TORONTO, April 9, 2019 /CNW/ - Starlight U.S. Multi-Family
(No. 1) Value-Add Fund (TSX.V: SUVA.A, SUVA.U) (the "Fund")
announced today that it has entered into an agreement to acquire
the remaining interest of approximately 8.5% (the "Acquisition") in
Landmark at Coventry Pointe ("Coventry Pointe"). Following
completion of the Acquisition, the Fund expects to own a 100%
interest in Coventry Pointe, a 250-unit, garden style, value-add
multi-family property completed in 2002 and located in Atlanta, Georgia. The Acquisition is expected
to be satisfied using a portion of the cash proceeds (the "Cash
Proceeds") from the refinancing described below, together with the
assumption of the vendor's portion of the property level
financing.
The Fund also announced today that concurrently with the
Acquisition, it expects to refinance the mortgage at Coventry
Pointe for net proceeds of approximately US$2.6 million, which is expected to provide the
Fund with a US$3.8 million capital
advance line which can be drawn to fund future value-add
initiatives at Coventry Pointe. The mortgage is expected to bear
interest at LIBOR + 200 bps and provide for interest only
repayments until maturity in January
2021 (the "Refinancing"). As noted above, the proceeds from
the Refinancing are expected to be used to partially fund the
Acquisition.
Pursuant to a purchase and sale agreement effective April 8, 2019, as may be amended from time to
time (the "Purchase Agreement"), the Fund has agreed to purchase
the remaining interest of approximately 8.5% in Coventry Pointe for
the purchase price of approximately US$3.70
million less assumed debt of approximately US$2.43 million, subject to adjustment for net
working capital attributable to the approximate 8.5% interest not
owned before the Acquisition. The Purchase Agreement contains
customary representations and warranties for a transaction of this
nature. Subject to the satisfaction or waiver of conditions
precedent, the purchase of Coventry Pointe is scheduled to close on
or about April 11, 2019 and is
conditional upon the approval of the TSX Venture Exchange.
"The purchase of the remaining interest in
Coventry Pointe from refinancing proceeds demonstrates the Fund's
success in implementing its value-add strategy to enhance asset
values. 100% ownership of the property by the Fund is expected to
be immediately accretive to the Fund," commented Evan Kirsh, the Fund's President.
Coventry Pointe
Coventry Pointe consists of 18, three
and four storey walk-up buildings on a 35.5 acre site comprised of
one- bedroom, two-bedroom and three-bedroom suites. The apartment
suites feature white raised-panel cabinets, white appliances
including dishwashers and microwaves, brushed nickel and chrome
hardware, vinyl flooring, and pantries in the kitchen. Bedrooms and
living areas include carpet flooring, wiring for ceiling fans,
crown molding, oversized walk-in closets, and porches/balconies.
The bathrooms are outfitted with garden tubs, tile surrounds, and
vinyl flooring. Indoor amenities include a spacious clubhouse,
business centre, fitness room, and an enclosed mail centre. Outdoor
amenities include a resort-quality swimming pool, two tennis
courts, a dog park, a large playground with a variety of equipment,
a picnic area, green space with nature paths, and a car wash
station. As part of the Fund's business plan, Coventry Pointe is
being repositioned to a modern standard with upgraded suite
finishes, attractive common areas and amenity spaces, and improved
curb appeal. As of April 1, 2019,
Coventry Pointe's occupancy was 93.6%.
Interest of Related Party
The Acquisition constitutes a "related party transaction" under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). The Fund relied
on the exemptions from the formal valuation and minority approval
requirements set out in subsection 5.5(a) and paragraph 5.7(1)(a)
of MI 61-101, respectively. The Acquisition was approved by the
Fund's board of directors (other than Daniel Drimmer, who declared his interest in the
Acquisition and was recused from voting) in accordance with the
Fund's amended and restated limited partnership agreement dated as
of June 12, 2017.
