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Press release from CNW Group

Scott's REIT comments on sale of Priszm outlets to Soul Restaurants

Wednesday, June 01, 2011

Scott's REIT comments on sale of Priszm outlets to Soul Restaurants18:56 EDT Wednesday, June 01, 2011Leases may provide for Scott's REIT to receive the majority of proceedsThe REIT is soliciting new tenants for high-traffic locations in Ontario and British ColumbiaTORONTO, June 1, 2011 /CNW/ - Scott's Real Estate Investment Trust (TSX: SRQ.UN) ("Scott's REIT" or "REIT") responded today to Priszm Income Fund's ("Priszm") announcement that it had closed the sale of 204 restaurants located in Ontario, B.C. and Quebec to Soul Restaurants Canada Inc. ("Soul Restaurants"), affecting 63 properties that the REIT owns. "This sale is good for our business and for our Unitholders as it provides us with many opportunities to diversify our tenant base even further," said Evelyn Sutherland, Chief Financial Officer at Scott's REIT. "We are pleased that the transaction has gone through and look forward to entering into a formal consent agreement with Priszm and Soul Restaurants for the remaining properties."Scott's REIT has also been advised by its legal counsel that it may have a claim on the proceeds with respect to the 63 properties. On May 30, 2011, the court appointed monitor for Priszm agreed to set aside $12.2 million until this claim by Scott's REIT could be heard in the courts.Officially 32 stores have been assigned to Soul Restaurants Canada Inc. as a result of the nature of their lease. Soul Restaurants is required to pay the rent on these properties.The remaining leases still require Scott's REIT's consent to be assigned to Soul Restaurants. Although Scott's REIT provided Priszm with the consent agreement to assign the leases on March 30, 2011, it has not yet been executed by Priszm and Soul Restaurants. Therefore, Soul Restaurants Canada Inc. will operate these leases, while Priszm will continue to pay the rent until the consent agreement is fully executed.Priszm store closuresOn May 30, 2011, Priszm announced that it had closed 30 under-performing stores in Ontario and B.C, 16 of which belong to Scott's REIT. Priszm continues to pay rent on the REIT-owned sites pursuant to its lease obligations with Scott's REIT.The REIT anticipates that tenant demand for the sites will be strong and is currently soliciting possible new tenants for these locations as a proactive measure in the event that Priszm is unable to remarket the sites."The reality is that these sites are in two of Canada's most highly sought-after markets," said Sutherland. "Most are located at the corners of main intersections and have drive thru functionality, which can easily be reformatted for any quick service operation."Priszm intends to disclaim six leasesPriszm gave notice to Scott's REIT that it will disclaim six of its leases on June 9, 2011. Four of the sites have already been subleased for the same rent. The REIT is currently remarketing the two remaining sites and anticipates that it will either re-lease the sites or potentially dispose of the properties.About Scott's Real Estate Investment Trust Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property owner with 220 properties in seven provinces across Canada. Scott's REIT's properties are well located and geographically diverse across Canada with the majority of all properties containing long-term quadruple net leases. The REIT has approximately 75.6 per cent interest in Scott's Real Estate LP. To find out more about Scott's Real Estate Investment Trust (TSX: SRQ.UN), visit our website at http://www.scottsreit.com.Forward-Looking StatementsThis document contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding future growth opportunities and potential and expected cash distributions or cash distribution levels. In particular, information regarding the REIT's monthly cash distributions and information relating to the impact of the REIT's recent acquisitions on annual revenues and interest expense is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, occupancy rates, property expense and capital expenditures. While the REIT considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what is currently expected. Such factors include risks relating to the REIT's reliance on Priszm, the REIT's largest tenant, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in the REIT's Annual Information Form for the year ended December 31, 2009. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Other than as required by applicable Canadian securities law, the REIT does not undertake to update this information at any particular time. Additional information identifying risks and uncertainties is contained in Scott's REIT filings with the Canadian securities regulators, available at www.sedar.com.For further information: For investor information, please contact: Trish Moran 416-624-5133 trish.moran@scottsreit.com For media information, please contact: Trevor Boudreau 604-564-8209 trevor.boudreau@scottsreit.com