AIP Realty Trust (“AIP”) (TSXV: AIPV.U) is pleased to announce that
its wholly-owned subsidiary AIP Realty Management, LLC has entered
into membership purchase agreements (the “Agreements”) with
AllTrades Five Properties, LLC (“AT5P”), to acquire up to five
additional companies, each of which owns a light industrial flex
property in the Dallas-Fort Worth (“DFW”) area of Texas. Each of
the Agreements provide AIP with the exclusive option, subject to
certain conditions, to acquire (i) AIP Mesquite, LLC, (ii) AIP
Lewisville Main, LLC, (iii) AIP Carrollton Briercroft, LLC, (iv)
AIP Frisco, LLC, and (v) AIP Plano, LLC (collectively, the “Texas
LLCs”) , each of which owns a light industrial flex property in
Mesquite, Lewisville, Carrollton, Frisco and Plano, Texas,
respectively (collectively, the “Properties”).
The Agreements align with AIP’s strategy and
business objectives discussed in AIP’s filing statement dated March
31, 2022. Upon completion of construction, each of the Properties
will address the underserved needs for new generation, high quality
light industrial flex space of the large, diverse and growing
market of trades and services businesses in the US.
As previously disclosed, AIP has the exclusive
right to finance a portion of the development costs of and to
purchase the newly constructed and leased properties built by
AllTrades Industrial Properties, Inc. (“AllTrades”). This structure
provides AIP unitholders with the benefits of development upside
while minimizing risk.
The Properties represent an aggregate
approximate 376,000 square feet of gross leasable area, comprised
of 108 WorkSpace ShopsTM and 44 WorkSpace StudiosTM as well as 209
WorkSpace Secured ParkingTM spaces, and are targeted at the trades
and services sectors and small businesses which are often
underserved and relegated to older buildings with outdated
amenities. The AllTrades facilities offer modern, appealing spaces
that can be readily adapted to multiple uses. The Properties were
developed with equity capital from AllTrades and Trinity Investors
(a $4 billion Dallas-based real estate private equity fund)
(“Trinity”).
“AIP has taken a significant step forward in
securing additional high quality light industrial flex properties
in Texas towards the planned national rollout,” said Leslie Wulf,
Executive Chairman of AIP. “The acquisition of some or all of the
five properties, will provide AIP with a substantially increased
quality, size and diversity of cash flow for the portfolio.”
The Mesquite Property
The facility owned by AIP Mesquite, LLC (the
“Mesquite Property”) is located in an attractive market in southern
eastern part of the Dallas Fort Worth market. Construction of the
Mesquite Property is expected to be completed in July of 2022. The
Mesquite Property will be comprised of 49,713 rentable square feet
across 12 WorkSpace Shops™, 10 WorkSpace Studios™ and 32 WorkSpace
Secured Parking™ spaces. The Mesquite property is currently in the
pre-leasing phase.
The membership purchase agreement pertaining to
the acquisition of AIP Mesquite, LLC provides for the purchase of
all of the membership interests of AIP Mesquite, LLC, for a
purchase price of up to US$12 million, excluding closing costs
(the “Mesquite Purchase Price”). The acquisition of AIP Mesquite,
LLC by AIP Realty Management, LLC is subject to certain conditions,
including but not limited to completion of the construction of the
facility, receipt of audited financial statements of AIP Mesquite,
LLC, receipt of a satisfactory third-party appraisal supporting the
Mesquite Purchase Price, receipt of regulatory approvals, including
the approval of the TSX Venture Exchange (“TSXV”), approval of the
independent trustees of AIP and customary closing date and
post-closing adjustments. The purchase price is expected to be
satisfied by a combination of the assumption of a mortgage of
approximately US$5.95 million and cash.
