/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES./
TORONTO, June 4, 2018 /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 an
additional interest of approximately 41.5% in Landmark at Coventry
Pointe ("Coventry Pointe"), a 250 suite, garden style, value-add
multi-family property completed in 2002, that is located in
Atlanta, Georgia (the
"Acquisition"). The Acquisition will utilize a portion of the
proceeds from a recently completed refinancing of a property
wholly-owned by the Fund (the "cash proceeds") together with
assumed financing. Upon the acquisition of the additional interest
in Coventry Pointe, the Fund will own an aggregate interest of
approximately 91.5% in Coventry Point.
The remaining interest of approximately 8.5% in Coventry Pointe
will remain under the ownership of Daniel
Drimmer, a director and the Chief Executive Officer of
Starlight U.S. Multi-Family (No. 1) Value-Add GP, Inc., the Fund's
general partner, and the principal of the Fund's asset manager,
Starlight Group Property Holdings Inc. All decision making in
respect of Coventry Pointe, including day-to-day and material
decisions, will be made by the Fund through established governance
practices.
"The purchase of an additional interest in Coventry Pointe
through proceeds from a refinancing demonstrates the Fund's success
in implementing its value-add strategy to enhance asset values and
also highlights the Fund's ability to redeploy capital on an
accelerated basis," commented Evan
Kirsh, the Fund's President.
Pursuant to a purchase and sale agreement effective June 4, 2018, as may be amended from time to time
(the "Purchase Agreement"), the Fund has agreed to purchase
additional interest of approximately 41.5% in Coventry Pointe for
the purchase price of US$15.59
million. 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
June 12, 2018 and is conditional upon
the approval of the TSX Venture Exchange.
In connection with the Acquisition, the purchase price of
US$15.59 million will be satisfied by
the cash proceeds together with financing assumed by the Fund in
the amount of US$11.53 million,
comprised of US$10.01 million from
the initial funding and US$1.51
million of future funding for capital expenditures. The loan
was secured on January 9, 2018 for a
three-year term, with two one-year extensions available, and
comprised a total of US$24.14 million
of initial funding and US$3.65
million of future funding for capital expenditures.
Financing is interest-only and is payable at an annual rate of
one-month LIBOR + 2.00%. The Fund and Mr. Drimmer each continue to
assume responsibility for the liabilities of Coventry Pointe on a
pro-rata ownership basis.
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 currently 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 will continue to be repositioned to a modern
standard with upgraded suite finishes and attractive common areas
and amenity spaces, and the property's curb appeal will be
improved. As of June 1, 2018,
Coventry Pointe's occupancy was 94.0%.
Following completion of the Acquisition, the Fund will continue
to retain The Worthing Companies ("Worthing"), a well-known
development and property management company in the United States, to property manage Coventry
Pointe. Worthing currently manages two 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 interests in
diversified income-producing rental properties in the U.S.
multi-family real estate market.
Securities Law
The acquisition of the additional
interest in Coventry Pointe 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 October 12,
2016.
Forward-Looking Information
This news release
contains statements that may constitute forward-looking statements
within the meaning of Canadian securities laws and which reflect
the Fund's current expectations regarding future events, including
statements concerning the acquisition and financing of Coventry
Pointe and the timing thereof, the repositioning of Coventry
Pointe, the property manager of Coventry Pointe, and the overall
improvement of the financial performance of the Fund resulting from
the acquisition of Coventry Pointe. Particularly, statements
regarding future results, performance, achievements, prospects or
opportunities for Fund or the real estate industry are
forward-looking statements. In some cases, forward-looking
statements can be identified by terms such as "may", "might",
"will", "could", "should", "would", "occur", "expect", "plan",
"anticipate", "believe", "intend", "seek", "aim", "estimate",
"target", "project", "predict", "forecast", "potential",
"continue", "likely", "schedule", or the negative thereof or other
similar expressions concerning matters that are not historical
facts.
The forward-looking statements in this news release involve
risks and uncertainties, including those set forth in the Fund's
materials filed with the Canadian securities regulatory authorities
from time to time at www.sedar.com. Actual results could differ
materially from those projected herein. Those risks and
uncertainties include, among other things, risks related to: the
ability to complete the acquisition and financing of Coventry
Pointe; reliance on the Fund's manager; the expected benefits of
the ownership of Coventry Pointe; the property management of
Coventry Pointe; the experience of the Fund's officers and
directors; substitutes for residential real estate rental suites;
reliance on property management; competition for real property
investments and tenants; and U.S. market factors.
Information contained in forward-looking statements is based
upon certain material assumptions that were applied in developing
such forward-looking statements including management's perceptions
of historical trends, current conditions and expected future
developments, as well as other considerations that are believed to
be appropriate in the circumstances, including the following: the
overall improvement of the financial performance of the Fund's
portfolio resulting from the acquisition and financing of Coventry
Pointe; the ability of the manager of the Fund to manage and
operate the Fund's properties; the ability of the property managers
selected to manage the Fund's properties; the population of
multi-family real estate market participants; assumptions about the
markets in which the Fund operates; the global and North American
economic environment; foreign currency exchange rates; and
governmental regulations or tax laws. Readers are cautioned against
placing undue reliance on forward-looking statements. Except as
required by applicable Canadian securities laws, none of the Fund
or its manager undertake any obligation to update or revise
publicly any forward-looking statements, 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