/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN
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FOR DISTRIBUTION TO UNITED STATES
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UNITED STATES./
TORONTO, April 3, 2019 /CNW/ - Firm Capital Property Trust
("FCPT" or the "Trust"), (TSX-V: FCD.UN) is pleased
to announce that it has entered into an agreement to acquire (the
"Acquisition") from First Capital Realty Inc. and an
affiliate thereof (collectively, "First Capital") a 50%
non-managing interest in six net-leased primarily grocery anchored
shopping centres located in Ontario and Quebec (the "Acquisition
Portfolio"). The acquisition price for 100% of the
Acquisition Portfolio is approximately $266
million, excluding transaction costs. The Trust's portion of
the acquisition price is approximately $133
million.
HIGHLIGHTS OF THE ACQUISITION PORTFOLIO
- IMMEDIATELY ACCRETIVE TO AFFO BY APPROXIMATELY 9%: The
Acquisition Portfolio is expected to be immediately approximately
9% accretive to the Trust's fourth quarter 2018 normalized
annualized Adjusted Funds From Operations ("AFFO") per Trust
Unit (as defined below), after adjusting for subsequent events.
- ENHANCED SIZE AND SCALE WITH NEARLY $400 MILLION OF ASSETS: Upon closing of the
Acquisition, the Trust's portfolio will be comprised of 75
income-producing properties totaling 2,228,381 square feet (at the
Trust's share) of Gross Leasable Area ("GLA"), as well as
residential assets aggregating 204 residential units. Following the
closing of the Acquisition Portfolio, the Trust's Gross Book Value
("GBV") is expected to be approximately $403 million.
- WELL DIVERSIFIED PORTFOLIO BY ASSET CLASS AND GEOGRAPHY:
Upon closing of the Acquisition, 77% of the Trust's Net Operating
Income ("NOI") will be generated from primarily
grocery-anchored retail properties, as well as 19% from industrial
properties, 3% from apartments and 1% from office. By geography,
59% of NOI will be generated from Ontario, 27% from Quebec, and 7% from Nova Scotia, with the balance from
British Columbia, Saskatchewan, Alberta and Manitoba.
- WELL DIVERSIFIED TENANT PROFILE: Upon closing of the
Acquisition, the Trust's ten largest commercial tenants are
expected to account for approximately 28.8% of net rent, with no
tenant comprising more than 10.3% of the pro forma commercial net
rent. Further, the top five tenants are national and/or high
quality tenants and comprise Sobeys (10.3%), Loblaws (3.0%), PPG
(2.7%), Canadian Tire (2.3%), and IGA (2.3%).
DETAILS OF THE ACQUISITION PORTFOLIO
The Acquisition Portfolio is comprised of six properties
totaling 1,022,600 square feet of GLA (at a 100% interest) located
in Ottawa, Ontario; Nepean, Ontario; Repentigny, Quebec, and Gatineau, Quebec. All six of the properties
are anchored by high quality tenants including Canadian Tire, IGA,
Loblaws, Walmart, and Shoppers Drug Mart, among others. The
Acquisition Portfolio is approximately 97% occupied and has a
remaining weighted average lease term ("WALT") of
approximately 6.1 years. Upon closing of the Acquisition, the Trust
and First Capital will enter into a co-ownership arrangement such
that the Trust and First Capital will each own half of the
Acquisition Portfolio. First Capital will also property manage the
Acquisition Portfolio.
Property
|
Property
Occupancy1
|
GLA (at
100%)
|
% of
Total
|
Remaining
WALT (Years)1
|
Carrefour du Plateau
(Gatineau)
|
100.0%
|
241,772
|
23.6%
|
9.6
|
Galeries de
Repentigny (Repentigny)
|
100.0%
|
130,739
|
12.8%
|
2.9
|
Galeries Brien Est
(Repentigny)
|
100.0%
|
8,856
|
0.9%
|
3.9
|
Galeries Brien Ouest
(Repentigny)
|
100.0%
|
52,331
|
5.1%
|
4.2
|
Gloucester City
Centre (Ottawa)
|
97.2%
|
369,663
|
36.1%
|
5.2
|
Merivale Mall
(Nepean)
|
91.6%
|
219,239
|
21.4%
|
6.2
|
Total / Weighted
Average
|
97.2%
|
1,022,600
|
100.0%
|
6.1
|
Note:
|
|
|
|
(1)
|
As of March 1,
2019.
|
The acquisition price for 100% of the Acquisition Portfolio of
$266 million equates to an implied
price per square foot of approximately $260 per square foot, which represents a
significant discount to replacement cost. The closing of the
Acquisition is expected to occur on or about May 2, 2019, and is subject to the satisfaction
of customary closing conditions, including financing, regulatory
and due diligence conditions, as well as the closing of the
Offering and the Concurrent Private Placement (as such terms are
defined below).
