Artis to be acquired by RFA

Executive Summary

• Artis Real Estate Investment Trust and RFA Capital Holdings Inc. have agreed to combine via a court-approved plan of arrangement, where RFA will acquire all outstanding units of Artis.
• Artis unitholders will receive one common share of the new entity, RFA Financial, for each Artis unit held, resulting in Artis unitholders owning 68% of the new company and RFA shareholders owning 32%.
• The transaction is expected to close in Q1 2026, creating a scaled, bank-led financial services platform with significant growth targets in lending assets and return on equity.

Key Details

• Transaction Structure: RFA Capital Holdings Inc. (private) will acquire Artis Real Estate Investment Trust (public) via a share exchange transaction under a statutory plan of arrangement.
• Exchange Ratio: Each Artis common unit will be exchanged for one common share of RFA Financial. Each Artis preferred unit (Series E and Series I) will be exchanged for one preferred share of RFA Financial with substantially the same terms, subject to preferred unitholder approval (though closing is not conditional on this approval).
• Ownership Post-Closing: Current Artis common unitholders will own 68% of RFA Financial common shares; current RFA common shareholders will own 32%.
• Management Changes:
  • Ben Rodney (current Chair of Artis and President/CEO of RFA) becomes President and CEO of RFA Financial.
  • Samir Manji (current President/CEO of Artis) becomes Executive Chair of the Board of Directors.
  • Jaclyn Koenig (current CFO of Artis) becomes CFO of RFA Financial.
  • Melody Lo (Managing Partner of RFA) becomes COO of RFA Financial.
  • Kara Watson (current EVP, Legal of Artis) becomes EVP, Legal and Corporate Secretary of RFA Financial.
• Dividend Policy: RFA Financial intends to pay a quarterly cash dividend initially set at 11 cents per share (44 cents annualized). Preferred shares will receive dividends equivalent to current Artis preferred unit distribution rates.
• Transaction Rationale: Creation of a leading, bank-led financial service platform combining RFA Bank of Canada (Schedule 1 bank) and RFA Mortgage Corp. with Artis’s diversified real estate portfolio.
• Medium-Term Targets (3-5 years post-closing):
  • Total lending assets: $8.0 billion to $12.0 billion.
  • RFA Bank Return on Equity: Low- to mid-teen double-digit percentage.
  • Cumulative asset sales from Artis portfolio: $1.3 billion to $1.5 billion.
  • RFA Bank Net Income CAGR: 40% to 50%.
  • EPS Payout Ratio Target: Less than 65%.
• Closing Conditions: Requires approval of at least 2/3 of votes cast by Artis unitholders, 2/3 of RFA shareholders, and court approval. Expected to close in Q1 2026.
• Voting Support: Unitholders representing ~39.2% of Artis (including Sandpiper Group, Halcyon International, Steven Joyce, and all Artis trustees/officers) have entered into voting support agreements.
• Lock-Up Agreements: Unitholders/shareholders representing ~22.1% of Artis and ~33.0% of RFA have entered into 180-day lock-up agreements.
• Fairness Opinions: CIBC World Markets Inc. and Haywood Securities Inc. provided fairness opinions to the Artis special committee regarding the exchange ratio.
• Advisers:
  • Artis: Financial adviser CIBC World Markets Inc.; Legal adviser Norton Rose Fulbright Canada LLP.
  • RFA: Financial adviser BMO Capital Markets; Legal adviser Borden Ladner Gervais LLP.
• Corporate Actions: Artis will be delisted from the TSX upon closing. RFA Financial will apply for listing on the TSX. A one-for-three share consolidation is expected for RFA Financial common shares upon closing.
• Termination Fee: $25 million payable by either party in certain circumstances, including acceptance of a superior proposal.

Notable Quotes

• "By combining Artis with RFA, we are creating a scalable and growing financial services platform that benefits from diversification and built-in access to substantial growth capital... We believe RFA's various platforms... are ripe for significant growth harnessing the substantial capital currently embedded in the Artis real estate portfolio." — Samir Manji, Executive Chair of RFA Financial
• "We see a highly attractive opportunity to grow RFA's balance sheet and invest in existing and new product capabilities... As Artis continues to monetize its real estate holdings over the coming years, it is expected to release meaningful amounts of capital that can be redeployed into compelling investment opportunities." — Ben Rodney, President and CEO of RFA Financial
• "Halcyon is committed to supporting the transaction... we are confident this transaction presents a compelling opportunity to unlock long-term value for current unitholders by combining the scale of the Artis platform with the superior growth profile of RFA." — Steven Joyce, President and CEO of Halcyon