Granite REIT Holdings Limited Partnership

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer obtained prior relief from NI 51-102, NI 52-109, NI 52-110, NI 58-101, insider reporting requirements in the Securities Act (Ontario) and NI 55-104, NI 44-101 and NI 44-102 to accommodate existing credit support issuer structure -- real estate investment trust and corporate subsidiary provide full and unconditional guarantees of debt securities of the filer -- filer may be unable to rely on exemption for certain credit support issuers in applicable securities legislation -- relief granted from continuous disclosure requirements, certification requirements, insider reporting requirements, audit committee requirements, and corporate governance requirements -- relief subject to conditions substantially analogous to the conditions contained in section 13.4 of NI 51-102.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, ss. 107 and 121(2)(a)(ii).

National Instrument 51-102 Continuous Disclosure Obligations, ss. 13.1 and 13.4.

National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, s. 8.6.

National Instrument 52-110 Audit Committees, s. 8.1.

National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 10.1(2).

National Instrument 58-101 Disclosure of Corporate Governance Practices, ss. 1.3(c) and 3.1.

February 24, 2025

IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
GRANITE REIT HOLDINGS LIMITED PARTNERSHIP
(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision (the Requested Relief) under the securities legislation of the Jurisdiction (the Legislation) that:

(i) pursuant to section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), the Filer be exempted from the requirements of NI 51-102 (the Continuous Disclosure Requirements);

(ii) pursuant to section 8.6 of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), the Filer be exempted from the requirements of NI 52-109 (the Certificate Form Requirements);

(iii) pursuant to section 8.1 of National Instrument 52-110 Audit Committees (NI 52-110), the Filer be exempted from the requirements of NI 52-110 (the Audit Committee Requirements);

(iv) pursuant to section 3.1 of National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101), the Filer be exempted from the corporate governance disclosure requirements of NI 58-101 (the Corporate Governance Disclosure Requirements); and

(v) pursuant to subsection 121(2) of the Securities Act (Ontario) (the Act) and pursuant to section 10.1 of National Instrument 55-104 Insider Reporting Requirements and Exemptions (NI 55-104), insiders of the Filer be exempt from the insider reporting requirement (as defined in National Instrument 14-101 Definitions (NI 14-101)) (the Insider Reporting Requirements),

in each case provided that certain conditions are satisfied.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for the application, and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut (collectively and together with Ontario, the Jurisdictions).

Interpretation

Terms defined in NI 14-101 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. Granite Real Estate Investment Trust (Granite REIT) is a Canadian-based real estate investment trust formed under the laws of the Province of Ontario and engaged, directly and through its subsidiaries, primarily in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe.

2. Granite REIT Inc. (Granite GP) is a corporation formed under the Business Corporations Act (British Columbia).

3. The Filer is a limited partnership formed under the laws of the Province of Québec.

4. All of the limited partnership units of the Filer (which represent approximately 99.999% of the economic entitlement in the Filer) are held by Granite REIT, with the general partner interest (which represents approximately 0.001% of the economic entitlement in the Filer) held by Granite GP.

5. The only material assets of Granite REIT are the limited partnership interests in the Filer and its shares of Granite GP, and the only material asset of Granite GP is its relatively nominal general partner interest in the Filer. As a result of the Reorganization (as defined below), Granite REIT owns 100% of the equity securities of Granite GP.

6. Granite REIT is a reporting issuer or the equivalent under the securities legislation of each Jurisdiction and is not in default of applicable Legislation of each Jurisdiction or the rules and regulations made pursuant thereto. The trust units of Granite REIT (REIT Units) currently trade on the Toronto Stock Exchange under the ticker symbol "GRT.UN" and on the New York Stock Exchange under the ticker symbol "GRP.U".

7. Granite GP is not a reporting issuer in any province or territory of Canada.

8. The Filer is a reporting issuer or the equivalent under the securities legislation of each Jurisdiction and is not in default of applicable Legislation of each Jurisdiction or the rules and regulations made pursuant thereto.

9. Prior to the Reorganization (as defined below), each REIT Unit was stapled to a common share of Granite GP (a Common Share) (and each Common Share was stapled to a REIT Unit) to form a "stapled unit" (a Stapled Unit), and a REIT Unit, together with a Common Share, traded together as Stapled Units (the Stapled Structure).

