True North Commercial REIT Continues Unitholder Value Initiatives with Suspension of Distribution Reinvestment Plan and Announcement of a Normal Course Issuer Bid and Timing of Q1-2023 Results
Chief Executive Officer Acquires 1,606,000 million Trust Units to Increase Ownership to 9.9%
and Insiders Acquire an Additional 374,925 Trust Units to Collectively Increase Ownership to 11.4%
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/
"This news release constitutes a "designated news release" for the purposes of the REIT's prospectus supplement dated April 21, 2022 to its short form base shelf prospectus dated February 17, 2022."
TORONTO, April 12, 2023 /CNW/ - True North Commercial Real Estate Investment Trust (TSX: TNT.UN) (the "REIT") announced today that it has undertaken additional initiatives to further its capital strengthening and unitholder ("Unitholder") value strategy including its filing of a notice with the Toronto Stock Exchange ("TSX") to make a normal course issuer bid ("NCIB") and the suspension of the REIT's distribution reinvestment plan ("DRIP"). The REIT also announced that since March 16, 2023 insiders of the REIT, including Daniel Drimmer, the REIT's Chairman of the Board and Chief Executive Officer, have acquired an aggregate of 1,980,925 trust units ("Units") reflecting their ongoing confidence in the REIT's ability to improve long-term Unitholder value.
"The implementation of these additional initiatives will further advance the REIT's previously announced unitholder value plan and demonstrates management's commitment to improving the strength of the REIT's near and long-term financial position," explained Daniel Drimmer. "The addition of a normal course issuer bid together with the suspension of the distribution reinvestment plan reflects management's opinion that the REIT's units are currently under-valued and these mechanisms should benefit Unitholders by increasing their equity interest in the REIT's assets".
The REIT and its board of trustees ("Board of Trustees") have authorized a NCIB for its Units, subject to the approval by the TSX. The REIT believes that its Units trade in a price range which does not adequately reflect the value of such Units in relation to the business of the REIT and its future business prospects. As a result, depending upon future price movements and other factors, the REIT considers its outstanding Units may represent an attractive investment for itself. Therefore, from time to time, the purchase of Units at certain market prices below its net asset value presents an attractive use of the REIT's funds that should afford additional value and liquidity for the issued and outstanding Units while benefitting Unitholders by increasing their proportionate equity interest in the REIT. Decisions regarding the timing of purchases under the NCIB will be determined by management of the REIT based on market conditions, Unit price and other factors. Management may elect to not purchase any Units under the NCIB or may elect to suspend or discontinue the NCIB at any time.
Under the terms of the NCIB, subject to TSX approval, the REIT will have the ability to purchase for cancellation up to a maximum of 8,239,557 of its Units (representing 10% of the REIT's public float of 82,395,573 Units). Purchases under the NCIB will be made through the facilities of the TSX or through a Canadian alternative trading system and in accordance with applicable regulatory requirements at a price per Unit equal to the market price at the time of acquisition. The NCIB will commence on April 18, 2023 and remain in effect until the earlier of April 17, 2024 or the date on which the REIT has purchased the maximum number of Units permitted under the NCIB. The REIT's average daily trading volume from October 1, 2022 until March 31, 2023, was 261,748 Units. In accordance with the rules of the TSX, 25% of that average daily trading volume (65,437 Units) is the REIT's daily limit for purchases under the NCIB made through the facilities of the TSX, subject to block purchase exceptions. As of the close of business on April 6, 2023, the number of issued and outstanding Units was 92,103,964. Any Units acquired through the NCIB will be cancelled. The REIT has not purchased any Units in the previous 12-month period.
In connection with the NCIB, the REIT will enter into an automatic securities purchase plan ("ASPP") with CIBC World Markets Inc. (the "Broker"). The ASPP is intended to allow for the purchase of Units under the NCIB when the REIT would ordinarily not be permitted to purchase Units due to regulatory restrictions and customary self-imposed blackout periods. Pursuant to the ASPP, the REIT has provided instructions to the Broker to make purchases under the NCIB in accordance with the terms of the ASPP, which may not be varied or suspended during the term of the ASPP. Such purchases will be determined by the Broker at its sole discretion based on purchasing parameters set by the REIT in accordance with the rules of the TSX, applicable securities laws and the terms of the ASPP. Units will be purchased through the facilities of the TSX or through a Canadian alternative trading system. Subject to TSX approval, the ASPP is expected to be implemented on April 18, 2023, and if not terminated sooner based on the terms of the ASPP, will end on April 17, 2024.
Outside of pre-determined blackout periods, Units may be purchased under the NCIB based on management's discretion, in compliance with TSX rules and applicable securities laws. All purchases made under the ASPP will be included in computing the number of Units purchased under the NCIB.
Effective immediately, the REIT has suspended the DRIP until further notice. As a result, Unitholders will receive distributions in cash effective with the distribution currently scheduled to be paid on April 17, 2023 to Unitholders of record on March 31, 2023. If the REIT elects to reinstate the DRIP in the future, the Unitholders enrolled in the DRIP at the time of suspension and who remain enrolled at the time of reinstatement will automatically resume participation in the DRIP at that time. The suspension of the DRIP is expected to provide the REIT with additional flexibility to continue advancing its objectives and focus on value-creating opportunities while maximizing Unitholder value.