Descriptions of the properties that comprise of the Acquisition
Portfolio are as follows:
- CARREFOUR DE PLATEAU
Servicing Gatineau's Hull community is Carrefour du Plateau.
Anchored by Canadian Tire, IGA, Sports Experts and Jean-Coutu, this
centre currently offers a wide mix of amenities and includes space
for additional density. This retail centre services the surrounding
highly populated, family-oriented neighbourhoods with over 94,000
residents within a five kilometre radius. In addition, this centre
has exposure to the busy arterials of Des Allumettières and Des
Grives Boulevards. As of March 1,
2019, the Carrefour du Plateau property was 100%
occupied;
- GALERIES DE REPENTIGNY,
GALERIES BRIEN EST, AND GALERIES BRIEN OUEST
Galeries de
Repentigny, Galeries Brien Est and
Galeries Brien Ouest are located east of Montreal in the affluent community of
Repentigny. Strategically situated
on Boulevard Brien and in close proximity to Highway 40, these
three centres offer easy accessibility to local residents. Major
tenants include Super C, IGA, Dollarama and Uniprix. Adjacent to
one another, these three centres combine to form a singular retail
offering. As of March 1, 2019,
Galeries de Repentigny, Galeries
Brien Est and Galeries Brien Ouest were all 100% occupied.
- GLOUCESTER CITY CENTRE
Gloucester City Centre is
located east of Ottawa in the
neighbourhood of Gloucester. With
more than 48 brand-name retailers, Gloucester City Centre is
anchored by a 125,000 square foot Loblaws, a 98,500 square foot
Walmart, a 11,700 square foot LCBO and a 10,200 square foot Pharma
Plus. This 370,000 square foot enclosed shopping centre is focused
on day-to-day retail offerings, including groceries, prescription
drugs, personal-care items, household supplies, banking and other
personal services. Over 119,200 people reside within a five
kilometre radius of Gloucester City Centre, with an average annual
household income of over $91,900.
Gloucester City Centre will include a new O-Train station on the
Confederation Line, which is scheduled for completion in the spring
of 2019, and which is expected to enhance accessibility to the
shopping centre. As of March 1, 2019,
the Gloucester City Centre property was 97% occupied. Both First
Capital and the Trust believe that the property benefits from
significant redevelopment potential, with plans to seek 930,000
square feet of additional commercial and residential density.
- MERIVALE MALL
Merivale Mall is located in
Nepean, a neighbourhood of
Ottawa located in the southwest of
the city. This property is situated in the prominent regional
retail node known as the Merivale Retail Corridor, which spans
approximately 3.2 kilometres along Merivale Road and offers over
2.5 million square feet of retail space. Merivale Mall benefits
from traffic counts of over 50,000 vehicles per day. Merivale Mall
offers ample parking (1,010 parking stalls) and approximately
220,000 square feet of retail shopping space, anchored by a roster
of national tenants, including Farm Boy, Sport Chek, Planet
Fitness, Marshalls and Shoppers Drug Mart. As of March 1, 2019, Merivale Mall was approximately
92% occupied. Both First Capital and the Trust believe that the
property benefits from significant redevelopment potential, with
plans to seek 280,000 square feet of additional commercial and
residential density.
DEBT FINANCING
The Acquisition Portfolio is being financed through a
combination of new and assumed mortgages for a total amount of
approximately $92.9 million (at the
Trust's interest). The weighted average interest rate for both the
new and assumed mortgages is expected to be approximately 3.55%
with a Weighted Average Term to Maturity ("WATM") of
approximately 5.4 years. The new mortgages, which equate to
approximately $62.4 million, are
being arranged through a combination of Canadian chartered banks
for approximately $52.9 million (each
at the Trust's interest) as well as a Vendor Take Back note from
First Capital for $9.6 million
(at the Trust's interest).
MARKETED EQUITY OFFERING
The Trust also announced today that it has filed a preliminary
prospectus supplement with the securities authorities in all
provinces of Canada except
Quebec, with respect to a proposed
offering (the "Offering") of trust units ("Trust
Units"). It is currently anticipated that approximately
$20 million of Trust Units will be
offered at a price of $6.40 per Trust
Unit. The Offering is being made on a fully marketed basis
through a syndicate of underwriters led by Canaccord Genuity Corp.,
CIBC Capital Markets, and National Bank Financial Inc., and
including Scotiabank, TD Securities Inc., Echelon Wealth Partners
Inc., Industrial Alliance Securities Inc., Raymond James Ltd.,
Desjardins Securities Inc., GMP Securities L.P., and Laurentian
Bank Securities Inc.