10. On October 1, 2024, Granite REIT and Granite GP implemented a reorganization of the Stapled Structure (the Reorganization). The Reorganization was effected by way of plan of arrangement under the Business Corporations Act (British Columbia) involving Granite REIT and Granite GP and resulted in, among other things, (i) the occurrence of an "Event of Uncoupling" of the Stapled Units, (ii) each Common Share was transferred from each holder of Common Shares to Granite REIT, in exchange for the issuance of fractional REIT Units by Granite REIT to each such holder, (iii) the issued and outstanding REIT Units were consolidated such that each holder of REIT Units held the same number of REIT Units after the consolidation as the holder held prior to the Reorganization; (iv) Granite GP became a wholly-owned subsidiary of Granite REIT; and (v) the Stapled Structure was terminated.

11. The Filer's non-convertible debt securities (the Debt Securities) have been guaranteed by each of Granite REIT and Granite GP and such guarantees are joint and several.

12. Each of Granite REIT and Granite GP is a "credit supporter" (as defined in Part 13.4 of NI 51-102) of the Debt Securities of the Filer.

13. It is proposed that the Filer may distribute Debt Securities from time to time pursuant to a base shelf prospectus (together with any amendment, collectively, a Base Shelf Prospectus) filed or to be filed in each of the Jurisdictions, as supplemented by one or more prospectus supplements (collectively, each a Prospectus Supplement and, together with the Base Shelf Prospectus, a Prospectus) to be filed in each of the Jurisdictions. Any Prospectus will be prepared pursuant to the short form procedures contained in NI 44-101 and the shelf procedures contained in NI 44-102 and will comply with the requirements set out in Form 44-101F1 that would apply to a credit support issuer as provided by Items 12 and 13 of Form 44-101F1. Each of Granite REIT and Granite GP will provide a full and unconditional guarantee of the payments to be made by the Filer in respect of any Debt Securities distributed pursuant to a Prospectus, and the holders of such securities will be entitled to receive payment from each of Granite REIT and Granite GP within 15 days of any failure by the Filer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support securities" in NI 51-102. The guarantees of Granite REIT and Granite GP will be joint and several.

14. Pursuant to a decision document dated December 21, 2012 In the Matter of Granite Real Estate Inc. (the Filer) on its Own Behalf and on Behalf of Granite REIT Holdings Limited Partnership (Granite LP) and Granite Europe Limited Partnership (Finance LP) Formed or to be Formed as Part of a Conversion of the Filer to a Real Estate Investment Trust Structure (the 2012 LP Decision), subject to certain conditions stipulated therein, the Filer had been granted an exemption from: (i) the Continuous Disclosure Requirements; (ii) the Certificate Form Requirements; (iii) the Audit Committee Requirements; and (iv) the Corporate Governance Disclosure Requirements, and reporting insiders of the Filer had been granted an exemption from the Insider Reporting Requirements.

15. Pursuant to a decision document dated August 23, 2013 In the Matter of Granite REIT Holdings Limited Partnership (the Filer) (the 2013 LP Decision), subject to certain conditions stipulated therein, the Filer had been granted an exemption from the eligibility requirements relating to short form and shelf prospectuses.

16. Pursuant to a decision document dated November 5, 2024 In the Matter of Granite REIT Holdings Limited Partnership (the Filer) (the 2024 LP Decision), subject to certain conditions stipulated therein, the Filer had been granted an exemption from: (i) the Continuous Disclosure Requirements; (ii) the Certificate Form Requirements; (iii) the Audit Committee Requirements; (iv) the Corporate Governance Disclosure Requirements and (v) the eligibility requirements relating to short form and shelf prospectuses, and reporting insiders of the Filer had been granted an exemption from the Insider Reporting Requirements for a transition period following implementation of the Reorganization until Granite REIT can file its own stand-alone financial statements and accompanying MD&A pursuant to NI 51-102 (expected to be by March 31, 2025 (the Transition Period).

17. Pursuant to the 2012 LP Decision and the 2024 LP Decision, as applicable, the Filer obtained relief similar to the Requested Relief in connection with the Continuous Disclosure Requirements, the Certificate Form Requirements, the Audit Committee Requirements, and the Corporate Governance Disclosure Requirements, and for its reporting insiders in connection with the Insider Reporting Requirements.

18. One of the conditions to the 2012 LP Decision and the 2013 LP Decision was that the REIT Units and the Common Shares remained stapled. As a result of the Reorganization and termination of the Stapled Structure, the 2012 LP Decision and the 2013 LP Decision terminated in accordance with their terms.