Property Management
Following completion of the Acquisition, The Worthing Companies
("Worthing") will continue as the property manager at Coventry
Pointe. Worthing currently manages three multi-family communities
for Starlight U.S. Multi-Family in Atlanta, Georgia, including Coventry
Pointe.
The Fund Portfolio
The Fund has interests in and operates a portfolio comprising
1,193 multi-family suites in three value-add, income producing
apartment communities located in Phoenix,
Arizona; Atlanta, Georgia;
and Austin, Texas.
About Starlight U.S. Multi-Family (No. 1) Value-Add
Fund
The Fund is a limited partnership formed under the Limited
Partnerships Act (Ontario) for
the primary purpose of indirectly acquiring, owning and operating a
portfolio of diversified income-producing rental properties in the
U.S. multi-family real estate market.
Forward-Looking Information
Certain statements contained in this press release constitute
forward-looking information within the meaning of Canadian
securities laws. Forward-looking information is provided for the
purposes of assisting the reader in understanding the Fund's
current expectations and plans relating to the successful
completion of the Refinancing and acquisition of Coventry Pointe,
the repositioning of Coventry Pointe, the overall improvement of
the financial performance of the Fund resulting from the
acquisition of Coventry Point, and readers are cautioned that such
statements may not be appropriate for other purposes. Forward
looking information may relate to future results, acquisitions,
performance, achievements, events, prospects or opportunities for
the Fund or the real estate industry and may include statements
regarding the financial position, business strategy, acquisitions,
budgets, litigation, projected costs, capital expenditures,
financial results, occupancy levels, taxes and plans and objectives
of or involving the Fund. 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", "goal", "project", "predict", "forecast", "potential",
"continue", "likely", "schedule", or the negative thereof or other
similar expressions concerning matters that are not historical
facts.
Forward-looking information necessarily involves known and
unknown risks and uncertainties, which 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, assumptions may not be correct and objectives,
strategic goals and priorities may not be achieved. A variety of
factors, many of which are beyond the Fund's control, affect the
operations, performance and results of the Fund and its business,
and could cause actual results, including those relating to the
Refinancing and acquisition of Coventry Pointe, to differ
materially from current expectations of estimated or anticipated
events or results. 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 actual results will be consistent with such
forward-looking statements.
Information contained in forward-looking information 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 and the financial performance of
the Fund resulting from the Refinancing and acquisition of Coventry
Pointe, as well as other considerations that are believed to be
appropriate in the circumstances, including the following: the
ability of the Fund to complete the Refinancing and acquisition of
Coventry Pointe, including approval by the TSX Venture Exchange;
the inventory of multi-family real estate properties; the
availability of properties for acquisition and the price at which
such properties may be acquired; the availability of mortgage
financing and current interest rates; the ability to complete
value-add initiatives; the extent of competition for properties;
the population of multi-family real estate market participants;
assumptions about the markets in which the Fund operates; the
ability of Starlight Investments US AM Group LP, the manager of the
Fund, to manage and operate the properties; the global and North
American economic environment; foreign currency exchange rates; and
governmental regulations or tax laws.
Although the Fund believes the expectations reflected in such
forward-looking information are reasonable and represent the Fund's
projections, expectations and beliefs at this time, such
information involves known and unknown risks and uncertainties
which may cause the Fund's actual performance and results in future
periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such
forward-looking information. Important factors that could cause
actual results to differ materially from the Fund's expectations
include, among other things, the availability of suitable
properties for purchase by the Fund, the availability of mortgage
financing for such properties, and general economic and market
factors, including interest rates, business competition and changes
in government regulations or in tax laws. The reader is cautioned
to consider these and other factors, uncertainties and potential
events carefully and not to put undue reliance on forward-looking
information as there can be no assurance that actual results will
be consistent with such forward-looking information.
The forward-looking information included in this press release
relate only to events or information as of the date on which the
statements are made in this press release. Except as specifically
required by applicable Canadian law, the Fund undertakes no
obligation to update or revise publicly any forward-looking
information, 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.
Neither the 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 Starlight U.S. Multi-Family (No. 1) Value-Add Fund