Lexpert Magazine

LEXPERT MAGAZINE | MARCH 2016 11 Reid: Owning non-core assets is rarely re- warded by the market and can give activ- ists an opening to argue that management lacks focus. For Fortis, this was a deal that just made good strategic sense and the tim- ing was right – they were taking a pause af- ter completing major acquisitions in 2013 and 2014. is was a high-quality real es- tate portfolio, but there was no compelling rationale for Fortis to continue to own it. See: For Slate, this was about using the knowledge and expertise of its team and focusing on undervalued assets. LEXPERT: ere was lots of legal represen- tation on this deal. And yet the deal closed in short order — just one month aer an- nouncement on May 21. Did having so many parties offer any twists? Lombardi: e portfolio included 19 prop- erties, so there were lots of issues to work through. In some cases an office building was connected to a hotel, and it was chal- lenging to negotiate arrangements accept- able to Fortis, Slate and the hotel buyer. But the negotiations were business-minded and pragmatic, and we were able to avoid get- ting bogged down fighting over side issues. A comprehensive data site was available to Slate for a number of weeks prior to the announcement of the deal, and the parties were highly incentivized to find solutions that would work for both parties. Isabel Henkelman (McCarthy): We were all fortunate enough to be dealing with very goal-oriented sophisticated parties. Shortt: And it helped that each of the lead lawyers had worked with each other on pri- or deals. ere was a level of understanding and co-operation between the parties that isn't always there on deals of this size and complexity. at, and a number of late night calls with all clients and lawyers, made the difference. LEXPERT: Were there any risks that might have prevented this deal from closing? Reid: Slate needed to have its joint venture partner and lenders on board and execute a capital-markets financing. Fortis agreed to support this by investing $35 million in Slate's publicly traded REIT units. As a motivated seller, Fortis was prepared to be flexible and creative to get the deal done. See: Both parties were interested in con- ducting and expediting the closing of the deal. is short closing period meant the window to addressing any issues was small. We were faced with the traditional regula- tory issues associated with such a transac- tion, but were able to handle all matters in a timely manner. LEXPERT: Given that Fortis was selling its real estate portfolio, did this necessitate a winding down of Fortis Properties? Reid: Fortis Properties was in the process of selling substantially all of its assets, so For- tis, as the parent company, agreed to stand behind the obligations of Fortis Properties under the purchase agreement. ere was no need to wind down Fortis Properties as part of the deal, although Fortis may decide to do so in the future. LEXPERT: Was it a memorable deal? What are you going to take away from this one? Lombardi: From our perspective, one of the most interesting aspects involved the Delta Brunswick/Brunswick Square property. is was a highly integrated office building and hotel complex. Severing the proper- ties would have been very challenging, and it was unclear whether Slate or the hotel purchaser would take it. In the end, we were able to negotiate a deal with Slate that worked for everyone. Shortt: It was complex and fast-paced. While there were lots of different disci- plines involved on the legal side, it was a real estate deal at its core. Currie: Notwithstanding the complexity, multiple stakeholders and aggressive time- lines, everyone worked collaboratively. e deal was transformational in that it cemented Slate's status as an office REIT with a truly national footprint. (For a summary and full list of legal advi- sors, visit ow.ly/YbpvI.) ON THE TREND Where are the pure plays? Looking back at the past five years, it's not surprising that energy companies overwhelmingly acquire energy-related targets, whereas professional investors in the financial space will look anywhere for a good deal. GRAPHIC BY DAVID DIAS; SOURCE: THOMSON REUTERS | ANALYSIS ON RECENT TRANSACTIONS |

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