The Securities Commission has granted an exemption to Nexus Real Estate Investment Trust (the Filer) from certain minority approval and formal valuation requirements under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101). This exemption allows the Filer to include the indirect interest held by holders of exchangeable units of several limited partnerships when calculating the Filer’s market capitalization for the purposes of the 25% market capitalization exemption for related party transactions.
The Filer is an unincorporated open-ended real estate investment trust that operates through various limited partnerships and subsidiaries. The exchangeable units of these partnerships are economically equivalent to the Filer’s publicly traded units and can be exchanged for them on a one-to-one basis.
The exemption is subject to conditions, including that the transaction would qualify for the Transaction Size Exemption if the exchangeable units were considered an outstanding class of equity securities of the Filer convertible into Trust Units, and that there are no material changes to the rights, privileges, and restrictions attached to the units or the agreements governing them.
The decision is based on the rationale that the exchangeable units are effectively part of the equity value of the Filer and should be included in the market capitalization calculation. This approach is consistent with the treatment of operating entities of income trusts under National Policy 41-201 Income Trusts and Other Indirect Offerings.
The exemption is granted provided that the Filer complies with certain disclosure requirements in press releases and annual information forms, reflecting the adjusted market capitalization threshold due to the inclusion of the exchangeable units.