/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/
TORONTO, Oct. 1, 2013 /CNW/ - True North Apartment Real Estate
Investment Trust (the "REIT") (TSX: TN.UN) is pleased to announce that
it has acquired properties located in Trenton, Ontario (the "Trenton
Acquisition") and Montreal, Québec (the "Montreal Acquisition", and
together with the Trenton Acquisition, the "Acquisitions"), for
purchase prices of approximately $10.7 and $12.3 million, respectively.
The REIT also announced the disposition of two non-core properties
located in Hanover, Ontario and Saanich, British Columbia.
"We are very pleased to announce this series of transactions, which in
combination, serve to positively refocus our overall property
portfolio," stated Leslie Veiner, the REIT's Chief Executive Officer.
"The two properties we divested were smaller non-core assets and were
the only properties the REIT owned in these two markets. The
redeployment of the proceeds from these dispositions into acquisitions
in Trenton and Montreal are intended to provide the REIT with both a
higher return on equity and significant strategic advantages."
"The property in Trenton, Ontario has been well maintained with
extensive recent upgrades, and is located in a strong rental market.
The property in Montreal, Quebec will not only increase our presence in
the Montreal area, but it will also benefit from considerable
operational synergies. We anticipate that these synergies will provide
us with opportunities for organic growth, further enhancing the value
of this acquisition over time." Mr. Veiner added, "The acquisition of
the Montreal property further demonstrates the significant benefit of
our relationship with Starlight Investments Ltd., whereby given their
extensive pipeline, we were able to quickly redeploy the proceeds from
the property dispositions into a new opportunity in a strong market."
The Trenton Acquisition
The Trenton property is a 119 unit concrete high-rise building. The
property has been well maintained, and recently benefited from capital
expenditures of $0.5 million that primarily served to upgrade both the
balconies and heating infrastructure. The purchase price of $10.7
million represents a capitalization rate of 5.75% and is expected to be
satisfied through a vendor take back of 333,334 of the REIT's Class B
limited partnership units ("Class B LP Units"), which are economically
equivalent to and exchangeable for the REIT's trust units ("Units"), at
a price of $9.00 per Class B LP Unit, with the balance being funded by
new mortgage financing.
The Montreal Acquisition
In connection with the Montreal Acquisition, the REIT entered into an
agreement of purchase and sale with an entity that is wholly-owned by
Daniel Drimmer, the Chairman of the Board of the REIT, which contains
customary provisions for transactions of a similar nature, including
representations, warranties, covenants and indemnities of both parties.
The Montreal Acquisition constitutes a "related party transaction" under
Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Pursuant to Section 5.5(a) and 5.7(1)(a) of MI 61-101,
the REIT is exempt from obtaining a formal valuation and minority
approval of the REIT's unitholders due to the fair market value of the
Montreal Acquisition being below 25% of the REIT's market
capitalization for purposes of MI 61-101. The Montreal Acquisition was
approved unanimously by the Board of Trustees of the REIT (other than
Daniel Drimmer who declared his interest in the Montreal Acquisition
and was recused from voting) in accordance with the REIT's amended and
restated declaration of trust dated as of September 28, 2012, and was
approved under the rules of the TSX.
The Montreal property is comprised of 148 units in eleven low-rise
buildings. The property has been well maintained, and as a result,
minimal capital expenditures are expected. The purchase price of
approximately $12.3 million, which represents a capitalization rate of
5.75%, was satisfied through the combination of approximately $3.4
million of cash and $8.9 million in new mortgage financing.
On July 30, 2013, and as previously announced by the REIT in connection
with the release of its financial results for the period ended June 30,
2013, the REIT completed the disposition of a 57 unit property located
in Hanover, Ontario, for a price of approximately $5.7 million,
representing a capitalization rate of 5.85%. The purchaser assumed the
existing mortgage on the property.
In a separate transaction, the REIT also disposed of a 44 unit property
located in Saanich, British Columbia on August 28, 2013. The
disposition price of this property was approximately $6.9 million,
representing a capitalization rate of 4.43%.
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust
established under the laws of the Province of Ontario. The REIT focuses
on a long-term strategy to generate stable cash distributions on a
tax-efficient basis for unitholders. The REIT intends to actively look
for opportunities to expand its asset base and increase its
distributable cash flow through acquisitions of additional multi-suite
residential rental properties across Canada, the United States, and
other jurisdictions where opportunities may arise.
Additional information concerning the REIT is available at www.sedar.com.
Certain statements contained in this press release constitute
forward-looking information within the meaning of Canadian securities
laws. Forward-looking information is provided for the purposes of
presenting information about management's current expectations and
plans relating to the future and readers are cautioned that such
information may not be appropriate for other purposes. Forward-looking
information relates to the REIT's future outlook and anticipated
events, including statements above regarding the accretion, including
to return on equity, resulting from the Acquisitions and the property
dispositions, statements regarding the synergies and strategic
advantages such as opportunities for organic growth resulting from the
Acquisitions and the property dispositions, and statements regarding
capital expenditures at the Montreal property, and may also include
statements regarding the financial position, business strategy,
budgets, litigation, projected costs, capital expenditures, financial
results, taxes and plans and objectives of or involving the REIT.
Particularly, statements regarding future results, performance,
achievements, prospects or opportunities for the REIT or the real
estate industry are forward-looking information. In some cases,
forward-looking information can be identified by terms such as "may",
"might", "will", "could", "should", "would", "occur", "expect", "plan",
"anticipate", "believe", "intend", "seek", "aim", "estimate", "target",
"project", "predict", "forecast", "potential", "continue", "likely",
"schedule", or the negative thereof or other similar expressions
concerning matters that are not historical facts.
Forward-looking information necessarily involves known and unknown risks
and uncertainties, which may be general or specific, and which give
rise to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals and
priorities will not be achieved. A variety of factors, many of which
are beyond the REIT's control, affect the operations, performance and
results of the REIT and its business, and could cause actual results to
differ materially from current expectations of estimated or anticipated
events or results. These factors include, but are not limited to, the
synergies and organic growth resulting from the Acquisitions, and the
risks discussed in the REIT's materials filed with Canadian securities
regulatory authorities from time to time on www.sedar.com. The reader is cautioned to consider these and other factors,
uncertainties and potential events carefully and not to put undue
reliance on forward-looking information as there can be no assurance
that actual results will be consistent with such forward-looking
Forward-looking information is based upon certain material assumptions
that were applied in drawing a conclusion or making a forecast or
projection, including management's perceptions of historical trends,
current conditions and expected future developments, as well as other
considerations that are believed to be appropriate in the
circumstances, including the following: that the Acquisitions will be
accretive; that the divestitures and the Acquisitions will result in
synergies and organic growth; that the Canadian economy will remain
stable over the next 12 months; that inflation will remain relatively
low; that interest rates will remain stable; that conditions within the
real estate market, including competition for acquisitions, will be
consistent with the current climate; that the Canadian capital markets
will continue to provide the REIT with access to equity and/or debt at
reasonable rates when required; and that Starlight Investments Ltd.
will continue its involvement as asset manager of the REIT in
accordance with its current asset management agreement. While
management considers these assumptions to be reasonable based on
currently available information, they may prove to be incorrect.
The forward-looking information in this press release is dated, and
relates only to events or information, as of the date of this press
release. Except as specifically required by law, the REIT undertakes no
obligation to update or revise publicly any forward-looking
information, whether as a result of new information, future events or
otherwise, after the date on which the statements are made or to
reflect the occurrence of unanticipated events.
SOURCE: True North Apartment Real Estate Investment Trust
For further information:
Chief Executive Officer
Chief Financial Officer