To demonstrate their confidence in the REIT's business plan which includes its capital strengthening and Unitholder value strategy, Daniel Drimmer, the REIT's Chief Executive Officer and Chairman of the Board has acquired 1,606,000 Units and other members of the REIT's management and the Board of Trustees acquired an additional 374,925 Units through the TSX between March 16, 2023 and April 5, 2023, at prices ranging from $3.18 to $3.49 per Unit. Further details are available on sedi.ca. With the REIT expecting to file its financial statements and management's discussion and analysis for the period ended March 31, 2023 on May 9, 2023, and in accordance with the REIT's insider trading policy, insiders are restricted from purchasing further units on the TSX, until May 11, 2023. As a result of their recent purchases, Mr. Drimmer now owns 8,540,047 Units, or approximately 9.9% of the REIT's outstanding Units, and collectively all insiders of the REIT now own an aggregate of 9,708,391 Units, or approximately 11.4% of the REIT's outstanding Units as of April 11, 2023.
The REIT intends to release its financial results for the three months ended March 31, 2023 on Tuesday, May 9, 2023.
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT currently owns and operates a portfolio of 46 properties consisting of approximately 4.9 million square feet in urban and select strategic secondary markets across Canada. The REIT is focused on growing its portfolio principally through acquisitions across Canada and such other jurisdictions where opportunities exist.
For more information regarding the REIT, please visit www.sedar.com or the REIT's website at www.truenorthreit.com.
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are provided for the purposes of assisting the reader in understanding the REIT's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, performance, achievements, events, prospects or opportunities for the REIT or the real estate industry and may include statements regarding the financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. In some cases, forward-looking information can be identified by such terms as "may", "might", "will", "could", "should", "would", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", or the negative thereof or other similar expressions suggesting future outcomes or events.
Forward-looking statements necessarily involve 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, assumptions may not be correct and objectives, strategic goals and priorities may 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, including those relating to the suspension (and potential future reinstatement) of the DRIP and the establishment of the NCIB (including the potential impact thereof on Unitholders, as well as the REIT and its ability to advance its objectives, explore strategic opportunities and deliver long-term value to its Unitholders), to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, risks related to the Units and risks related to the REIT's annual information form for the year ended December 31, 2022, annual and management's discussion & analysis at "Risks and Uncertainties" 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 statements as there can be no assurance actual results will be consistent with such forward-looking statements.
Forward-looking statements that involve a number of risks and uncertainties, including statements regarding the outlook for the REIT's business and results of operations, the ability of the REIT to manage inflation and rising interest rates, and the changes to the REIT's business and operations following the coronavirus pandemic (SARS- CoV-2) ("COVID-19"). Forward-looking statements involve 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, assumptions may not be correct and objectives, strategic goals and priorities may 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: risks relating to the suspension of the DRIP and the establishment of the NCIB (including the potential impact thereof on Unitholders, as well as the REIT and its ability to advance its objectives, explore strategic opportunities and deliver long-term value to its Unitholders); risks and uncertainties related to the Units; risks related to the REIT and its business; fluctuating mortgage and interest rates and general economic conditions, including increased levels of inflation; credit, market, operational and liquidity risks generally; occupancy levels and defaults, including the failure to fulfill contractual obligations by tenants; lease renewals and rental increases; the ability to re-lease and find new tenants for vacant space; the timing and ability of the REIT to sell certain properties; the after effects of the COVID-19 pandemic on the business, operations and financial condition of the REIT and its tenants, as well as on consumer behavior and the economy in general, including the ability to enforce leases, perform capital expenditure work, increase rents, raise capital through the issuance of Units or other securities of the REIT and obtain mortgage financing on the REIT's properties. The foregoing is not an exhaustive list of factors that may affect the REIT's forward-looking statements. Other risks and uncertainties not presently known to the REIT could also cause actual results or events to differ materially from those expressed in its forward-looking statements. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions applied in drawing a conclusion or making a forecast or projection, including management's perception of historical trends, current conditions and expected future developments, as well as other considerations believed to be appropriate in the circumstances. There can be no assurance regarding: (a) the suspension of the DRIP; (b) the establishment of the NCIB; (c) the after effects of COVID-19 on the REIT's business, operations and performance, including the performance of its Units; (d) the REIT's ability to mitigate any impacts related to fluctuating mortgage and interest rates and inflation; (e) the factors, risks and uncertainties expressed above in regards to the post pandemic environment on the commercial real estate industry and property occupancy levels; (f) credit, market, operational, and liquidity risks generally; (g) the availability of investment opportunities for growth in Canada and the timing and ability of the REIT to sell certain properties; (h) Starlight Group Property Holdings Inc., or any of its affiliates, continuing as asset manager of the REIT in accordance with its current asset management agreement; and (i) other risks inherent to the REIT's business and/or factors beyond its control which could have a material adverse effect on the REIT.
The forward-looking statements made in this news release are dated and relate only to events or information as of the date of this news release. Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, 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 Commercial Real Estate Investment Trust
Daniel Drimmer, Chief Executive Officer, (416) 234-8444 or Tracy Sherren, President and Chief Financial Officer, (416) 234-8444
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