The Lewisville Property
The facility owned by AIP Lewisville Main, LLC
(the “Lewisville Property”) is located in the northern area of the
DFW market. Construction of the Lewisville Property is expected to
be completed in October of 2022. The Lewisville Property will be
comprised of approximately 69,000 rentable square feet across 22
WorkSpace Shops™, 6 WorkSpace Studios™ and 27 WorkSpace Secured
Parking™ spaces.
The membership purchase agreement pertaining to
the acquisition of AIP Lewisville, LLC provides for the purchase of
all of the membership interests of AIP Lewisville, LLC, for a
purchase price of up to US$15 million, excluding closing costs
(the “Lewisville Purchase Price”). The acquisition of AIP
Lewisville, LLC by AIP Realty Management, LLC is subject to certain
conditions, including but not limited to completion of the
construction of the facility, receipt of audited financial
statements of AIP Lewisville, LLC, receipt of a satisfactory
third-party appraisal supporting the Lewisville Purchase Price,
receipt of regulatory approvals, including the approval of the
TSXV, approval of the independent trustees of AIP and customary
closing date and post-closing adjustments. The purchase price is
expected to be satisfied by a combination of the assumption of a
mortgage of approximately US$7.50 million and cash.
The Carrollton Property
The facility owned by AIP Carrollton Briercroft,
LLC (the “Carrollton Property”) is located in the north central
area of the DFW market. Construction of the Carrollton Property is
expected to be completed in December of 2022. The Carrollton
Property will be comprised of approximately 100,000 rentable square
feet across 22 WorkSpace Shops™, 22 WorkSpace Studios™ and 54
WorkSpace Secured Parking™ spaces.
The membership purchase agreement pertaining to
the acquisition of AIP Carrollton, LLC provides for the purchase of
all of the membership interests of AIP Carrollton, LLC, for a
purchase price of up to US$24 million, excluding closing costs
(the “Carrollton Purchase Price”). The acquisition of AIP
Carrollton, LLC by AIP Realty Management, LLC is subject to certain
conditions, including but not limited to completion of the
construction of the facility, receipt of audited financial
statements of AIP Carrollton, LLC, receipt of a satisfactory
third-party appraisal supporting the Carrollton Purchase Price,
receipt of regulatory approvals, including the approval of the
TSXV, approval of the independent trustees of AIP and customary
closing date and post-closing adjustments. The purchase price is
expected to be satisfied by a combination of the assumption of a
mortgage of approximately US$11.25 million and cash.
The Frisco Property
The facility owned by AIP Frisco, LLC (the
“Frisco Property”) is located in the north central area of the DFW
market. Construction of the Frisco Property is expected to be
completed in December of 2022. The Frisco Property will be
comprised of approximately 75,000 rentable square feet across 22
WorkSpace Shops™, 6 WorkSpace Studios™ and 45 WorkSpace Secured
Parking™ spaces.
The membership purchase agreement pertaining to
the acquisition of AIP Frisco, LLC provides for the purchase of all
of the membership interests of AIP Frisco, LLC, for a purchase
price of up to US$20.5 million, excluding closing costs (the
“Frisco Purchase Price”). The acquisition of AIP Frisco, LLC by AIP
Realty Management, LLC is subject to certain conditions, including
but not limited to completion of the construction of the facility,
receipt of audited financial statements of AIP Frisco, LLC, receipt
of a satisfactory third-party appraisal supporting the Frisco
Purchase Price, receipt of regulatory approvals, including the
approval of the TSXV, approval of the independent trustees of AIP
and customary closing date and post-closing adjustments. The
purchase price is expected to be satisfied by a combination of the
assumption of a mortgage of approximately US$9.22 million and
cash.
The Plano Property
The facility owned by AIP Plano, LLC (the “Plano
Property”) is located in the east central area of the DFW market.
Construction of the Plano Property is expected to be completed in
September of 2022. The Plano Property will be comprised of
approximately 82,000 rentable square feet across 30 WorkSpace
Shops™ and 51 WorkSpace Secured Parking™ spaces.
The membership purchase agreement pertaining to
the acquisition of AIP Plano, LLC provides for the purchase of all
of the membership interests of AIP Plano, LLC, for a purchase price
of up to US$20 million, excluding closing costs (the “Plano
Purchase Price”). The acquisition of AIP Plano, LLC by AIP Realty
Management, LLC is subject to certain conditions, including but not
limited to completion of the construction of the facility, receipt
of audited financial statements of AIP Plano, LLC, receipt of a
satisfactory third-party appraisal supporting the Plano Purchase
Price, receipt of regulatory approvals, including the approval of
the TSXV, approval of the independent trustees of AIP and customary
closing date and post-closing adjustments. The purchase price is
expected to be satisfied by a combination of the assumption of a
mortgage of approximately US$9 million and cash.
Mezzanine Financing
Pursuant to a commitment, AIP Realty Management
LLC, a wholly-owned subsidiary of AIP, has agreed to lend mezzanine
financing (the “Credit Facility) of up to US$12 million to
AllTrades Industrial Development LLC, (“AID”) a wholly owned
subsidiary of AllTrades, which will be used in conjunction with
additional equity funding provided by Trinity along with
construction loans to fund special purpose LLCs to build and
develop up to 12 further facilities in the DFW area by a subsidiary
of AID. The credit facilities will be granted for facilities that
AIP has underwritten and provide a forward purchase commitment to
acquire upon completion after all required conditions being met.
The Credit Facility will bear current pay interest of 10% on the
drawn down portion and AIP will also receive up to 50% of the sales
profit generated from the prorated portion of the mezzanine to the
overall equity in the project. The Credit Facility will be secured
by the assets of AID.
After an extensive review and analysis of the
transactions contemplated by the Agreements and the Credit Facility
and consideration of, among other things, the unanimous
recommendation of AIP’s governance committee (comprised of three
independent trustees of AIP) (the “Governance Committee”), the
board of trustees of AIP, with Leslie Wulf, Bruce Hall and Greg
Vorwaller recused, unanimously approved the Agreements and the
Credit Facility. Leslie Wulf, Bruce Hall and Greg Vorwaller were
not party to any discussions or deliberation relating to the
approval of Agreements and the Credit Facility.
No securities of AIP will be issued, nor will
any finders fees be paid by AllTrades or AIP in connection with the
transactions contemplated in the Agreements. The transactions will
not result in the creation of new insiders or a new control person
of AIP.
Upon completion of construction of each of the
facilities, the Governance Committee will obtain independent
appraisals and audited financial statements pertaining to each of
the Texas LLCs. In the event that each appraisal and set of audited
financial statements support a purchase price that is within the
range set out in the Agreements, the Governance Committee will make
a recommendation to the board of trustees of AIP, with Leslie Wulf,
Bruce Hall and Greg Vorwaller recused, and AIP will then seek
regulatory approvals, including approval of the TSX Venture
Exchange to proceed with the acquisition of each of the Texas LLCs,
in turn.
The Governance Committee is responsible for
supervising the process to be carried out by AIP and its
professional advisors in connection with the Agreements and the
Credit Facility, making recommendations to the board of trustees of
AIP, with Leslie Wulf, Bruce Hall and Greg Vorwaller recusing, in
respect of matters that it considered relevant with respect to the
Agreements and the Credit Facility, and ensuring that AIP completes
the acquisitions of the Texas LLCs and provides that the Credit
Facility is being provided to AllTrades in compliance with the
requirements of Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions (“MI 61-101”),
AIP’s declaration of trust and applicable policies of the TSXV.
