TransGlobe Apartment Real Estate Investment Trust

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 51-102 Continuous Disclosure Obligations -- Application for relief from requirement in Section 8.4 of NI 51-102 to include financial statement disclosure in business acquisition report -- Filer completed the acquisition (the Acquisition Transaction) of the Acquisition Properties -- Filer does not access to historical accounting records necessary to audit combined financial statements for the Acquisition Properties purchased by the Owners in 2008 -- Principal Regulator issued a receipt dated January 6, 2011 in respect of a final prospectus of the Filer -- Receipt evidenced the granting by the Principal Regulator of relief requested in a pre-file waiver application, exempting the Filer from, among other things, the requirements of National Instrument 44-101 Short Form Prospectus Distributions to include historical financial statements of the Acquisition Properties purchased by the Owners in 2008, for the period not held by the Owners, subject to the condition that the financial statements of all Acquisition Properties for the interim period ended September 30, 2010 shall be presented on an audited basis -- Acquisition Transaction was subject to the applicable requirements of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions relating to, among other things, preparation of a formal valuation of the non-cash assets involved in the Acquisition Transaction and minority approval -- Filer will provide the Alternative Financial Statements in lieu of the financial statements required by Section 8.4 of NI 51-102 in the BAR in respect of the Acquisition Transaction -- Relief granted subject to conditions including provision of the Alternative Financial Information.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 8.4.

February 14, 2011

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

TRANSGLOBE APARTMENT REAL ESTATE

INVESTMENT TRUST

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for a decision pursuant to Section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) that the Filer be exempt from the requirement to include the financial statement disclosure prescribed under Section 8.4 of NI 51-102 in the business acquisition report (BAR) of the Filer relating to the Acquisition Transaction (as defined herein) (the Exemption Sought).

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

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

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

Interpretation

Terms defined in National Instrument 14-101 Definitions 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. The principal, registered and head office of the Filer is located at 5955 Airport Road, Suite 223 in Mississauga, Ontario.

2. The Filer is an unincorporated, open-ended real estate investment trust established on April 8, 2010 under, and governed by, the laws of the Province of Ontario, pursuant to a declaration of trust dated April 8, 2010, as amended and restated as of May 6, 2010.

3. The Filer was formed to own multi-suite, residential rental properties across Canada. As at the date hereof, the Filer owns a portfolio of 87 residential properties principally located in urban centres in the Provinces of Alberta, Ontario, Québec, New Brunswick and Nova Scotia, which it acquired from affiliates of TransGlobe Investment Management Ltd. (collectively with companies and entities controlled or under the direction of the Drimmer family, TransGlobe) and other parties with which TransGlobe owned the properties (collectively, the Owners) as part of the closing of its initial public offering (the IPO) on May 14, 2010 and subsequent transactions, including the Acquisition Transaction.

4. The Filer is authorized to issue an unlimited number of trust units (Units) and an unlimited number of special voting units (the Special Voting Units and together with the Units, the Voting Units). As at February 2, 2011, there were 35,413,381 Units and 7,072,682 Special Voting Units issued and outstanding. The number of Special Voting Units outstanding at any point in time is equivalent to, and accompanies, the number of outstanding units of limited partnerships managed and controlled by the Filer that are exchangeable into Units, and the Special Voting Units provide voting rights with respect to the Filer to the holder of such exchangeable securities.

5. The Filer is a reporting issuer or the equivalent thereof in each Province and Territory of Canada and, to the best of its knowledge, information and belief, is not in default of any requirement of Canadian securities legislation.

6. The Units are listed on the Toronto Stock Exchange under the symbol "TGA.UN".

7. On January 6, 2011, the Principal Regulator issued a receipt (the Receipt) in respect of a final prospectus of the Filer (the Prospectus) qualifying for distribution up to 10,662,570 subscription receipts (the Subscription Receipts) of the Filer.

8. Each Subscription Receipt entitled the holder thereof to receive one Unit, without payment of any additional consideration, upon completion of the acquisition by the Filer (the Acquisition Transaction) of 20 residential properties and one townhouse complex from the Owners (the Acquisition Properties), and promissory notes pursuant to which certain TransGlobe entities will provide instalment payments to the Filer in consideration of the Filer assuming certain mortgages in order for the Filer to achieve a specified effective weighted average interest rate across all mortgages to be assumed by the Filer upon completion of the Acquisition Transaction.

