WPT Industrial Real Estate Investment Trust



Application for a decision under section 5.1 of OSC Rule 48-501 exempting the applicant from trading restrictions under subsection 2.2(a) of OSC Rule 48-501 for at-the-market distribution of securities. Decision granted.

Applicable Legislative Provisions

Ontario Securities Commission Rule 48-501 -- Trading During Distributions, Formal Bids and Share Exchange Transactions, ss. 2.2, 5.1.

August 13, 2020




The securities regulator in the Jurisdiction (the Decision Maker) has received an application (the Application) from the Filer pursuant to the procedures set forth in OSC Policy 2.1 -- Applications to the Ontario Securities Commission for a decision under the securities legislation of the Jurisdiction (the Legislation) that the requirement in section 2.2(a) of the Rule do not apply to insiders of the Filer (the Insiders) in connection with any ATM Distributions made by the Filer under an Equity Distribution Agreement (the Exemptive Relief Sought).

The Decision Maker has also received a request from the Filer for a decision that the Application and this decision (together, the Confidential Material) be kept confidential and not be made public until the earliest of: (i) the date on which the Filer publicly announces an ATM distribution; (ii) the date on which the Filer first enters into an Equity Distribution Agreement as described below, (iii) the date on which the Filer advises the Decision Maker that there is no longer any need for the Confidential Material to remain confidential, and (iv) 90 days after the issue of the decision with respect to the Exemptive Relief Sought (together, the Confidentiality Relief).


Terms defined in National Instrument 14-101 -- Definitions, MI 11-102, National Instrument 21-101 -- Marketplace Operation and National Instrument 13-101 -- System for Electronic Document Analysis and Retrieval (SEDAR) have the same meaning if used in this decision, unless otherwise defined herein. All dollar figures in this decision refer to Canadian dollars.


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

The Filer

1. The Filer is an unincorporated, open-ended real estate investment trust governed by the laws of the Province of Ontario. The head office of the Filer is located in Toronto, Ontario.

2. The Filer is a reporting issuer in each province and territory of Canada and to its knowledge is not in default of securities legislation in any jurisdiction of Canada.

3. The Filer's trust units (the Units) are listed on the Toronto Stock Exchange (the TSX) in U.S. dollars under the trading symbol "WIR.U" and in Canadian dollars under the symbol "WIR.UN".

4. The Units meet the requirements in the Rule to be considered a "highly-liquid security".

Proposed ATM Distribution

5. The Filer has filed a short form base shelf prospectus dated December 5, 2019 (the Shelf Prospectus).

6. The Filer has applied to the Ontario Securities Commission for exemptive relief pursuant to National Policy 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions (the Passport Application) for exemptive relief from certain prospectus delivery and form requirements in order to facilitate the "at-the-market distributions" of Units by the Filer in Canada (ATM Distributions) within the meaning of, and pursuant to the shelf prospectus procedures prescribed in, Part 9 of National Instrument 44-102 -- Shelf Distributions (NI 44-102), to be made pursuant to the terms and conditions of one or more substantially identical equity distribution agreements (each, an Equity Distribution Agreement) to be entered into between the Filer and certain agents (the Agents). The Filer has also applied to the Autorité des marches financiers for relief from the French translation requirements in respect of any ATM Distribution (the AMF Application).

7. Subject to mutual agreement on terms and conditions, and to receipt of the exemptions sought under the Passport Application and the AMF Application, the Filer is proposing to enter into one or more Equity Distribution Agreements with the Agents, providing for the periodic sale of Units by the Filer through the Agents, pursuant to an ATM Distribution under the base shelf prospectus procedures prescribed by Part 9 of NI 44-102 (an ATM Program), after the filing of a prospectus supplement (together with the Shelf Prospectus, the Prospectus).

8. The Equity Distribution Agreement will provide that, at the time of each sale of Units pursuant to an ATM Distribution, the Filer will represent to the Agents that the Prospectus contains full, true and plain disclosure of all material facts relating to the Filer and the Units being distributed. It is therefore likely that the bulk of the sales activity under the ATM Program will occur during periods commencing on the second business day after the public announcement of the Filer's quarterly or annual earnings and continuing until the end of each fiscal quarter thereafter.

Equity Ownership

9. Under the Filer's equity ownership guidelines (the Ownership Guidelines), each of the independent trustees (independent for the purposes of National Instrument 58-101 -- Disclosure of Corporate Governance Practices) (an "Independent Trustee") of the Filer is required to acquire (and thereafter maintain ownership of) a number of Units or equity equivalents with a fair market value equal to a minimum of three times the annual base cash retainer (currently $40,000) in place for Independent Trustees. Each Independent Trustee has three years from the later of April 26, 2013 (the closing date for the Filer's initial public offering of Units) and the date of his or her appointment to the meet the requirement of the Ownership Guidelines. In addition, the Filer's named executive officers (NEOs), including the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, General Counsel and Secretary are required to hold Units, deferred trust units, deferred limited partnership units of WPT Industrial LP, the Filer's operating subsidiary, or other equity securities that own underlying Units with a value equal to six times the base salary for the Chief Executive Officer and three times base salary for the Chief Financial Officer and the Chief Operating Officer, General Counsel and Secretary, based on the market value of the securities held, and which must be attained within five years of being subject to the guidelines. NEOs must retain 100% of equity granted (less taxes) until guidelines are met after the five-year grace period.

