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A Royal Bank of Canada (RBC) sign is seen in downtown Toronto.
A Royal Bank of Canada (RBC) sign is seen in downtown Toronto.
(MARK BLINCH/REUTERS)

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RBC doesn’t buy H&R’s break fee explanation

The debate over the break fee that Primaris Retail Real Estate Investment Trust agreed to pay H&R REIT as part of their takeover deal is heating up, with an RBC Dominion Securities analyst joining the chorus of critics, saying he is dubious of the size, makeup and stated rationale or the fee.

In a note entitled “the Anatomy of a Break Fee,” analyst Neil Downey of RBC analyzed recent transactions and found that the fee of 3.8 per cent is higher than the average 2.9 per cent in 10 recent real estate merger deals. He said many investors he’s talking to are not impressed with the size of the fee, especially considering the slim premium in the H&R offer over what was already on the table from hostile bidder KingSett Capital.