True North Apartment REIT Issues Letter to Unitholders, Management Information Circular, and Notice of Meeting Regarding Transaction with Northern Property REIT and Creation of Northview Apartment REIT

  • Board of Trustees unanimously recommend Unitholders vote IN FAVOUR of proposed Plan of Arrangement
  • Proxy deadline of Friday October 9, 2015
  • Unitholder Meeting scheduled for October 14, 2015

TORONTO, Sept. 11, 2015 /CNW/ - True North Apartment Real Estate Investment Trust ("True North")(TSX:TN.UN,TN.DB) today announced that it has filed on SEDAR and is mailing a Letter to Unitholders, Notice of Meeting and Management Information Circular in respect of a special meeting of Unitholders scheduled for October 14, 2015 in Calgary, Alberta.

The documents present the reasons for the unanimous recommendation from True North's Board of Trustees that unitholders vote IN FAVOUR of a proposed plan of arrangement ("Plan of Arrangement") with Northern Property Real Estate Investment Trust ("NPR")(TSX:NPR:UN), among others. As announced on August 10, 2015, pursuant to the Plan of Arrangement, NPR will acquire all of True North's properties as well as two additional portfolios comprising 4,650 suites (collectively, the "Institutional Portfolio") from affiliates of Starlight Investments Ltd. ("Starlight") as well as from a joint venture between affiliates of Public Sector Pension Investment Board and affiliates of Starlight. As part of this transaction, the new REIT will be named Northview Apartment Real Estate Investment Trust ("Northview") to reflect the new national character of Northview's portfolio and its future growth strategy.

"This transaction provides True North unitholders with a compelling opportunity to participate in the creation of Northview – a significantly larger, financially stronger REIT that will be well positioned to deliver sustainable and growing distributions to unitholders," said True North President and CEO Leslie Veiner. "It creates immediate value for unitholders, increases liquidity and accelerates our efforts to increase the REIT's scale. This is an excellent value-enhancement opportunity for True North and its unitholders."

The transaction also provides True North unitholders a number of compelling benefits, including:

Stronger financial position and record of distribution growth 

  • Financial stability – Northview will have a target funds from operations payout ratio of under 70%, a more sustainable level than True North's current payout ratio.
  • Stronger financial position – Upon completion of the transaction, leverage at Northview will be 59%, which is lower than True North's current leverage level of 63%.
  • Potential for increased distributions over time – NPR has a history of regularly increasing its distributions, having raised its distributions eight times over the past 13 years, delivering total growth of 41.7% at a compound annual growth rate of 2.7%.


Immediate scale, growth and diversification
 

  • Achieves True North's goal of creating scale – Northview will have a national portfolio of more than 24,000 residential suites in more than 60 markets across eight provinces and two territories, and will be the third largest publicly traded multi-family REIT in Canada. Assembling a portfolio of this nature on an asset-by-asset basis would take considerable time and involve increased costs and transaction risks.
  • Expanded field of opportunity – Northview will benefit from an expanded geographic footprint and a resulting increase in potential growth opportunities in new markets across Canada.
  • Complementary property portfolio – NPR's strength in the west and north will combine with True North's strength in central and eastern Canada to create a truly national platform.
  • Enhanced access to capital to fuel growth; increased liquidity – Northview is expected to have a market capitalization of more than $1 billion, which should broaden and deepen its access to capital, provide unitholders of Northview with increased market liquidity and, over time, reduce Northview's cost of capital.
  • Future growth potential – While True North has a track record of growth, management believes that this transaction greatly enhances our ability to pursue new acquisition opportunities.

Continued Relationship with Starlight

  • Access to suites that could be included in future transactions – True North unitholders have benefitted from True North's association with Starlight, which manages, and has interests in one of the largest privately-held residential portfolios in Canada. Management believes continuing the relationship with Starlight will provide the opportunity to access and consider further residential acquisition opportunities and benefit from Starlight's extensive industry contacts. Following this transaction, Daniel Drimmer and his affiliates will continue to hold interests in approximately 12,000 suites in Canada that could be part of future transactions. Upon completion of the Plan of Arrangement, Mr. Drimmer, President and Chief Executive Officer of Starlight, will be the largest unitholder in Northview, holding approximately 14.5%.

Management depth and continuity 

  • Proven management team with a track record of growth – Unitholders of Northview will benefit from the continuity of a proven management team and experienced trustees with intimate knowledge of the entire portfolio. Leslie Veiner, President and Chief Executive Officer of True North since 2012, will continue with Northview as Chief Operating Officer, working with proven leaders from NPR in Todd Cook, Chief Executive Officer and Rob Palmer, Chief Financial Officer. Mr. Veiner's addition will support the integration of True North's properties into Northview.
  • Northview will be internally managed – Starlight will initially oversee the asset management of its former properties on a transitional basis with Northview's assets becoming internally managed by no later than the end of 2018, under the proven model currently employed by NPR.

The complete Letter to Unitholders, along with the Notice of Meeting and Management Information Circular, is available on www.northviewreit.com and on SEDAR, www.sedar.com.