10. The Filer believes that the Ownership Guidelines are in-line with best corporate governance practices and that it is in the Filer's best interest to avoid imposing any unnecessary restrictions on the ability of Insiders to increase their equity stake in the Filer.

11. Under the terms of the Filer's insider trading policy for all members of the board of trustees, directors, managers, officers, and employees of the Filer and its subsidiaries and their respective associates (the Insider Trading Policy), trustees and NEOs of the Filer, as well as certain other individuals, are limited in trading Units and other securities of the Filer while the Filer is not in blackout (a Trading Window). Blackout periods commence at the end of each fiscal quarter until 48 hours after the general release of the financial results for the quarter, and at the end of each fiscal year until 48 hours after the general release of the financial results for the year. If the Filer intends to commence an ATM Distribution, any such ATM Distributions by the Filer may occur during a Trading Window.

12. Pursuant to section 2.2(a) of the Rule, an insider of a reporting issuer is prohibited from bidding on or purchasing securities of that reporting issuer during the period commencing on the date that is two trading days prior to the day the offering price is determined for a prospectus offering of that reporting issuer, and ending on the date the selling process ends and all stabilization arrangements relating to the offered security are terminated (the Insider Purchasing Restriction).

13. These restrictions in the Rule were not designed in contemplation of ATM Distributions. Section 1.2(5)(a)(i) of the Rule provides the following interpretative guidance:

the selling process shall be considered to end, in the case of a prospectus distribution, if a receipt has been issued for the final prospectus, the dealer has allocated all of its portion of the securities to be distributed under the prospectus and all selling efforts have ceased

however such guidance does not apply in the context of an ATM Distribution, where the receipt is obtained before the distribution begins, the dealers do not allocate a position (but rather simply trade on a "marketplace", within the meaning of National Instrument 21-101 -- Marketplace Operation) and no selling efforts are made (only ordinary trading activity).

14. Similarly, the exemption in section 3.2(e) of the Rule, in respect of "a subscription for or purchase of an offered security pursuant to a prospectus distribution", is not possible to apply in the context of an ATM Distribution, given that insiders purchasing on a marketplace during an ATM Distribution would have no knowledge as to whether they are purchasing under the ATM Distribution or otherwise from a counterparty unrelated to the Filer.

15. The stated policy rationale for the Rule is to prohibit "purchases of or bids for restricted securities in circumstances where there is heightened concern over the possibility of manipulation by those with an interest in the outcome of the distribution or transaction".{1}

16. In the case of the Filer, given that:

(a) the Units constitute a "highly-liquid security" and are liquid to such a degree that it would be virtually impossible for an Insider to manipulate the trading price of the Units through purchases;

(b) most Insiders will, in any event, be unaware of when each ATM Distribution begins and ends and discrete sales of Units thereunder occur; and

(c) any Insider that is purchasing Units on the market during an ATM Distribution will not know whether it is purchasing under the ATM Distribution or from another counterparty unrelated to the Filer;

there is no policy rationale for applying the Insider Purchasing Restriction to Insiders in the context of an ATM Distribution.

17. In the absence of an exemption from the Insider Purchasing Restriction, Insiders would be restricted from bidding on and purchasing Units during a period of time prior to and during each ATM Distribution by the Filer, which could overlap with the Trading Windows and unduly and unnecessarily impede trustees of the Filer from making purchases of Units, including for the purposes of complying with the Ownership Guidelines.


18. The Filer submits that the Confidentiality Relief is warranted in the circumstances as there is otherwise a risk of the public being misled into believing, on the basis of the Confidential Material being available to the public before the earliest of the proposed expiration dates, that implementation of the contemplated ATM Distribution arrangement by the Filer is imminent when in fact the parties have not yet come to a definitive agreement and the Filer may decide not to proceed with an ATM Distribution in the near term, or at all, depending on market conditions and other factors outside of the Filer's control. Such premature disclosure could cause confusion and uncertainty in the market and would be contrary to the public interest.

19. In recognition of the general principles of access under the Act, however, the Filer proposes that the Confidentiality Relief be limited to a maximum duration of 90 days from the date of this decision. This period is believed to provide the Filer with sufficient time within which to negotiate a definitive Equity Distribution Agreement or otherwise make a final determination on the matter, and strikes an appropriate balance between the Filer's legitimate concerns about premature disclosure and principles of public access to filed materials.

20. Upon a definitive Equity Distribution Agreement being settled between the Filer and the Agents, the Filer's ordinary disclosure obligations will apply and news of the proposed ATM Distribution arrangement would be disseminated in the ordinary course.


The Decision Maker is satisfied that the decision meets the test set out in the Legislation.

The decision of the Decision Maker under the Legislation is that the Exemptive Relief Sought is granted.

DATED this 13th day of August 2020.

"Tracey Stern"

Manager, Market Regulation

Ontario Securities Commission

{1} OSC Request for Comment on Changes to Proposed OSC Rule 48-501 -- Trading During Distributions, Formal Bids and Share Exchange Transactions (2nd Publication) and Proposed Companion Policy 48-501CP to OSC Rule 48-501 and Proposed Rescission of OSC Policy 5.1, Paragraph 26 and OSC Policy 62-601 -- Securities Exchange Take-Over Bids -- Trades in the Offeror's Securities (September 10, 2004).