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
22 REITs "I WOULD EXPECT THAT WITH THE VERY BUSY PACE THAT WE ARE EXPERIENCING NOW IN THE SECTOR, THERE SEEMS TO BE NO REASON WHY IT SHOULDN'T CONTINUE. IT IS CERTAINLY AS BUSY AS THE SECTOR HAS EVER SEEN IF NOT MORE SO, ON A NUMBER OF FRONTS." IF YOU WERE one of the tens of thousands of Canadian investors who gleefully watched their REITs continue returning solid yields in 2012 – out-batting the TSX four years in a row – you might want to say, "Hey thanks, Ike!" It was US Republican President Dwight D. Eisenhower who created the modern real estate investment trust concept when he signed his REIT Act into law in 1960. Eisenhower wanted to give American investors the opportunity to invest in large-scale, income-producing real estate just as they could in other asset classes: through the sale of easily liquidatable securities. Since then, REITs have spread to nearly 40 countries around the world. But it wasn't until 1993 when a couple of enterprising Canadian lawyers hammered out the structures needed to fit REITs into the Canadian regime, and investors have been lapping them up ever since. After the global financial crisis in 2008, it's been hard to reap such consistent, decent returns anywhere else. A Scotiabank comparison of gross total returns shows that from January 1998 to January 2012, the TSX earned an average 147.7 per cent return. Not bad. But look at the S&P/TSX Capped REIT: it pounded out the TSX with a 493.2 per cent return during the same period. Patricia Koval, a corporate and securities lawyer with Torys LLP in Toronto, is one of the lawyers who led the creation of Canadian REITs back in the early '90s. "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." Indeed she did. Last year was "an extremely hot year," says Koval. "I think we raised, in terms of initial public offerings of new REITs and follow-up offerings of existing REITs, about $5 billion in equity and $3 billion in debt in 2012 alone." In fact, Canadian REITs are such a hot commodity that large Canadian property owners and asset managers are scrambling to issue a new flood of IPOs to raise money to buy even more income-produce real estate asset. In Canada, only about 10 per cent of real estate is securitized, compared to, say, about 30 to 40 per cent in the US and Australia, where REITs have been around longer. So finding available quality assets in this country that haven't already been snapped up can be a challenge. As the REIT market continues to steam ahead like no other investment class, issuers are increasingly stretching their search for office buildings, residential rentals, industrial properties, seniors' housing and other products across the border in the US. And US property as D al p m fa Th ti an S to as w ag o b te sa se L co vi LEXPERT® RANKED LAWYERS RANKED LAWYERS Keough, Loyola G. Bennett Jones LLP (403) 298-3429 keoughl@ bennettjones.com Mr. Keough is chair of the firm's Regulatory Department. He has particular experience in oil, gas, electricity, LNG, rates, facilities and environmental matters. His clients include utilities, buyers, producers, shippers and banks. ROB.indd 22 Kopstein, Robert A. Blake, Cassels & Graydon LLP (604) 631-3317 robert.kopstein@ blakes.com Mr. Kopstein advises on various corporate transactions such as Nexen Inc. on its $15.1-billion acquisition of NCOOC; Pembina Pipeline on its $3.8-billion acquisition of Provident Energy; and Exxon Mobil on its $2.6-billion acquisition of Celtic. Koval, Patricia A. Kroft, QC, Edwin G. Lampe, Jonathan Lastman, Dale H. Lat Torys LLP (416) 865-7356 pkoval@torys.com Blake, Cassels & Graydon LLP (604) 631-5200 ed.kroft@blakes.com Goodmans LLP (416) 597-4128 jlampe@goodmans.ca Goodmans LLP (416) 597-4129 dlastman@goodmans.ca Goo (41 jlat Ms. Koval practises in corporate finance (including investment funds), securities, M&A and governance. She has 20 years' experience with REITS, including domestic and cross-border IPOs, financings, management internalizations and mergers. Mr. Kroft is a partner experienced in handling tax and transfer pricing disputes. Appears before all levels of court including the Supreme Court of Canada. Published on taxation issues. Former member of Tax Court of Canada Rules Committee. Mr. Lampe is a member of the firm's executive and co-chair of its corporate/ securities group. Former OSC General Counsel, he advises domestic and international clients on M&A, strategic relationships, financings and governance and regulatory matters. Mr. Lastman is the firm's chair. Practises corporate, commercial and securities law in connection with public offerings, M&A and business restructurings. Director of Maple Leaf Sports & Entertainment and RioCan. Alternate NHL and NBA Governor. Mr. focu cros and bee indu mat Birc Pha Circ and 13-04-23 12:08 PM