The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.
Issue link: https://digital.carswellmedia.com/i/133445
ax m REITs 25 ds T ns struments – calls "northbound" and "southbound" REITs. With the northbounds, American asset managers and property promoters are looking to raise capital by listing US property portfolios on the TSX. With the southbound vehicles, Canadian issuers are looking to acquire US assets and securitize them in Canada. Because the US went through a significant real estate downturn, income-producing properties can be snapped up at bargain prices. And, with the US economy showing some signs of recovery, office, apartment, industrial, retail and other properties hold new promise of yield and growth. "We professionals [lawyers like Koval and Pincus] have largely broken the back of the tax and regulatory issues surrounding cross-border REITs," says Mitchell Gropper, QC, a partner with Farris, Vaughan, Wills & Murphy LLP and one of Vancouver's leading lawyers in income trusts. It's taken a while for the legal community to figure out how to structure cross-border and pure-play American REITs available on Canadian markets so that they escape both countries' tax tentacles and provide maximum returns to investors. But now that they have, Gropper expects cross-border REITs will IPO on the TSX with increasing frequency. "My friends who are in the market tell me in the US market there are still huge opportunities in that market." But Gropper adds a cautionary note. Though when asked about the possibility of a REIT bubble, he replied, "We [Farris] don't have a view on that," he said with so many property asset managers jumping on the REIT bandwagon and looking to issue new IPOs, it's more important than ever for investors to look closely at the quality of the assets underlying REITs. "We all know what has happened in real estate. Go anywhere in the world and find out what is the asset class that has caused the great financial crises?" The answer: real estate. Koval thinks a bubble is unlikely. And while underwriters will do their own due diligence on the quality of underlying assets, individual investors must do theirs as well. "At the end of the day, the job of the underwriters is really to make sure the prospectus spells out exactly what is in the REIT, and what the risks are associated with it. It's not the job of the underwriters to say we will bring to market only the absolutely highest-quality product. They will bring to market product they think is acceptable to the Canadian market. Acceptable is in the eye of the beholder." n- Anthony Davis is a freelance business writer and investigative journalist in Calgary. xh o Ts m- me d. as n d er me et hds or o ca and blic n d May, Neill I. Mayr, Clemens Goodmans LLP (416) 597-4187 nmay@goodmans.ca McCarthy Tétrault LLP (514) 397-4258 cmayr@mccarthy.ca Mr. May's practice focuses on securities law, with emphasis on M&A, public and private financings and restructurings. He is a member of the TSX Listing Advisory Committee and an adjunct professor at the U of T Faculty of Law. Mr. Mayr focuses on corporate finance, M&A and corporate governance. He acted in numerous Canadian and cross-border transactions, and regularly represents purchasers, vendors, issuers, boards of directors and underwriters. ROB.indd 25 "AT THE TIME PEOPLE TOOK BETS AS TO WHETHER WHAT WE CREATED WAS GOING TO LAST. I BET STRONGLY IN FAVOUR THAT THEY WOULD LAST, AND THAT WE WOULD CREATE A WHOLE NEW INDUSTRY. I'M GLAD TO SAY THAT I WAS RIGHT AND I WON MY BET." McAusland, David L. McCrea, QC, J. Craig McElcheran, Kevin P. McReynolds, D. Shawn McCarthy Tétrault LLP (514) 397-7814 dmcausland@ mccarthy.ca Cox & Palmer (902) 491-4120 cmccrea@ coxandpalmer.com McCarthy Tétrault LLP (416) 601-7730 kmcelcheran@ mccarthy.ca Davies Ward Phillips & Vineberg LLP (416) 863-5538 smcreynolds@dwpv.com Mr. McAusland, formerly an EVP and CLO at Alcan Inc., is a senior corporate strategist and advisor who focuses on major corporate strategies and portfolio transactions, financial structures, governance and regulatory affairs in Canada and abroad. Mr. McCrea focuses on corporate commercial, banking and insolvency law, but his practice embraces fisheries, IP, energy and real estate law. He acts for corporations, government agencies, professional organizations and financial institutions. Mr. McElcheran practises in all areas of insolvency law, including advocacy and restructuring. He represents debtors, creditors and other stakeholders, and is an insolvency advisor in complex securitization and derivatives transactions. Mr. McReynolds practises M&A, corporate and securities law. He advises public companies and the securities industry on corporate governance issues and has represented issuers and underwriters in numerous public and private financings. 13-04-23 12:09 PM