19. The 2024 LP Decision will only be in force until the expiry of the Transition Period.

20. The Filer is a "subsidiary" of Granite REIT, Granite REIT is a "parent credit supporter" of the Filer, and Granite GP is a "subsidiary credit supporter" of the Filer, under the securities legislation of Alberta and Saskatchewan. However, the interpretation provisions respecting "subsidiary" and "beneficial ownership of securities" under the Act and equivalent legislation of the Jurisdictions, to the extent they only refer to the ownership or control of companies, as opposed to partnerships (or are silent with respect thereto), do not expressly capture the relationship that exists among the Filer, Granite REIT and Granite GP. Although staff of the principal regulator take the position that the terms "subsidiary" and "beneficial ownership of securities" in the Act do not exclude unincorporated entities, Granite REIT may not technically satisfy the definition of "parent credit supporter" and Granite GP may not technically satisfy the definition of "subsidiary credit supporter" (each as defined in section 13.4 of NI 51-102) in each of the Jurisdictions.

21. The Debt Securities will satisfy the definition of "designated credit support securities" (as defined in section 13.4 of NI 51-102), but for the fact that Granite REIT may not technically satisfy the definition of "parent credit supporter" (as defined in section 13.4 of NI 51-102). However, Granite GP acts as the general partner of the Filer, holding a 100% general partner interest in the Filer, and therefore controls the Filer directly. Further, Granite REIT holds all of the limited partnership units of the Filer and owns 100% of the equity securities of Granite GP, and therefore indirectly controls the Filer. As a result, following the Transition Period, Granite REIT will consolidate Granite GP and the Filer (and all of the Filer's assets and liabilities) in its financial statements.

22. The Filer may not meet the test set forth in subparagraph 13.4(2)(a) of NI 51-102 as Granite REIT may not technically satisfy the definition of "parent credit supporter" and Granite GP may not technically satisfy the definition of "subsidiary credit supporter" (as defined in section 13.4 of NI 51-102) in each of the Jurisdictions. Therefore, the Requested Relief is required in order for the provisions of section 13.4 of NI 51-102 to apply to the Filer.

23. If the Requested Relief is granted, the Filer will: (a) treat Granite REIT as a "parent credit supporter" and Granite GP as a "subsidiary credit supporter"; (b) comply with the conditions in subsection 13.4(2.1) of NI 51-102, as applicable, that apply to credit support issuers, in accordance with the terms and conditions of this decision; and (c) treat the Debt Securities as "designated credit support securities" and comply with the conditions in subsection 13.4(2.1) of NI 51-102, as applicable, that apply to designated credit support securities, in accordance with the terms and conditions of this decision.

24. If the Filer qualified for the exemption for certain credit support issuers from the Continuous Disclosure Requirements pursuant to subsection 13.4(2.1) of NI 51-102 as described in paragraph 23 above, the Filer would also qualify for the exemptions from the Certificate Form Requirements pursuant to section 8.5 of NI 51-109, the Audit Committee Requirements pursuant to subparagraph 1.2(g) of NI 52-110 and the Corporate Governance Disclosure Requirements pursuant to subparagraph 1.3(c) of NI 58-101, and the Insider Reporting Requirements would not apply to insiders of the Filer pursuant to subsection 13.4(3) of NI 51-102.

Decision

1. The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

2. The decision of the principal regulator under the Legislation is that the Requested Relief is granted, provided that the Transition Period has expired and the conditions set out below are satisfied:

(a) In respect of the Continuous Disclosure Requirements, the Filer satisfies the conditions set out in subsection 13.4(2.1) of NI 51-102, as applicable, except as modified in this decision and as follows:

(i) any reference to parent credit supporter in section 13.4 of NI 51-102 shall be deemed to include Granite REIT, and

(ii) any reference to subsidiary credit supporter in section 13.4 of NI 51-102 shall be deemed to include Granite GP;

(b) In respect of the Certificate Form Requirements, the Audit Committee Requirements, the Corporate Governance Disclosure Requirements and the Insider Reporting Requirements, the Filer satisfies the conditions set out in paragraph 2(a) above; and

(c) In respect of the Insider Reporting Requirements, the insider complies with the conditions in subparagraphs 13.4(3)(b) and (c) of NI 51-102.

"Marie-France Bourret"
Manager, Corporate Finance Division
Ontario Securities Commission

OSC File #: 2024/0725