Additional transaction details

Under the Plan of Arrangement, each holder of trust units of True North (other than a registered holder who has validly exercised its dissent rights) will receive 0.3908 of a trust unit of NPR ("NPR Ordinary Unit"). Class B limited partnership units of True North's limited partnerships, which are currently exchangeable for trust units of True North, will be exchanged or become exchangeable (at the election of the holder) for 0.3908 of an NPR Ordinary Unit, and their related True North special voting unit will be cancelled.

The consideration offered to True North unitholders represented a premium of 16.4% over the closing price of True North units on Friday, August 7, the day prior to the transaction being announced.

Voting Instructions and Unitholder Meeting Information

True North unitholders are recommended to vote in favour of the special resolution by voting their proxy or voting instruction form IN FAVOUR of the Plan of Arrangement by no later than the deadline of 10:00 a.m. Mountain Daylight Time / 12:00 p.m. Eastern Daylight Time on Friday October 9, 2015.  The record date has been set at September 4, 2015.  Further information on voting can be found in the Management Information Circular.

The Unitholder Meeting will be held at the Calgary Marriott Downtown Hotel, 110 9th Avenue SE, Calgary, Alberta at 10:00 a.m. (Mountain Daylight Time) / 12:00 p.m. (Eastern Daylight Time) on Wednesday, October 14, 2015.

In addition, True North has formed a soliciting dealer group and engaged CIBC as a soliciting dealer manager in connection with the special meeting.

CIBC will form and manage a soliciting dealer group comprised of members of the Investment Industry Regulatory Organization of Canada to solicit proxy votes from retail unitholders in favour of the Plan of Arrangement.

In accordance with standard practice in Canada and as compensation for their time and services, True North will pay the members of the soliciting dealer group a fee of $0.05 per True North unit voted in favour of the Plan of Arrangement that is solicited by a member of the soliciting dealer group from a Canadian retail unitholder. The fees are subject to the following limitations: (a) the amount paid for any single beneficial unitholder shall not be less than $75 or more than $1,500 per soliciting dealer; and (b) the minimum fee of $75 shall only be paid for any one beneficial unitholder where the number of units owned and voted by such beneficial unitholder is greater than or equal to 1,000.  Fees will only be paid for units voted in favour of the Plan of Arrangement and if the transactions are approved. No solicitation fees will be paid if the Plan of Arrangement is not adopted.

For voting inquiries, or assistance with voting, contact True North's Proxy Solicitor, Kingsdale Shareholder Services, toll-free at 1.877.659.1819 or 416.867.2272 outside of North America, or email contactus@kingsdaleshareholder.com.

About True North Apartment REIT

True North is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. True North focuses on a long-term strategy to generate stable cash distributions on a tax- efficient basis for unitholders. The REIT actively looks 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. True North trust units are traded on the TSX under the ticker symbol: TN.UN. The True North convertible unsecured subordinated debentures are traded on the TSX under the ticker symbol TN.DB. Additional information concerning True North is available on SEDAR at www.sedar.com or at its website at www.truenorthreit.com.

Non-GAAP and Additional GAAP Measures

Certain measures contained in this news release do not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS") and, therefore, are considered non-GAAP measures. These measures are provided to enhance the reader's overall understanding of financial conditions. They are included to provide investors and management with an alternative method for assessing operating results in a manner that is focused on the performance of operations and to provide a more consistent basis for comparison between periods. These measures include widely accepted measures of performance for Canadian real estate investment trusts; however, the measures are not defined by IFRS. In addition, these measures are subject to the interpretation of definitions by the preparers of financial statements and may not be applied consistently between real estate entities. Please refer to NPR's and True North's second quarter 2015 Management's Discussion & Analysis for definitions of non-GAAP measures and additional GAAP measures, including NOI, FFO, and debt to gross book value.

Forward Looking Information

This press release contains forward looking statements that reflect current expectations of each of NPR and True North about their future results, performance, prospects and opportunities, including with respect to the closing, costs and benefits of the proposed transactions and other statements that are not historical facts.

The timing and completion of the proposed transactions are subject to customary closing conditions, termination rights and other risks and uncertainties including, without limitation, required regulatory, court, and unitholder approvals. Accordingly, there can be no assurance that the proposed transactions will occur, or that they will occur on the timetable or on the terms and conditions contemplated in this news release. The proposed transactions could be modified, restructured or terminated.

Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management's good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally, which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to, risks associated with investment in and development of real property, competition, financing and refinancing risks, changes in economic conditions, changes in interest rates, changes in taxation rules, reliance on key personnel, environmental matters, tenant risks, fluctuations in commodity prices and other risk factors more particularly described in NPR's and True North's Management Information Circulars as well as the most recent Annual Information Forms of NPR and True North available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to NPR and True North may also adversely affect NPR and True North.

Readers are cautioned not to place undue importance on forward-looking information. NPR and True North disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

SOURCE True North Apartment Real Estate Investment Trust

For further information: Investors, Kingsdale Shareholder Services, Toll-free: 1-877-659-1819, Outside of North America: 416-867-2272, Email: contactus@kingsdaleshareholder.com; Leslie Veiner, President and Chief Executive Officer, (647) 725-0433; Martin Liddell, Chief Financial Officer, (647) 729-2588; Media, Joel Shaffer, Longview Communications, (416) 649-8006; Trevor Zeck, Longview Communications, (604) 694-6037

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