9. The Receipt evidenced the granting by the Principal Regulator of relief requested in a pre-file waiver application, exempting the Filer from, among other things, the requirements of National Instrument 44-101 Short Form Prospectus Distributions to include historical financial statements of the Acquisition Properties purchased by the Owners in 2008, for the period not held by the Owners, subject to the condition that the financial statements of all Acquisition Properties for the interim period ended September 30, 2010 shall be presented on an audited basis (the Prospectus Relief).

10. Relying on the Prospectus Relief, the Prospectus contained the following financial statement presentation (collectively, the Alternative Financial Statements):

a. audited combined financial statements of the Acquisition Properties for the nine-month period ended September 30, 2010 and the year ended December 31, 2009 and unaudited combined financial statements for the year ended December 31, 2008, reflecting the financial position of the 20 Acquisition Properties as at September 30, 2010 and the results of operations and cash flows of 17 of the Acquisition Properties from January 1, 2010 to September 30, 2010 and the results of operations and cash flows of the three Acquisition Properties that were acquired by the Owners on July 29, 2010 (the 2010 Acquired Properties), from the date of acquisition to September 30, 2010;

b. unaudited combined financial statements of the 2010 Acquired Properties for the period from January 1, 2010 to July 28, 2010 (date of disposition) and the nine-months ended September 30, 2009;

c. audited combined financial statements of the 2010 Acquired Properties for the year ended December 31, 2009 and unaudited combined financial statements for the year ended December 31, 2008;

d. unaudited pro forma consolidated financial statements of the Filer as at September 30, 2010 and for the period from May 14, 2010 (date of commencement of operations of the Filer) to September 30, 2010; and

e. audited schedule of assets acquired and liabilities assumed by the Filer as at May 14, 2010.

11. The Prospectus also incorporated by reference the following financial statement presentation:

a. audited financial statements of the properties acquired by the Filer as part of the closing of its IPO as at and for the years ended December 31, 2009 and 2008 as contained in the final IPO prospectus of the Filer dated May 7, 2010;

b. unaudited pro forma consolidated financial statements of the Filer as at and for the year ended December 31, 2009 as contained in the final IPO prospectus of the Filer dated May 7, 2010;

c. audited $10 balance sheet of the Filer as at April 8, 2010 as contained in the final IPO prospectus of the Filer dated May 7, 2010;

d. unaudited interim consolidated financial statements of the Filer as at, and for the period from May 14, 2010 to, September 30, 2010; and

e. those financial statements contained in the amended and restated business acquisition report of the Filer dated November 11, 2010.

12. The Acquisition Transaction was subject to the applicable requirements of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions relating to, among other things, preparation of a formal valuation of the non-cash assets involved in the Acquisition Transaction and the approval by a majority of the votes cast by disinterested holders of Voting Units (Unitholders) entitled to vote on the Acquisition Transaction at a duly constituted meeting of Unitholders held to consider the Acquisition Transaction (the Meeting).

13. In connection with the Meeting, the Filer filed on SEDAR and delivered to its Unitholders a management information circular (the Circular) dated December 28, 2010, which included the Alternative Financial Statements.

14. On January 27, 2011, the Acquisition Transaction was approved by the requisite favourable vote of the Unitholders and, on January 28, 2011, the Acquisition Transaction was completed and the Subscriptions Receipt were exchanged for Units.

15. The Filer's most recently completed financial year ending on or before the date of completion of the Acquisition Transaction was the financial year ended December 31, 2010.

16. The Filer has determined that the Acquisition Transaction is a "significant acquisition" for purposes of NI 51-102 and that the Filer must file a BAR in respect of the Acquisition Transaction.

17. Unless otherwise exempted, including pursuant to Section 13.1 of NI 51-102, the BAR must include or incorporate by reference the financial statements set out in Section 8.4 of NI 51-102 relating to the Acquisition Properties. In effect, the BAR must contain two full years of financial statements (being 2009 and 2010 fiscal years) for the Acquisition Properties with the most recent year being audited, and a pro forma balance sheet of the Filer as at the date of the most recent balance sheet filed (being September 30, 2010) and pro forma income statements for the Filer's most recently completed financial year for which it filed financial statements (being nil) and the Filer's most recently completed interim period (being the period from May 14, 2010 to September 30, 2010).

18. The Filer will provide the Alternative Financial Statements in lieu of the financial statements required by Section 8.4 of NI 51-102 in the BAR in respect of the Acquisition Transaction.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.

The decision of the Principal Regulator under the Legislation is that the Exemption Sought is granted provided that the Filer includes the Alternative Financial Statements in the BAR in respect of the Acquisition Transaction.

"Michael Brown"

Assistant Manager, Corporate Finance

Ontario Securities Commission