Private, structured transaction includes four Wal-Mart stores in Ontario
TORONTO, May 22, 2013 /CNW/ - Avison Young, Canada's largest independently-owned commercial real estate services company, announced today the completion of a private, structured finance transaction with an aggregate balance of $104.8 million. The transaction includes four Wal-Mart-tenanted, new-format stores in Ontario and was placed on behalf of Calloway Real Estate Investment Trust ("Calloway REIT") in early May 2013.
This transaction employs an alternate-debt vehicle that allows real estate owners access to a non-conventional area of the capital stack. By opening up a new source of debt capital, Avison Young is able to assist Calloway with balancing its debt requirements. The terms of the arrangement include a weighted average term of approximately 16 years, leverage of 81% of value and an interest rate of 3.76%.
Norm Arychuk, a mortgage broker with Avison Young's debt capital markets group, was part of the team that brought the parties together and facilitated the transaction.
"By accessing this capital, Calloway gains the use of another debt vehicle that augments the universe of debt funds available in a much more efficient manner than a conventional mortgage execution, through achieving higher leverage at a lower interest rate than typical pricing would provide," comments Arychuk. "Obtaining additional capital by leveraging existing assets in this fashion allows property owners the opportunity to unlock previously unreachable equity to further their business goals."
Steve Liew, Vice-President with Calloway REIT, adds: "This structure allowed us to utilize the strength of our largest tenant by pledging only the Wal-Mart assets and retaining the ancillary retail shopping centre free and clear for future financing. Working with Avison Young's debt capital markets team provided us with a customized debt vehicle well-suited to our particular situation and requirements."
This structured finance transaction is directly tied to 100% of the net cash flow from the tenant after expenses, to establish the leverage at very low debt-service coverage of 1.05 times. "Unlike a conventional mortgage transaction - which would be restricted to less than 70% to 75% leverage and debt-service coverage of at least 1.2 times - we were able to provide greater leverage on a smaller asset grouping and provide Calloway with greater overall flexibility," says Arychuk.
About Avison Young
Founded in 1978, Avison Young is Canada's largest independently-owned commercial real estate services company. Headquartered in Toronto, Ontario, Avison Young is also the largest Canadian-owned, principal-managed commercial real estate brokerage firm in North America. Comprising more than 1,200 real estate professionals in 46 offices across Canada and the U.S., the full-service commercial real estate company provides value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-residential properties.
About Calloway REIT
Calloway is one of Canada's largest real estate investment trusts with an enterprise value of approximately $6.7 billion. It owns and manages approximately 26 million square feet in 115 value-oriented retail centres having the strongest national and regional retailers, as well as strong neighbourhood merchants. Calloway's vision is to provide a value-oriented shopping experience to Canadian consumers. For more information on Calloway, please visit www.callowayreit.com
For further information/comment/photos:
• Norm Arychuk, Mortgage Broker, Avison Young: (416) 673-4006
• Sherry Quan, National Director of Communications & Media Relations, Avison Young: (604) 647-5098; cell: (604) 726-0959
Avison Young was a winner of Canada's Best Managed Companies program in 2011 and requalified in 2012 to maintain its status as a Best Managed company.
Follow Avison Young Bloggers: http://blog.avisonyoung.com
Follow Avison Young on LinkedIn: http://www.linkedin.com/company/avison-young-commercial-real-estate
SOURCE: Avison Young Commercial Real Estate (BC)
For further information:
(604) 647-5098 or (604) 726-0959 cell