REIT launch successfully completes first stage of value-creation strategy
Shares issued: Class A - 17,094,490 Class B - 3,148,538
/NOT FOR DISSEMINATION IN THE UNITED STATES OR DISTRIBUTION THROUGH UNITED STATES NEWS OR WIRE SERVICES/
HALIFAX, May 25 /CNW/ - (TSX: HII.A & HII.B and NYSE Euronext Amsterdam: HII). Richard Homburg, Chairman and Chief Executive Officer of Homburg Invest (or "HII" or the "Company") announced today that the Homburg Canada Real Estate Investment Trust (the "REIT") (TSX: HCR.UN) has closed its initial public offering of 16,000,000 units of the REIT (the "Units"). The Units were priced at $10.00 per Unit, for total gross proceeds of $160,000,000.
"With the closing of the IPO for the Homburg Canada REIT, we have taken the first important step in accomplishing our strategy of spinning off our assets into four geographically based companies and a development company," said Richard Homburg, Chairman and Chief Executive Officer of Homburg Invest. "Our strategy is designed to highlight the substantial value in our global real estate portfolio by allowing investors in specific geographies, like Canada, to invest in assets close to home that they can easily value and follow. This value-surfacing strategy is intended to provide HII with ongoing cash flow from its share of REIT distributions, and to highlight the intrinsic value in HII shares."
At the issue price, the Units will provide REIT unitholders with an expected cash-on-cash yield of 9.5% annually. The first distribution, for the period from closing to June 30, 2010, will be paid on July 15, 2010 and will be in the amount of $0.09705 per Unit. The REIT intends to make subsequent monthly cash distributions in the amount of $0.07917 per Unit commencing on August 15, 2010 for the month of July 2010.
Upon closing of the offering, HII and Homburg Canada Inc. ("HCI") sold a portfolio of Canadian income producing real estate properties (the "Initial Properties") and the management business carried on by HCI in respect of the Initial Properties, to the REIT in return for cash, units of the REIT and assumption by the REIT of part of the debt previously held on HII's balance sheet. HII currently holds approximately 45% of the REIT.
The offering was underwritten by a syndicate of underwriters led by TD Securities Inc. which included National Bank Financial Inc., Desjardins Securities Inc., CIBC World Markets Inc., Scotia Capital Inc., Canaccord Genuity Corp., HSBC Securities (Canada) Inc., Dundee Securities Corporation and Beacon Securities Ltd.
An option to purchase up to an aggregate of 2,400,000 additional Units at the offering price has been granted to the underwriters of the offering, of which up to 960,000 Units are to be issued and sold by the REIT from treasury and 1,440,000 Units are to be sold by HII (one of the promoters of the REIT) as a secondary offering of a portion of the Units it will hold as a retained interest in the REIT, on a pro rata basis between the REIT and HII. The option may be exercised by the underwriters for a period of 30 days following closing of the offering. If the option is exercised in full, HII will hold approximately 40% of the REIT.
The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of that Act. This news release does not constitute an offer for sale of these securities in the United States of America or in the European Economic Area.
About Homburg Invest
Directly and through its interest in Homburg Canada REIT, Homburg Invest Inc. owns and develops a diversified portfolio of quality real estate including office, retail, industrial and residential apartment and townhouse properties throughout Canada, the United States and Europe. The head office of the Company is located in Halifax, Nova Scotia.
This news release may contain statements which by their nature are forward-looking and express the Company's beliefs, expectations or intentions regarding future performance, future events or trends. Forward looking statements are made by the Company in good faith, given management's expectations or intentions, which are subject to market conditions, acquisitions, occupancy rates, capital requirements, sources of funds, expense levels, operating performance and other matters. Therefore, forward-looking statements contain assumptions which are subject to various factors including: unknown risks and uncertainties; general economic conditions; local market factors; performance of other third parties; environmental concerns; and interest rates, any of which may cause actual results to differ from the Company's good faith beliefs, expectations or intentions which have been expressed in or may be implied from this news release. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks. Information and statements in this document, other than historical information, should be considered forward-looking and reflect management's current views of future events and financial performance that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include, but are not limited to, the following: general economic conditions and developments within the real estate industry, competition and the management of growth. The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.
SOURCE Homburg Invest Inc.
For further information: For further information: Mr. Richard Homburg, Chairman and CEO, Homburg Invest Inc., (902) 468-3395; J. Richard Stolle, President and COO, Homburg Invest Inc., 31-20-573-3855