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Stephen Pincus quoted in “A milestone for Milestone”, Financial Post


Lawyer Stephen Pincus
Area Corporate Finance and Securities, REITs and Income Securities


Excerpt from “A milestone for Milestone”, by Barry Critchley

The Milestone deal, co-led by BMO Capital Markets and CIBC World Markets, is "a very robust structure," said Stephen Pincus, chair of the REIT and income securities practice at Goodmans LLP.

In short, Pincus said, it's a Canadian issuer "that doesn't need to register with the SEC," but into which both Canadian and U.S. investors can participate;

Milestone qualifies as a U.S. REIT. "There is no tax [to be paid] in the U.S.," said Pincus, noting that because Milestone has no Canadian assets, no tax is paid in Canada.

For investors, one attractive feature in their return is so-called tax-advantaged return of capital. "It's like investing in a Canadian REIT, with high shelter. But if Canadians invested in a U.S. REIT, they wouldn't get the return of capital treatment," said Pincus.

The structure allows the U.S. sponsors - or the initial shareholders - to hold a retained interest. "Here the retained interest can be held in any amount," said Pincus, noting that on Milestone the initial shareholders will have a 60% stake.

Milestone's deal continues a trend: for more than a decade there have been various waves of foreign assets, but especially from the U.S., being brought to Canada to satisfy the demand of income-desiring investors. "We have been busy on these matters for 12 years," said Pincus, who estimates that at least nine to 10 different structures, all designed to bring foreign income to Canada, have been used, with tweakings to the structures required following legislative changes, in Canada and the U.S.

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