Ottawa-based Minto eyes early July for $200M REIT offering

Minto Properties will retain a 62.4 per cent ownership stake in the REIT
One80Five

One of Ottawa’s largest real estate firms could take its first steps into public markets as soon as next week, according to recently filed documents.

In a long-form prospectus filed last Friday, Ottawa-based Minto confirmed the $200-million value of its REIT offering, which will see a portion of its apartment portfolio spun off into a public investment vehicle. The company will offer 13,794,000 units at a price of $14.50 each, with net proceeds of $188.5 million once underwriters’ fees are subtracted.

The deal contains an over-allotment option for an extra two million units, which, if exercised, would bring to total value of the offering up to $230 million.

Minto said in its prospectus that it expects to begin public trading on July 3, or two weeks after that date at maximum.

The proceeds of the offering will be used by the REIT to purchase its initial rental buildings from Minto Properties, which will hold a majority stake in the new publicly traded entity.

The documents filed Friday disclose that Minto Properties will retain a 62.4 per cent ownership stake in the REIT. That position will decrease to 56.8 per cent if the over-allotment is exercised.

Founded in 1955, Minto develops, owns and manages residential and commercial real estate from its base in the capital. The REIT will target “high quality multi-residential properties” in Canada, a market Minto considers to be “highly fragmented,” according to the prospectus.

The local firm already confirmed that the REIT’s initial portfolio will consist of 22 properties from across Ottawa, Toronto, Edmonton and Calgary.

That includes 14 local properties, the largest of which are the Minto one80five high-rise at 185 Lyon St. and the 393-unit Parkwood Hills Garden Homes & Townhomes off Meadowlands Drive.

Minto predicts the 22 properties in the REIT will generate $82.2 million in revenue over the 12-month period ending June 30, 2019. Unit-holders will receive about $16.3 million in distributions, leaving a net income of nearly $18 million after expenses.

Minto had previously announced that Michael Waters will head the REIT as CEO. Rounding out the team are Ottawa’s Julie Morin as chief financial officer, Jaime McKenna as chief investment officer, George van Noten as senior vice-president of operations and Robert Pike, who will serve as president and chief operations officer from Mississauga.

The prospectus says the REIT will grow in part by acquiring additional properties from Minto, which holds a proportionate interest of approximately $510 million in additional multi-residential rental properties.

“It is Minto’s intention to have the REIT be the sole vehicle for all of its Canadian income producing multi-residential holdings over time,” the prospectus states.

While funds raised from the offering will primarily finance the REIT’s property expansions, it will also help Minto’s owners – the Greenberg family – with "their own estate-planning arrangements,” according to filings.

The offering is being underwritten by a syndicate that includes TD Securities, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets, Scotiabank, National Bank Financial Inc., Canaccord Genuity, Desjardins Securities, Raymond James Ltd. and Industrial Alliance Securities.

Goodmans LLP is acting as legal counsel to the REIT and Minto Properties.