REITs merge for 257% gain

Article Excerpt

CANADIAN REIT $49.92 (Toronto symbol REF.UN; Units outstanding: 73.2 million; Market cap: $3.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.8%; rose 15% after accepting a takeover offer from Choice Properties REIT (Toronto symbol CHP.UN). It’s the real estate subsidiary of Loblaw Companies Ltd. (Toronto symbol L). George Weston (Toronto symbol WN) also holds an interest in Choice. The merger will create Canada’s largest REIT, with 752 properties for a total of 69 million square feet (78% retail, 14% industrial and 8% office). After the deal, Loblaw and George Weston will together hold 65% of Choice. Under the terms of the offer, Canadian REIT (CREIT) investors can opt for either $53.75 in cash or 4.2835 Choice units for each CREIT unit they now hold. However, Choice has capped the cash portion of the offer at $1.65 billion. As a result, most CREIT investors will receive $22.50 cash and 2.4904 Choice units. Choice yields 6.2%. Canadian REIT unitholders won’t pay capital gains tax…

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