Boardwalk REIT agrees to sell its Windsor, Ontario Property Portfolio

CALGARY, July 20, 2015 /CNW/ - Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX)

Boardwalk Real Estate Investment Trust is pleased to announce that it has entered into an agreement with a private REIT to sell its Windsor Portfolio.  The Agreement is now unconditional.  The transaction is expected to close on September 10, 2015.  Details of the sale are summarized below:

Building Name

City

# Units

Type

Price

$/unit

$/sq ft

Current Debt

Cap Rate

Closing Date

Sold

Windsor Portfolio

Windsor, Tecumseh

1685

High Rise, Low Rise, Townhouses

$   136,200,000

^1

$   80,800

$      106

$  20,500,000

^3

5.43%

^2

September 10, 2015

^1Excludes Transaction Costs

^2Based on 2014 NOI, excluding Transaction Costs

3 Properties to be delivered free and clear of mortgage encumberances on closing, balance is as of September, 2015

The Trust is continuing the process of reviewing select non-core properties with the intent of high-grading its portfolio by re-deploying the equity from these assets towards value enhancing transactions for the Trust's Stakeholders, including acquisitions, development, and capital improvements.  Consistent with the Trust's balanced approach, some of the net proceeds may be returned to Unitholders though the payment of special distributions and may also be used towards other value enhancing transactions such as the repurchase and cancellation of Trust Units under the Trust's Normal Course Issuer Bid.  To that end, on June 30, 2015, the Trust received regulatory approval to renew its Normal Course Issuer Bid allowing the Trust to purchase and cancel up to 3,855,766 Trust Units, representing 10% of its public float at the time. 

Between mid-2007 and the second quarter of 2014, the Trust exercised a similar strategy of high-grading its portfolio through the sale of 2,335 Apartment Units, comprised of non-core assets, for total gross proceeds of $326.2 million.  The Trust re-deployed a significant portion of this equity into the purchase and cancellation of Trust Units under similar Normal Course Issuer Bids, and, re-purchased and cancelled 5,014,847 Trust Units, representing a total investment of $202.1 million, or an average cost of $40.31 per Trust Unit. 

With respect to the tax implications on the sale of the Trust's Windsor Portfolio, the resulting taxable income and non-taxable portion of capital gains generated by this transaction may be distributed to the Trust's Unitholders in the form of a special distribution.  Taxable income generated must be declared no later than December 31st of the calendar year to ensure that the Trust has distributed all of its taxable income in any given year.  The Trust paid a special distribution of $73 million, or $1.40 per Unit, to Unitholders of record on December 31, 2014 relating to the taxable income and non-taxable portion of capital gains generated by the Trust's BC Property Portfolio Disposition in 2014.

The Trust estimates that the taxable income and non-taxable portion of capital gains to be in the range of $0.90 to $1.00 per Unit generated from this transaction; however, the final amount of any distribution to Unitholders will be announced prior to the end of 2015.

The demand for Multi-Family Investment Properties in Canada continues to be strong.  As a result, capitalization rates continue to remain low and high prices for Multi-Family assets continue to be the trend.  The Trust continues to bid on higher quality assets; however, no new apartment acquisitions have been completed to date as the actual transaction prices on these assets would not prove to be in the best interest of the Trust on a risk-adjusted basis.

The Trust continues to explore other viable development opportunities for multi-family apartment buildings on excess land the Trust currently owns in Alberta and Saskatchewan.  The increased demand for multi-family investment properties, which has resulted in continued low capitalization rates, presents a unique opportunity for the Trust to explore the viability of multi-family rental property development in order to improve the Trust's portfolio and enhance value for Unitholders.

Corporate Profile

Boardwalk REIT strives to be Canada's friendliest landlord and currently owns and operates more than 220 communities with over 34,000 residential units totaling over 29 million net rentable square feet. Boardwalk's principal objectives are to provide its Residents with the best quality communities and superior customer service, while providing Unitholders with sustainable monthly cash distributions, and increase the value of its trust units through selective acquisitions, dispositions, development, and effective management of its residential multi-family communities. Boardwalk REIT is vertically integrated and is Canada's leading owner/operator of multi-family communities with 1,500 Associates bringing Residents home to properties located in Alberta, Saskatchewan, Ontario, and Quebec. Boardwalk REIT's Trust units are listed on the Toronto Stock Exchange, trading under the symbol BEI.UN. Additional information about Boardwalk REIT can be found on the Trust's website at www.BoardwalkREIT.com.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this News Release, and other statements concerning Boardwalk's objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "would", "expect", "intend", "estimate", "anticipate", "believe", "should", "plan", "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. All forward-looking statements in this News Release are qualified by these cautionary statements. These statements are not guarantees of future events or performance and, by their nature, are based on Boardwalk's estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in the Management's Discussion & Analysis of Boardwalk REIT's 2014 Annual Report, which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplace associated with current economic conditions, occupancy levels, access to debt and equity capital, interest rates, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions or dispositions, construction, environmental matters, legal matters, reliance on key personnel, income taxes, the conditions to the transactions not being satisfied resulting in the failure to complete some or all of the proposed transactions described herein, the trading price of the securities of Boardwalk, lack of availability of acquisition or disposition opportunities for the Trust and exposure to economic, real estate and capital market conditions in North America. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: that the general economy remains stable, interest rates are relatively stable, acquisition/disposition capitalization rates are stable, competition for acquisition or disposition of residential apartments remains intense, and equity and debt markets continue to provide access to capital. These assumptions, although considered reasonable by the Trust at the time of preparation, may prove to be incorrect. For more exhaustive information on these risks and uncertainties you should refer to our most recently filed annual information form which is available at www.sedar.com. Although the forward-looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this News Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time.

SOURCE Boardwalk Real Estate Investment Trust

Boardwalk REIT Investor Relations, [phone] or [email protected]