Minto Apartment REIT announces agreement to acquire two high quality properties in Montreal for $281.1 million and concurrent $225 million bought deal public offering of trust units
Minto Apartment REIT announces agreement to acquire two high quality properties in Montreal for $281.1 million and concurrent $225 million bought deal public offering of trust units |
[10-October-2019] |
/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR DISSEMINATION IN THE UNITED STATES/ Acquisition Highlights
OTTAWA, Oct. 10, 2019 /CNW/ - Minto Apartment Real Estate Investment Trust (TSX: MI.UN) (the "REIT") today announced that it has entered into an agreement to acquire Le 4300 and Haddon Hall, two premium institutionally owned and maintained multi-residential properties in Montreal, Quebec (the "Acquisition"). The properties have a combined 528 suites and are located in the highly attractive neighbourhoods of Westmount and Ville-Marie. The properties are also located in close proximity to the REIT's existing Rockhill property, enhancing economies of scale. The purchase price is approximately $281.1 million, representing an implied cap rate of 3.70% on forecasted year-one net operating income. Following closing of the Acquisition, the REIT will have ownership interest in a total of 7,243 suites.
The REIT also announced today that it has entered into an agreement to issue 9,850,000 trust units of the REIT (the "Units") from treasury on a bought deal basis at a price of $22.85 per Unit (the "Offering Price") to a syndicate of underwriters bookrun by TD Securities Inc. and BMO Capital Markets (the "Underwriters") for gross proceeds of approximately $225 million (the "Offering"). In addition, the REIT has granted the Underwriters an option, exercisable in whole or in part at any time up to 30 days following closing of the Offering, to purchase up to an additional 985,000 Units at the Offering Price (the "Over-Allotment Option") which, if exercised in full, would increase the gross proceeds of the Offering to approximately $247.5 million. The REIT intends to use the net proceeds of the Offering to finance directly and/or indirectly a portion of the purchase price for the Acquisition. "When we launched Minto Apartment REIT last year, one of our objectives was to build a strong presence in the Montreal market. This acquisition, combined with our purchase of the Rockhill property in May, clearly achieves this goal," said Michael Waters, Chief Executive Officer. "Upon closing of this transaction, our Montreal properties will make up more than 20% of the total suites of the REIT. Moreover, we believe that the REIT will own one of the best portfolios of multi-residential properties in Montreal. Both Le 4300 and Haddon Hall are premium properties in desirable locations, and provide substantial opportunities for us to build value. They are outstanding additions to our portfolio." Property Profiles Le 4300 Le 4300 is located close to transit, parks, restaurants, retail amenities, schools and universities, resulting in a 95 Walk Score(1). Current tenants are primarily retirees or high-earning professionals. Residents in the area have average household income of approximately $151,800(2), and 66%(2) of households in the area rent. Haddon Hall The property is located close to transit, parks, restaurants, retail amenities, schools and universities, resulting in a high Walk Score of 98(1). Current tenants have diverse ages, occupations and incomes. Residents in the area have average household income of $106,500(2), and 77%(2) of households in the area rent. (1) Source: walkscore.com Suite Repositioning and Other Value-Generating Opportunities The REIT plans to reposition suites at both Le 4300 and Haddon Hall following tenant turnover. Only 76 suites at the two properties have been renovated to date, leaving 452 with potential for repositioning. The REIT believes that the in-place rents are significantly below renovated market rents for both properties, providing attractive upside. The repositioning program is expected to generate an annual return on investment in line with the REIT's 8% to 15% target. To drive further rent growth, the REIT intends to upgrade the common areas at both properties, create additional suites and amenity areas from underutilized space at Le 4300, and upgrade the fitness facility at Haddon Hall. Acquisition Funding The aggregate purchase price of approximately $281.1 million for the Acquisition will be satisfied by a new $45 million mortgage on Haddon Hall, with the balance to be funded from net proceeds of the Unit Offering described below and the REIT's credit facility. Following completion of the Acquisition and the Unit Offering, the REIT's Debt to Gross Book Value ("GBV") ratio will be approximately 42%, but is expected to increase over time to align with management's previously stated leverage target of 45% to 55%. Unit Offering The REIT has reached an agreement with the Underwriters to issue 9,850,000 Units at a price of $22.85 per Unit, on a bought deal basis, for gross proceeds of $225 million. The REIT has also granted the Underwriters an Over-Allotment Option to purchase up to an additional 985,000 Units on the same terms and conditions. The REIT intends to use the net proceeds of the Offering, including the Over-Allotment Option, if any, to finance directly and/or indirectly a portion of the purchase price for the Acquisition. The Units will be offered in each of the provinces and territories of Canada pursuant to a prospectus supplement to the REIT's base shelf short form prospectus dated December 21, 2018. The terms of the Offering will be described in a prospectus supplement to be filed with Canadian securities regulators. The Offering is expected to close on or about October 22, 2019 and is subject to certain conditions including, but not limited to, the approval of the Toronto Stock Exchange. The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons. Closing The REIT expects the Acquisition to close on or about November 20, 2019. About Minto Apartment Real Estate Investment Trust Forward-Looking Information Non-IFRS Financial Measures SOURCE Minto Apartment Real Estate Investment Trust | ||
Company Codes: Toronto:MI.UN |
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