TORONTO - Units of CT Real Estate Investment Trust (TSX: CRT.UN) rose slightly in their first day of trading Wednesday after the Canadian Tire spinoff completed its initial public offering.
The offering of the more than 26.3 million units at $10 per unit raised gross proceeds of $263.5 million for the company.
On the Toronto Stock Exchange, the units closed up six cents at $10.06.
CT Real Estate says it used a portion of the proceeds of the offering to indirectly acquire from Canadian Tire Corp. Ltd. (TSX:CTC.A) a portfolio of real estate consisting of 255 retail properties and one distribution centre, with 19 million square feet of gross leasable space.
The aggregate purchase price for the initial properties was approximately $3.5 billion.
The REIT said it intends that its first distribution will be seven cents per unit for the Oct. 23-Nov. 30 period. Afterward, it intends monthly cash distributions of 5.4 cents per unit, which are initially expected to provide an annual yield of 6.5 per cent.
Distributions will be paid on or about the 15th day of each month to unitholders of record at the close of business on the last business day of the immediately preceding month.
CEO Ken Silver said an "outstanding portfolio," investment grade credit rating and the fact that Canadian Tire Corp. is the REIT's major tenant and majority unit holder mean it is "well-positioned for success and long-term growth."
"We are excited to be completing the IPO and have a well-structured plan to make CT REIT a valuable investment for our unitholders," Silver added.
The offering was underwritten by a syndicate of investment banks with Royal Bank's (TSX:RY) RBC Capital Markets and CIBC (TSX:CM)acting as joint bookrunners.
The underwriters have an over-allotment option, exercisable at any one time up to 30 days following the closing, to purchase up to an additional 3.95 million units which, if exercised in full, would increase the total gross proceeds of the offering to about $303 million.
Canadian Tire holds an 85 per cent effective interest in CT REIT, which would fall to 83.1 per cent if the over-allotment were exercised in full.
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