[SELLING $11.3
MILLION IN NON-CORE PROPERTY DISPOSITIONS]
TORONTO and MONTREAL, March 26,
2018 /CNW/ - Nexus Real Estate Investment Trust (the "REIT")
(TSXV: NXR.UN) is pleased to announce that it has entered into
conditional agreements to acquire three industrial properties for
an aggregate purchase price of approximately $64 million, to be partially satisfied by the
issuance to the vendors of approximately $22.7 million of units at a premium to market
issue price of $2.10 per unit. The
REIT has also entered into conditional agreements for the sale of
two non-core properties in Kelowna,
BC and Yellowknife, NWT for
$11.3 million.
"We are extremely pleased to announce these acquisitions which
we believe will not only generate increases in our AFFO per unit
but should result in significant improvement in our NAV/unit once
the repurposing associated with the Richmond assets is complete. The vendors
realize the attractiveness of becoming long-term Nexus REIT
unitholders as evidenced by a significant portion of the purchase
price being paid in units (at a premium to today's trading price).
With these acquisitions, purchased at a significant discount to
appraised values, Nexus will grow its market capitalization by
approximately $22.7 million without
the need to raise equity in the public markets. We are currently in
negotiations with several additional vendors for similar unit
structured deals and hope that these are the first in a series of
transactions that we will announce in the near future and complete
in the second quarter." stated Kelly
Hanczyk, the REIT's Chief Executive Officer.
The acquisitions remain subject to further due diligence and
customary closing conditions, including TSXV and other necessary
regulatory approvals.
Highlights
- In partial satisfaction of the aggregate purchase price,
approximately $22.7 million of units
will be issued to the vendors at $2.10 per unit, which is a premium to the current
market price of the REIT's units, increasing the REIT's market
capitalization without the need to raise equity in the public
markets.
- The Richmond, British Columbia
properties are two industrial buildings being acquired for a
contractual purchase price of $57.4
million with an attractive 6.5% capitalization rate. There
is a current appraisal (March 2018)
which values the assets at approximately $81
million. The acquisition has repurposing potential in 12-18
months' time that would further enhance the REIT's AFFO per unit
and Net Asset Value per unit.
- The Regina, Saskatchewan asset
is a multi-tenant industrial property which the REIT will acquire
for a purchase price of $6.6 million
and a going in cap rate of 7.5%. The property consists of two
single buildings. The vendor will be taking $2.4 million in units at $2.10 per unit as partial consideration.
- Two non-core properties in Kelowna,
BC and Yellowknife, NWT are
being sold for a total of $11.3
million in two separate transactions; the sale price is
$2.6 million greater than the total
original purchase prices.
- $22.7 million of the
approximately $64 million aggregate
purchase price will be satisfied through the issuance of units,
with the remainder payable in cash generated from approximately
$6.9 million of net proceeds of the
dispositions, and cash from new mortgage financing to be placed on
the properties.
The acquisitions remain subject to further due diligence and
customary closing conditions, including TSXV and other necessary
regulatory approvals.
Property Acquisitions
The Richmond Property
The Richmond property
transaction is the culmination of a relationship building process
between REIT management and the vendor that occurred over a
three-year period. The asset is being purchased for $57.4 million, of which the vendor will be
receiving $20.3 million in Class B LP
units of a subsidiary limited partnership of the REIT, and will
become a significant unitholder. The LP Units are intended to be
economically equivalent to and exchangeable for REIT Units on a
one-for-one basis, and will be accompanied by special voting units
of the REIT that provide their holders with equivalent voting
rights to holders of REIT Units.
The site consists of two buildings:
- Building #1 is a 117,490 sq. ft industrial building that is
currently being repurposed into a multi-tenant kids' sports mall
concept that is generating premium rents in the tight greater
Vancouver market.
- Building #2 is a 60,000 sq. ft industrial property with a
single multinational tenant that manufactures and services power
sources and other equipment in the marine and energy markets.
The REIT intends to enter into a construction management
agreement with the vendor to repurpose building #2 in the near
future, continuing with the sports mall concept and increasing the
total gross leasable area. Upon completion, the REIT expects to see
a significant increase in net operating income from the property,
resulting in an increase in the fair value that the property is
recorded on the REIT's books for, and in net asset value (NAV) per
unit. The Vendor of the Richmond
property transaction has contracted to acquire the Kelowna property from the REIT.
The Regina Property
The Regina Property is a 38,690 sq. ft, multi-tenant industrial
property being acquired for a contractual purchase price of
$6.6 million and a going in cap rate
of 7.5%. The property consists of two buildings anchored by Day
& Ross Shipping. The vendor will be taking $2.4 million in units at $2.10 per unit as partial purchase price
consideration.
About Nexus REIT
Nexus is a growth oriented real estate investment trust focused
on increasing unitholder value through the acquisition, ownership
and management of industrial, office and retail properties located
in primary and secondary markets in North
America. The REIT currently owns a portfolio of 62
properties comprising approximately 3.5 million square feet of
rentable area. The REIT has approximately 88,917,000 units issued
and outstanding. Additionally, there are approximately 5,440,000
Class B LP units of subsidiary limited partnerships of the REIT
issued and outstanding.
Forward Looking Statements
Certain statements contained in this new release constitute
forward-looking statements which reflect the REIT's current
expectations and projections about future results. Often, but not
always, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the REIT to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Actual results and
developments are likely to differ, and may differ materially, from
those expressed or implied by the forward-looking statements
contained in this news release. Such forward-looking statements are
based on a number of assumptions that may prove to be
incorrect.
While the REIT anticipates that subsequent events and
developments may cause its views to change, the REIT specifically
disclaims any obligation to update these forward-looking statements
except as required by applicable law. These forward-looking
statements should not be relied upon as representing the REIT's
views as of any date subsequent to the date of this news release.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. The factors identified above are not
intended to represent a complete list of the factors that could
affect the REIT.
Non-IFRS Measures
Included in this news release are non-IFRS measures such as
Adjusted Funds from Operations (or AFFO) that should not be
construed as an alternative to net income / loss, cash from
operating activities or other measures of financial performance
calculated in accordance with IFRS, and may not be comparable to
similar measures as reported by other issuers. Readers are
encouraged to refer to the REIT's MD&A for further discussion
of the non-IFRS measures presented.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
SOURCE Nexus Real Estate Investment Trust