True North Apartment Real Estate Investment Trust

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from provisions of section 8.4 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) permitting filer to include alternative financial disclosure in business acquisition report pursuant to section 13.1 of NI 51-102 -- filer acquired properties that have been owned by multiple owners over previous two years -- comparative period financial statements impractical to prepare and potentially confusing to investors -- recent audited interim financial statements for properties provided.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.4, 13.1.

November 8, 2012

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

TRUE NORTH 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 an order under Section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) exempting the Filer from the requirements of subsection 8.4(1) of NI 51-102 provided that the business acquisition report (BAR) for the Acquisition (as defined below) includes the Proposed Financial Disclosure (as defined below) (the Exemption Sought).

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

(i) the Ontario Securities Commission is the principal regulator for this application (the Principal Regulator); and

(ii) 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 the other provinces and territories of Canada (together 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 Filer is an unincorporated open-end real estate investment trust established under the laws of the Province of Ontario. The Filer's registered and head office is located at 401 The West Mall, Suite 1100, Toronto, Ontario, M9C 5J5.

2. On June 5, 2012, Wand Capital Corporation completed its capital pool company qualifying transaction by way of a plan of arrangement under the Business Corporations Act (Ontario) with the Filer.

3. The Filer is a reporting issuer in each of the Jurisdictions and is currently not in default of any applicable requirements under the securities legislation in each of the Jurisdictions.

3. The units of the Filer are listed and posted on the TSX Venture Exchange under the symbol "TN.UN".

4. On October 1, 2012, the Filer acquired a 76% equity interest in Blue-Starlight LP (Blue LP), the owner of 26 properties (the Properties), for a purchase price of approximately $138.95 million (the Acquisition).

5. Blue LP recently acquired the Properties from TransGlobe Apartment Real Estate Investment Trust (TGA REIT) in connection with the privatization of TGA REIT. TGA REIT previously acquired the Properties on different occasions:

(a) 6 properties (the IPO Properties) were acquired by TGA REIT concurrently with its initial public offering on May 14, 2010 (comprising approximately 26% of the value of the Acquisition),

(b) 1 property (the Vend-In Property) was acquired by TGA REIT on January 28, 2011 (comprising approximately 8% of the value of the Acquisition),

(c) 3 properties (the Eagle Properties) were acquired by the TGA REIT on September 1, 2011 (comprising approximately 14% of the value of the Acquisition),

(d) 15 properties (the Homburg Properties) were acquired by TGA REIT on October 18, 2011 (comprising approximately 49% of the value of the Acquisition), and

(e) 1 property (the Charlie Grace Property) was acquired by TGA REIT on April 20, 2012 (comprising approximately 3% of the value of the Acquisition).

6. The Acquisition may be considered an "acquisition of related businesses" pursuant to section 8.1 of NI 51-102 and as a result constitutes a "significant acquisition" of the Filer for the purposes of NI 51-102, as determined in accordance with section 8.3 of NI 51-102. The Filer is therefore required to file a BAR within 75 days of the completion of the Acquisition pursuant to Section 8.2 of NI 51-102.

7. As the Acquisition was considered a "related party transaction" under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101), the Filer was required to comply with Part 5 of MI 61-101, including the requirement to obtain prior approval of the Acquisition by a "majority of the minority" of unitholders of the Filer at a special meeting of the unitholders. The special meeting was held on Friday, September 28, 2012. During the meeting, among other things, the Acquisition received the requisite approval of unitholders. The Filer was exempt from the formal valuation requirements in section 5.4 of MI 61-101 by virtue of the exemption in paragraph 5.5(b) of MI 61-101.

8. The Acquisition was also approved by a committee of independent trustees of the Filer, which was established by the Filer for the purposes of supervising the process to be carried out by the Filer and its professional advisors in connection with the Acquisition, making recommendations to the trustees in respect of matters that it considered relevant with respect to the Acquisition, and ensuring that the Filer completed the Acquisition in compliance with the requirements of MI 61-101, the applicable policies of the TSX Venture Exchange and applicable law.

9. Pursuant to section 8.4 of NI 51-102, a BAR must include the following for each business or related business that is acquired:

(i) audited financial statements (i.e., a statement of financial position, a statement of comprehensive income, a statement of changes in equity and a statement of cash flows) for the most recently completed financial year of the business acquired;

(ii) unaudited financial statements for the financial year immediately preceding the most recently completed financial year of the business acquired; and

(iii) unaudited interim financial statements for the most recently completed interim period that started the day after the most recently completed financial year for the business acquired,

(collectively, the BAR Financial Statement Requirements).

10. Subsection 8.4(8) of NI 51-102 provides that if a reporting issuer is required to include financial statements for more than one business in a BAR because the significant acquisition involves an acquisition of related businesses, the financial statements must be presented separately for each business, except for the periods during which the businesses have been under common control or management, in which case the reporting issuer may present the financial statements of the business on a combined basis.

11. Although certain of the Properties may be consolidated for the purposes of preparing the required financial statements, to satisfy the BAR Financial Statement Requirements the Filer will nevertheless be required to prepare multiple sets of financial statements for some of the Properties.

12. Comparative period financial statements for some of the Properties have not been previously prepared.

13. The Filer proposes that the BAR for the Acquisition contain the following financial disclosure (the Proposed Financial Disclosure), prepared in accordance with Canadian GAAP applicable to publicly accounted enterprises:

(a) audited annual carve-out financial statements of the Properties for the year ended December 31, 2011, reflecting the IPO Properties (and reflecting the purchase of the Vend-In Property, the Eagle Properties and the Homburg Properties) with unaudited comparative financial statements for the IPO Properties for the period from May 1, 2010 and December 31, 2010;

(b) audited financial statements for the Eagle Properties for the period from January 1 to August 31, 2011, with unaudited comparative financial statements for the Eagle Properties for the twelve months ended December 31, 2010;

(c) audited annual financial statements for the Homburg Properties for the period from January 1 to October 18, 2011, with unaudited comparative financial statements for the Homburg Properties for the period from May to December 31, 2010; and

(d) audited stub carve-out financial statements of the Properties for the six month period ending June 30, 2012, reflecting the IPO Properties, the Vend-In Property, the Eagle Properties and the Homburg Properties and, for the period commencing on April 20, 2012, the Charlie Grace Property.

14. The Filer intends to comply with the requirements of subsection 8.4(5) of NI 51-102.

15. For the purposes of the financial statements referred to in subparagraph 11(d) above, the Filer will rely upon the exemption in section 8.9 of NI 51-102, which provides that the Filer is not required to provide comparative information for an interim financial report for an acquired business if:

(i) to a reasonable person it is impracticable to present prior-period information on a basis consistent with the most recently completed interim period of the acquired business,

(ii) the prior-period information that is available is presented, and

(iii) the notes to the interim financial report disclose the fact that the prior-period information has not be prepared on a basis consistent with the most recent interim financial information.

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 BAR for the Acquisition includes the Proposed Financial Disclosure.