$15 MILLION CONCURRENT PRIVATE
PLACEMENT
In addition to the Offering, the Trust intends to complete a
non-brokered private placement of Trust Units to close concurrently
with the Offering (the "Concurrent Private
Placement"), on substantially the same terms as the Offering,
raising gross proceeds of approximately $15
million. The subscribers of the Concurrent Private Placement
are expected to include an existing institutional unitholder of the
Trust and a group consisting of certain members of senior
management and trustees of the Trust. The distribution of Trust
Units pursuant to the Concurrent Private Placement will not be
qualified pursuant to the Prospectus Supplement. Closing of the
Offering will be conditional upon closing of the Concurrent Private
Placement for minimum aggregate gross proceeds of $15 million. Closing of the Concurrent
Private Placement is conditional on the closing of the Offering.
Closing of the Offering and the Concurrent Private Placement remain
subject to the approval of the TSX Venture Exchange.
DISTRIBUTION REINVESTMENT PLAN & UNIT PURCHASE
PLAN
The Trust has in place a Distribution Reinvestment Plan
("DRIP") and Unit Purchase Plan (the "Plan"). Under
the terms of the DRIP, FCPT's unitholders may elect to
automatically reinvest all or a portion of their regular monthly
distributions in additional Trust Units, without incurring
brokerage fees or commissions. Under the terms of the Plan, FCPT's
unitholders may purchase a minimum of $1,000 of Units per month and maximum purchases
of up to $12,000 per annum.
Management and trustees own approximately 7% of the issued and
outstanding Trust Units of the Trust.
ABOUT FIRM CAPITAL PROPERTY TRUST
Firm Capital Property Trust is focused on creating long-term
value for unitholders, through capital preservation and disciplined
investing to achieve stable distributable income. In partnership
with management and industry leaders, the Trust's plan is to own a
diversified property portfolio of multi-residential, flex
industrial, net lease convenience retail, and core service provider
professional space. In addition to standalone accretive
acquisitions, the Trust will make joint acquisitions with strong
financial partners and acquisitions of partial interests from
existing ownership groups, in a manner that provides liquidity to
those selling owners and professional management for those
remaining as partners. Firm Capital Realty Partners Inc.,
through a structure focused on an alignment of interests with the
Trust sources, syndicates and property and asset manages
investments on behalf of the Trust.
FORWARD LOOKING INFORMATION
This press release may contain forward-looking statements. In
some cases, forward-looking statements can be identified by the use
of words such as "may", "will", "should", "expect", "plan",
"anticipate", "believe", "estimate", "predict", "potential",
"continue", and by discussions of strategies that involve risks and
uncertainties, including statements regarding: the accretion of the
Acquisition Portfolio to AFFO; the timing for completion, and the
ability to complete, the Acquisition; the pro forma composition of
FCPT's portfolio upon completion of the acquisition of the
Acquisition; the entering into of a co-ownership agreement with
First Capital; the timing of and ability to obtain new mortgages on
the Acquisition Portfolio; the pricing and size of each of the
Offering and the Concurrent Private Placement; and the completion
of the Offering and the Concurrent Private Placement. The
forward-looking statements are based on certain key expectations
and assumptions made by the Trust. By their nature, forward-looking
statements involve numerous assumptions, inherent risks and
uncertainties, both general and specific, that contribute to the
possibility that the predictions, forecasts, projections and
various future events will not occur. Although management of the
Trust believes that the expectations reflected in the
forward-looking statements are reasonable, there can be no
assurance that future results, levels of activity, performance or
achievements will occur as anticipated. Neither the Trust nor any
other person assumes responsibility for the accuracy and
completeness of any forward-looking statements, and no one has any
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or such other
factors which affect this information, except as required by
law.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, which may be made only by means of
a prospectus, nor shall there be any sale of the Units in any
state, province or other jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under securities laws of any such state, province or
other jurisdiction. The Units have not been, and will not be
registered under the U.S. Securities Act of 1933, as amended, and
may not be offered, sold or delivered in the United States absent registration or an
application for exemption from the registration requirements of
U.S. securities laws.
NON-IFRS MEASURES
Certain terms used in this press release, including AFFO, NOI
and GBV, are not measures defined under International Financial
Reporting Standards ("IFRS") as prescribed by the
International Accounting Standards Board, do not have standardized
meanings prescribed by IFRS and should not be compared to or
construed as alternatives to profit/loss, cash flow from operating
activities or other measures of financial performance calculated in
accordance with IFRS. AFFO, NOI and GBV as computed by the Trust
may not be comparable to similar measures presented by other
issuers. The Trust uses these measures to better assess the Trust's
underlying performance and provides these additional measures so
that investors may do the same. Details on non-IFRS measures are
set out in the Trust's Management's Discussion and Analysis for the
year ended December 31, 2018 and the
Trust's Annual Information Form for the year ended December 31, 2017, dated April 30, 2018, which are both available on the
Trust's profile at www.sedar.com.
SOURCE Firm Capital Property Trust