Yet another B.C. income trust has gone private.
The B.C. Investment Management Corp. has acquired Canadian Hotel Income Properties Real Estate Investment Trust (TSX:HOT.UN) in a cash deal worth $1.2 billion.
CHIP REIT shareholders will receive $19.10 per CHIP REIT unit, which represents a 34% premium over the income trust's closing price July 31, and a 22% premium over the closing price March 27, the day before CHIP REIT set up a special committee to review the trust's strategic opportunities.
CHIP REIT trustees have unanimously recommended unitholders to accept the deal, which is expected to close before the end of the year. CHIP REIT's largest shareholder, Belkorp Group, who own 27%, has entered into a lockup agreement to tender its 13.3 million units to the deal. As part of the deal, BCIMC will also acquire all of the trust's outstanding debentures for $1,625.53 per $1,000 debenture.
The deal between B.C.'s public-sector pension fund manager and CHIP REIT is the latest acquisition of an income trust, following federal finance minister Jim Flaherty's distribution tax announcement last October.
Roughly $3.1 billion worth of deals have been done in the past four months involving B.C.'s income trusts. In April, Gateway Casinos Income Fund (TSX:GCI.UN) was bought out by an Australian consortium for $1.37 billion. In June, Versacold Income Fund (TSX:ICE.UN) was acquired by Icelandic shipping giant HF Eimskipafelag Islands for $525.7 million.
CHIP REIT's unit prices during the past week: between $14.26 and $14.90; 52-week high: $17.50; 52-week low: $12.25.