The Securities Commission granted an exemption to a real estate investment trust (REIT) from including certain historical financial statements in its business acquisition report (BAR). The REIT, which operates in multiple Canadian jurisdictions and is listed on the Toronto Stock Exchange, had acquired a portfolio of 16 multi-residential properties, constituting a significant acquisition under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). However, the REIT could not obtain historical financial information for two of the properties.
The Commission determined that the missing financial information was not material and that the alternative financial statements proposed by the REIT would be sufficient for investors. The alternative financial statements, which include audited combined carve-out financial statements for the properties it could account for and unaudited pro forma financial statements for the REIT, were prepared in accordance with International Financial Reporting Standards.
The exemption was granted under section 13.1 of NI 51-102, provided that the REIT includes the alternative financial statements in its BAR. The decision was based on the principle that the alternative disclosure would be more meaningful to investors than the unavailable historical financial information. This decision was made in accordance with the securities legislation of Ontario and the Process for Exemptive Relief Applications in Multiple Jurisdictions, with the Ontario Securities Commission acting as the principal regulator.