jurisdictions prior to the closing of the Offering through the filing of a final prospectus in each of the provinces and territories in Canada.

6. The net proceeds of the Offering to be received by the REIT after deduction of the Underwriters’ fee and the estimated expenses of the Offering payable by the Company will be used to pay a portion of the purchase price for the retirement homes and the retirement home business to be acquired by the REIT from Central Park Lodges Limited and/or its subsidiaries (“CPL”).

7. The REIT is expected to enter into an underwriting agreement with the Filers and certain other underwriters (the “Independent Underwriters”) with respect to the Offering. The proportionate share of the Offering underwritten by each of the underwriters is expected to be as follows:

UnderwriterProportionate Share

1. CIBCWM 25%
2. HSBC 23%
3. Merrill Lynch Canada Inc. 14%
4. RBCDS 14%
5. TDSI 14%
6. National Bank Financial Inc. 7%
7. Raymond James Ltd. 3%

8. The REIT filed a preliminary prospectus dated February 12, 2001 in each province and territory of Canada, and received a preliminary MRRS decision document therefore.

9. The preliminary prospectus contains and the final prospectus will contain, a certificate signed by each of the underwriters including the Filers.

10. On the closing of the Offering the REIT will assume mortgages on the retirement homes acquired by the REIT totalling about $59.7 million and owing to Canadian Imperial Bank of Commerce, HSBC Bank Canada, The Toronto-Dominion Bank and the Royal Bank of Canada, or wholly-owned subsidiaries thereof, (the “Banks”) in the respective amounts of about $46.7 million, $2.8 million, $6.8 million and $3.4 million. It is not intended that the proceeds of the Offering be used to repay any amounts owing under these mortgages. However, it is expected that proceeds of the Offering will be used to repay all or part of credit facilities owing by CPL to the Banks totalling about $33.3. million as at January 31, 2001, which consisted of about $8.8 million, $10.5 million and $14.0 million owing to, respectively, HSBC Bank Canada, The Toronto-Dominion Bank and the Royal Bank of Canada. In addition, Canadian Imperial Bank of Commerce, either on its own or as part of a group (which may include some or all of the other Banks) intends to directly or indirectly provide a revolving credit facility to the REIT to finance its acquisitions and for other purposes described in the preliminary prospectus. Each of the Filers is a direct or indirect subsidiary of one of the Banks.

11. CPL took the initiative in organizing the business of the REIT and as such may be considered to be a “promoter” of the REIT as that term is used in the Legislation. Each of CPL and the REIT is in good financial condition and is not under any immediate financial pressure to proceed with the Offering.

12. In light of the financing to be provided by the Banks to the REIT, the REIT may be considered a connected issuer (or the equivalent) under the Legislation in respect of the Filers.

13. The underwriters will not comply with the Independent Underwriter Requirement based on the proposed composition of the underwriting syndicate, since the portion underwritten by the Filers would exceed 50% of the amount of the Offering.

14. The REIT is not a related issuer (or the equivalent) of any underwriter and the REIT is not a “specified party” as defined in proposed Multi-jurisdictional Instrument 33-105 Underwriting Conflicts (the “Proposed Instrument”).

15. The distribution will be made under a prospectus which contains the information required in Appendix C to the Proposed Instrument.

16. The prospectus will identify the Independent Underwriters and disclose the role of the Independent Underwriters in the structuring and pricing of the Offering and in the due diligence activities performed by the underwriters in connection with the Offering.

17. The Banks did not participate in the decision to make the Offering or in the determination of the terms of the distribution or the use of the proceeds.

18. The Filers will not benefit in any manner from the Offering other than by the payment of their fee in connection with the Offering.

AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that the Independent Underwriter Requirement shall not apply to the Filers in connection with the Offering provided the Issuer is not a related issuer, as defined in the Proposed Instrument, to the Filers at the time of the Offering and is not a specified party, as defined in the Proposed Instrument, at the time of the Offering.

DATED this 30th day of March, 2001.

J.A. Geller R. Stephen Paddon
©2024 British Columbia Securities Commission