$33-million sale and leaseback transaction with Shoppers Drug Mart
expected to close September 22
TORONTO, Sept. 13, 2011 /CNW/ - Scott's Real Estate Investment Trust
(TSX: SRQ.UN) ("Scott's REIT" or "the REIT") today provided an update
on its previously announced acquisition of nine retail properties from
Shoppers Drug Mart Corporation (TSX: SC) ("Shoppers Drug Mart"), as
well as the REIT's re-leasing efforts with respect to the locations
formerly occupied by Priszm Income Fund ("Priszm").
The REIT also provided comment on business arising from Priszm's ongoing
Shoppers Drug Mart Acquisition #2
Scott's REIT announced that it has waived all conditions with respect to
the acquisition of nine retail properties from Shoppers Drug Mart and
has set the closing date for this acquisition for Thursday, September
22, 2011. The $33-million sale and leaseback transaction will be
financed with the proceeds of the previously announced convertible
debenture offering expected to close on Tuesday, September 20, 2011 and
with a first mortgage secured against the properties upon closing.
The transaction is subject to customary closing conditions. This
transaction follows the first Shoppers Drug Mart acquisition of 12
properties that closed on March 5, 2010.
To date, Priszm has disclaimed leases related to 22 properties owned by
Scott's REIT (the "Disclaimed Sites"). The REIT has entered into lease
agreements with new tenants for eight of those locations. It is also
currently in advanced stages of negotiation for five more of the
Disclaimed Sites and anticipates being able to finalize such agreements
by the end of the third quarter.
"The interest from potential tenants has been extremely strong as the
majority of these sites are located on desirable corners in primary
markets," said John Bitove, CEO of Scott's REIT. "We are confident that
we will re-lease the remaining sites in the near future - further
diversifying our tenant base and strengthening the stability of our
Update on Priszm
Last week, Scott's REIT was served with court materials concerning the
ongoing proceedings involving Priszm and its related entities
(collectively, "Priszm Entities") under the Companies' Creditors Arrangement Act ("CCAA").
The matters to which these materials relate will be heard by the Ontario
Superior Court of Justice (Commercial List) (the "Court") on Wednesday,
September 14, 2011.
The Priszm Entities are bringing a motion for an order:
approving the Asset Purchase Agreements among the Priszm Entities and
FMI Atlantic Inc. with respect to the sale of 43 operating restaurants
in Nova Scotia and New Brunswick; and
approving an Asset Purchase Agreement dated September 7, 2011 between
Priszm LP, Priszm Inc. and 1844440 Ontario Inc. with respect to the
sale of all equipment used in the operation of the outlet located at
the address at 2032 Kipling Avenue in Toronto, Ontario.
Of the properties listed in the above transactions, Scott's REIT is the
landlord of 20 locations. As such, Scott's REIT supports the proposed
approval of all the transactions.
Scott's REIT was also informed that the senior secured creditors of the
Priszm Entities: Prudential Insurance Company of America, Pruco Life
Insurance Company, and Prudential Retirement Insurance and Annuity
Company, have brought forward an application to appoint RSM Richter
Inc. as receiver of all of the assets of Priszm, and its undertakings
and properties. At the same time, FTI Consulting Canada Inc. - the
Court-appointed monitor of the Priszm Entities - is seeking an order,
discharging itself as the Court-appointed monitor of the Priszm
The REIT believes that the change from a CCAA restructuring to a
receivership of the Priszm Entities is not likely to have an adverse
effect on Scott's REIT.
"We expect that obligations owing to the REIT with respect to those
leases that have not been disclaimed by Priszm prior to the conclusion
of its CCAA proceedings, or have not been terminated by the Receiver
after the receivership has commenced, will continue to be honoured,"
said Teresa Neto, Chief Financial Officer at Scott's REIT. "We look
forward to putting this issue behind us so that we can continue to
focus on growing Scott's REIT with a strong, diversified and stable
tenant base across Canada."
Scott's REIT is continuing with its claim to the proceeds of the sale
transaction between Priszm and Soul Restaurants and, to date, the
Court-appointed monitor for Priszm has set aside $12.2 million from the
sale proceeds until such claim is determined. There can be no assurance
as to the outcome of any litigation involving this claim.
About Scott's Real Estate Investment Trust
Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property
owner with 220 properties in seven provinces across Canada. Scott's
REIT's properties are well located and geographically diverse across
Canada with the majority of all properties containing long-term
quadruple net leases. The REIT has approximately 75.6 per cent interest
in Scott's Real Estate LP. To find out more about Scott's Real Estate
Investment Trust (TSX: SRQ.UN), visit our website at http://www.scottsreit.com.
This document contains certain information that may constitute
forward-looking information within the meaning of securities laws. In
some cases, forward-looking information can be identified by the use of
terms such as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "intend", "estimate", "predict", "potential", "continue" or
other similar expressions concerning matters that are not historical
facts. Forward-looking information may relate to management's future
outlook and anticipated events or results, and may include statements
or information regarding future growth opportunities and potential and
expected cash distributions or cash distribution levels. In particular,
information regarding the REIT's monthly cash distributions and
information relating to the impact of the REIT's recent acquisitions on
annual revenues and interest expense is forward-looking information.
Forward-looking information is based on certain factors and assumptions
regarding, among other things, occupancy rates, property expense and
capital expenditures. While the REIT considers these assumptions to be
reasonable based on information currently available to it, they may
prove to be incorrect. Forward looking-information is subject to
certain factors, including risks and uncertainties, which could cause
actual results to differ materially from what is currently expected.
Such factors include risks relating to the REIT's reliance on Priszm,
the REIT's largest tenant, risks associated with investment in real
property, competition, reliance on key personnel, financing and
refinancing risks, environmental matters, tenant risks, risks related
to current economic conditions and other risk factors more particularly
described in the REIT's Annual Information Form for the year ended
December 31, 2010. You should not place undue importance on
forward-looking information and should not rely upon this information
as of any other date. Other than as required by applicable Canadian
securities law, the REIT does not undertake to update this information
at any particular time. Additional information identifying risks and
uncertainties is contained in Scott's REIT filings with the Canadian
securities regulators, available at www.sedar.com.
SOURCE Scott's Real Estate Investment Trust
For further information:
For investor information, please contact:
For media information, please contact: