TORONTO, Dec. 7, 2016 /CNW/ - Firm Capital American
Realty Partners Corp. ("the "Company"), (TSXV : FCA.U) is
pleased to provide additional information regarding its recently
announced proposed $7.5 million joint
venture investment in New York
City, a reminder about the rights offering and update on the
share consolidation.
NEW YORK CITY JOINT VENTURE
INVESTMENT
On November 14,
2016, the Company announced that it had agreed to invest in
a joint venture that will consist of eight multi-family buildings
(the "Portfolio") comprised of 127 residential units and two
commercial units located in New York
City with a strong local owner (the "Sponsor
Partner"). The Portfolio is currently 91% occupied. The Sponsor
Partner is acquiring the portfolio at a going in capitalization
rate in excess of 4.5%, and has a plan to renovate the apartment
units and increase rents over a three year repositioning period.
The Sponsor Partner is highly experienced in the New York City area and owns and manages
similar properties where the Portfolio is located and has completed
similar repositioning plans on other multi-family buildings.
The purchase price of the Portfolio is approximately
$38.4 million. The Portfolio is being
funded with a $23.8 million
conventional first mortgage; a senior equity facility provided by a
consortium of investors including the Company (collectively the
"Firm Capital Group") for $10
million that yields 8.0% per annum and $6.7 million of common equity from the joint
venture partnership, with the Firm Capital Group being a 50% equity
owner and the Sponsor Partner being a 50% equity owner.
The Company is pleased to be participating in this investment
alongside an experienced Sponsor Partner who has succeeded in
investing in gentrifying areas of New
York City. The Company will be investing in a combination of
preferred and common equity. The preferred equity has a fixed rate
of return of 8% per annum and the common equity is forecasted to
generate a five year Levered Internal Rate of Return ("IRR")
of approximately 27% per annum. On a blended basis, both the
preferred and common equity investment are forecasted to generate a
five year Levered IRR of approximately 16%. The Company's expected
pro-rata share of the joint venture investment is approximately
$7.5 million and will be funded from
net proceeds received from the $10.0
million Rights Offering. Closing of the Portfolio is
expected to occur during the fourth quarter of 2016.
RIGHTS OFFERING REMINDER
The Company would also like
to remind shareholders of the $10.0
million Rights Offering available to holders of its common
shares as at the close of business on the record date of
November 18 2016 (the "Record
Date"), on the basis of one Right for each common share held.
Each Right will entitle the holder to subscribe for one common
share of the Company (the "Rights Shares") upon payment of
the subscription price of US$0.16 per
Rights Share. The Rights will expire at 5:00
p.m. (Toronto time) on
December 14, 2016 (the "Expiry
Time"), after which time unexercised Rights will be void and of
no value. Shareholders who fully exercise their Rights will be
entitled to subscribe for additional Rights Shares, if available as
a result of unexercised Rights prior to the Expiry Time, subject to
certain limitations as set out in the Company's rights offering
circular (the "Circular").
Further details of the Rights Offering are set out in the rights
offering notice (the "Notice") and Circular which have been
mailed to all shareholders and is also available under the
Company's profile on SEDAR at www.sedar.com. The Notice and an
accompanying rights certificate will be mailed to each shareholder
of the Company resident in Canada
as at the Record Date. Registered shareholders who wish to exercise
their Rights must forward the completed rights certificate,
together with the applicable funds, to the rights agent, TSX Trust
Company, on or before the Expiry Time. Shareholders who own their
common shares through an intermediary, such as a bank, trust
company, securities dealer or broker, will receive materials and
instructions from their intermediary. Shareholders resident in a
jurisdiction outside of Canada
(the "Ineligible Holders") will receive a letter from the
Company describing the procedures to be followed by such Ineligible
Holders if they wish to participate in the Rights Offering.
There are currently 62,933,860 common shares of the Company
outstanding. If all of the Rights issued under the Rights Offering
are validly exercised (or if only a portion of the Rights are
validly exercised and the Stand-by Commitment is fulfilled), the
Rights Offering will raise gross proceeds of approximately
US$10.0 million. The Company intends
to use the net proceeds of the Rights Offering for future
acquisitions (including the aforementioned New York City Joint
Venture Investment) and general working capital purposes.
SHARE CONSOLIDATION
Subsequent to the completion of
the Rights Offering, the Company will undertake a consolidation of
its common shares. Terms of the consolidation will be provided to
shareholders in due course.
ABOUT FIRM CAPITAL AMERICAN REALTY PARTNERS CORP.
Firm
Capital American Realty Partners Corp. focuses on capital
partnership investing in U.S. income producing real estate &
mortgage debt investments.
The Company is focused on the following investment
platforms:
- Income Producing Real Estate Investments: Acquiring
income producing U.S. real estate assets in major cities across
the United States. Acquisitions
are completed solely by the Company or in joint-venture partnership
with local industry expert partners who retain property management;
and
- Mortgage Debt Investments: Real estate debt and equity
lending platform focused on major cities across the United States. Focused on providing all
forms of bridge mortgage loans and joint venture capital.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "intend" and similar expressions. Forward-looking
statements in this news release include, but are not limited to,
statements regarding the Company's single family property
disposition program and Debt Restructuring, which may not be
completed within the estimated time frames specified above or at
all. Failure to complete the steps described above or any delays in
their implementation may have a material adverse affect upon the
business of the Company and its market value. There is no assurance
that the Company will be able to complete the disposition of the
single property disposition portfolio at anticipated values or at
all or that market conditions will support the debt and equity
raises contemplated by the Company. There is no assurance that the
implementation of the steps described above, even if completed as
described above, will increase the market value of the Company's
securities, which is subject to numerous factors beyond the
Company's control.
Forward-looking statements necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse factors affecting the U.S. real estate
market generally or those specific markets in which the Company
holds properties; volatility of real estate prices; inability to
complete the Company's single family property disposition program
or Debt Restructuring in a timely manner; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms;
industry and government regulation; changes in legislation, income
tax and regulatory matters; the ability of the Company to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
Certain financial information presented in this press release
reflect certain non-International Financial Reporting Standards
("IFRS") financial measures, which include NOI, FFO and
AFFO. These measures are commonly used by real estate investment
companies as useful metrics for measuring performance, however,
they do not have standardized meaning prescribed by IFRS and are
not necessarily comparable to similar measures presented by other
real estate investment companies. The Company believes that FFO and
AFFO are important measures of operating performance. The IFRS
measurement most directly comparable to AFFO is net income. These
terms are defined in The Company's Management Discussion and
Analysis for the quarter ended June 30,
2016 filed on www.sedar.com.
Neither the 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.
SOURCE Firm Capital American Realty Partners Corp.