True North Apartment REIT announces completion of previously announced acquisition of 1,570 suite property portfolio and conversion of subscription receipts issued in $63.8 million public offering
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/
TORONTO, Feb. 20, 2013 /CNW/ - True North Apartment Real Estate Investment Trust (the "REIT") (TSXV: TN.UN) announced today that it has completed its previously announced acquisition (the "Acquisition") of a portfolio of 17 properties (the "Acquisition Properties") comprising an aggregate of 1,570 residential suites located in Ontario, Québec, Alberta and British Columbia. The REIT completed the Acquisition by acquiring control of Rocky (2013) Limited Partnership ("Rocky LP"), an entity previously controlled by Daniel Drimmer, the Chair of the board of trustees of the REIT, as well as a principal holder of voting securities of the REIT.
The purchase price for the Acquisition Properties and an instalment note of $152.8 million (net of the issue price premium of $0.9 million on the class B limited partnership units of Rocky LP) was satisfied by a combination of: (i) approximately $37.7 million in cash; (ii) the assumption of approximately $68 million aggregate principal amount of existing mortgage debt; (iii) approximately $33 million aggregate principal amount of new mortgage debt, including $5 million represented by a vendor take-back mortgage (the "VTB") from an entity related to Daniel Drimmer; and (iv) the issuance to D.D. Acquisitions Partnership of 3,512,878 class B limited partnership units of Rocky LP at a deemed issue price of $4.27 per class B limited partnership unit of Rocky LP and accompanying special voting units of the REIT (which provide the holder with voting rights in respect of the REIT).
As the Acquisition was considered a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, the REIT was required to obtain prior approval of the Acquisition and the VTB (the "Unitholder Approval") by a majority of the minority unitholders of the REIT at a special meeting (the "Special Meeting") of unitholders ("Unitholders"). The Special Meeting was held on Tuesday, February 19, 2013 at which the Acquisition received the requisite Unitholder Approval, with approximately 99% of the Unitholders at the meeting (excluding Mr. Drimmer and his affiliates), in person or by proxy, voting in favour.
In order to finance the cash payment component of the purchase price and the costs of the Acquisition, the REIT completed a "bought deal" public offering (the "Offering") of 15,950,500 subscription receipts (the "Subscription Receipts") on January 30, 2013, including 2,080,500 Subscription Receipts issued upon exercise of the over-allotment option granted to a syndicate of underwriters co-led by CIBC and Raymond James Ltd. Each Subscription Receipt was sold at a price of $4.00, for aggregate gross proceeds of approximately $63.8 million and entitled the holder thereof to receive one unit of the REIT ("Unit") upon completion of the Acquisition without payment of any additional consideration. Contemporaneously with the closing of the Acquisition, one Unit was issued in exchange for each outstanding Subscription Receipt, resulting in the issuance of an aggregate of 15,950,500 Units. The balance of the net proceeds from the Offering will be used for general trust purposes and/or for future acquisitions.
Trading of the Subscription Receipts has been halted and the TSXV has advised that the Subscription Receipts are expected to be de-listed at the close of trading tomorrow.
An amount per Subscription Receipt equal to the amount per Unit of any cash distributions made by the REIT for which record dates have occurred during the period that the Subscription Receipts were outstanding has become payable in respect of each Subscription Receipt, namely $0.0233 per Subscription Receipt and is expected to be paid on or about the third business day following the closing of the Acquisition.
As of February 20, 2013, there were 46,081,921 Units and 10,844,506 class B limited partnership units (economically equivalent to and exchangeable for Units) outstanding.
The REIT has also granted to Mr. Graham Rosenberg, a trustee of the REIT, effective as of February 20, 2013, 85,000 options to subscribe for up to 85,000 Units for a period of five years, at an exercise price of $4.00 all in accordance with the REIT's amended and restated unit option plan.The granted options will vest over a three year period commencing February 20, 2014.
Forward-looking Statements
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 position and results of operations 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 and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to the REIT's future outlook and anticipated events, including the anticipated use of the net proceeds of the Offering, the expected timing of the de-listing of the Subscription Receipts or the expected timing for the cash distributions in respect of the Subscription Receipts. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts.
Forward-looking statements necessarily involve known and unknown risks and uncertainties, that 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, that assumptions may not be correct and that objectives, strategic goals and priorities will 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, 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 that actual results will be consistent with such forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian economy will remain stable over the next 12 months; inflation will remain relatively low; interest rates will remain stable; conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate; the Canadian capital markets will continue to provide the REIT with access to equity and/or debt at reasonable rates when required; Starlight Investments Ltd. will continue its involvement as asset manager of the REIT in accordance with its current asset management agreement; and the risks identified or referenced above, collectively, will not have a material impact on the REIT. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.
The forward-looking statements made in this press release are dated, and relate only to events or information, as of the date of this press release. Except as specifically required by 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.
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. Additional information concerning the REIT may be obtained from the management information circular of the REIT dated January 21, 2013 and is available at www.sedar.com.
The REIT focuses on a long-term strategy to generate stable cash distributions on a tax-efficient basis for unitholders. The REIT intends to actively look 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.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: True North Apartment Real Estate Investment Trust
Leslie Veiner
Chief Executive Officer
(416) 234-8444
or
Martin Liddell
Chief Financial Officer and Secretary
(416) 234-8444
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