The transactions contemplated in the Agreements
and the Credit Facility may constitute a “related party
transaction” under MI 61-101 as the Texas LLCs are currently owned
by AllTrades Five Properties, LLC, which is owned by AIP DFW I, LLC
(“AIPDFW”) and AllTrades Group Two Properties, LP (“ATG2”). AIPDFW
is majority owned by TPEG AllTrades DFW I Investors LLC with
AllTrades holding 5.73% of the Class B shares and 22.5% of the
Class C shares. The general partner of ATG2 is AllTrades Group Two
Management, Inc., a corporation wholly owned by AllTrades. Three of
the trustees and officers of AIP, namely Leslie Wulf, Bruce Hall
and Greg Vorwaller, are directors and officers of AllTrades. Bruce
Hall is also the manager of AT5P. Leslie Wulf, Greg Vorwaller and
Bruce Hall collectively own approximately 3% of AIP. Pursuant to
subsections 5.5(e) of and 5.7(1)(c) of MI 61-101, AIP was exempt
from obtaining a formal valuation and approval of AIP’s minority
shareholders because AIP’s units trade on the TSXV and, pursuant to
subsection 5.5(e) of MI 61-101, the Agreements and the Credit
Facility were supported by Alpha Carta Ltd., AIP’s controlling
unitholder.
About AIP Realty Trust
AIP Realty Trust is a real estate investment
trust with a growing portfolio of light industrial flex facilities
focused on small businesses and the trades and services sectors in
the U.S. These properties appeal to a diverse range of small space
users, such as contractors, skilled trades, suppliers, repair
services, last-mile providers, small businesses and assembly and
distribution firms. They typically offer attractive fundamentals
including low tenant turnover, stable cash flow and low capex
intensity, as well as significant growth opportunities. With an
initial focus on the DFW market, AIP plans to roll-out this
innovative property offering nationally. AIP holds the exclusive
rights to finance the development of and to purchase all the
completed and leased properties built across North America by its
development and property management partner, AllTrades. For more
information, please visit www.aiprealtytrust.com.
For further information from the Trust,
contact:
Leslie WulfExecutive Chairman(214)
679-5263les.wulf@aiprealtytrust.com
or
Greg VorwallerChief Executive Officer(778)
918-8262Greg.vorwaller@aiprealtytrust.com
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of applicable securities legislation.
Forward-looking statements are based on a number of assumptions and
is subject to a number of risks and uncertainties, many of which
are beyond AIP’s control, that could cause actual results and
events to differ materially from those that are disclosed in or
implied by such forward-looking statements.
Forward-looking statements contained in this
press release include, without limitation, statements pertaining to
the expected timing and completion of the acquisition of the Texas
LLCs; the effect of the acquisitions of the Texas LLCs on AIP’s
financial performance; the ability to secure the funding required
to complete the acquisition of the Texas LLCs; the satisfaction of
the conditions precedent to consummation of the acquisition of the
Texas LLCs, including the ability to obtain required regulatory
approvals; and the ability of AIP to execute its business and
growth strategies. AIP’s objectives and forward-looking statements
are based on certain assumptions, including that (i) AIP will
receive financing on favourable terms; (ii) the future level of
indebtedness of AIP and its future growth potential will remain
consistent with AIP’s current expectations; (iii) there will be no
changes to tax laws adversely affecting AIP’s financing capacity or
operations; (iv) the impact of the current economic climate and the
current global financial conditions on AIP’s operations, including
its financing capacity and asset value, will remain consistent with
AIP’s current expectations; (v) the performance of AIP’s
investments in Texas will proceed on a basis consistent with AIP’s
current expectations; and (vi) capital markets will provide AIP
with readily available access to equity and/or debt.
The forward-looking statements contained in this
news release are expressly qualified in their entirety by this
cautionary statement. All forward-looking statements in this press
release are made as of the date of this press release. AIP does not
undertake to update any such forward- looking information whether
as a result of new information, future events or otherwise, except
as required by law.
Additional information about these assumptions
and risks and uncertainties is contained under “Risk Factors” in
AIP’s filing statement dated March 31, 2022, which is available on
SEDAR at www.sedar.com.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
NOT FOR DISSEMINATION IN THE UNITED STATES OR
DISTRIBUTION THROUGH UNITED STATES NEWS OR WIRE SERVICES.
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