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CAPREIT Announces Public Unit Financing of $300 Million and Further Expansion of Canada-Wide MHC Portfolio With Purchase of 3,469 Sites

CNW Group - Mon Apr 1, 3:31PM CDT

/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/

(TSX:CAR-UN.TO) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT" or the "REIT") announced today that it has agreed to sell, subject to regulatory approval, 6,125,000 units at a price of $49.00 per unit for aggregate gross proceeds of $300,125,000 (the "Offering") to a syndicate of underwriters led by RBC Capital Markets on a bought-deal basis. CAPREIT has granted the underwriters an over-allotment option (the "Over-Allotment Option"), exercisable in whole or in part up to 30 days after closing of the Offering, to purchase up to an additional 918,750 units to cover over-allotments, if any. CAPREIT also announced the acquisition of a Manufactured Housing Community ("MHC") portfolio for $182 million.

The Offering

CAPREIT will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada, a preliminary short form prospectus relating to the issuance of the units. Closing of the Offering is expected to take place on or about April 23, 2019.

CAPREIT intends to use the net proceeds of the Offering:

i.               to finance the REIT's approximately
                               $116 million equity requirement as
                               part of a $182 million portfolio
                               acquisition of 23 Manufactured
                               Housing Communities totaling 3,469
                               sites across Canada (the "MHC
                               Portfolio Acquisition");




             ii.              to fund the REIT's $74 million equity
                               requirement for approximately $155
                               million of additional Canadian
                               acquisitions of newly constructed
                               apartment properties that are in the
                               advanced stages of negotiations and
                               diligence, and are expected to close
                               in Q2 2019 (the "Q2 Acquisitions");




             iii.             to partially repay the REIT's
                               acquisition and operating facility,
                               which was used to fund the REIT's
                               $66 million acquisition of an
                               unencumbered 1,104 site MHC
                               portfolio that closed on March 14,
                               2019 (the "Closed MHC Acquisition");
                               and




             iv.              the remainder, if any, for future
                               acquisitions, capital expenditures
                               and for general trust purposes.

The MHC Portfolio Acquisition

CAPREIT announced today that it has agreed to acquire a portfolio of 23 MHCs totaling 3,469 sites located in five provinces across Canada. The properties are concentrated in three regions: 47% in Atlantic Canada, 23% in Ontario and 30% in Alberta. Occupancy for the portfolio currently stands at 95.4%.

CAPREIT will pay approximately $182 million for the portfolio funded by the net proceeds of the Offering and the assumption of approximately $66 million in existing mortgages with a weighted average interest rate of 3.4% and a weighted average term of 2.5 years. Closing is expected in May 2019, subject to certain third-party approvals.

The Atlantic Canada portfolio consists of 11 properties totaling 1,619 sites in New Brunswick, Nova Scotia and Prince Edward Island with a current occupancy of 92.8%. The Ontario portfolio consists of 5 communities totaling 800 sites with a current occupancy of 99.1%. The Alberta portfolio includes 7 communities totaling 1,050 sites with a current occupancy of 96.7%. The portfolio being acquired includes the opportunity to expand through the development of new lots.

"With the completion of this important transaction, our total MHC portfolio will grow by 45% to 11,166 sites in 68 communities well-located across Canada, increasing CAPREIT's presence in this attractive industry segment" commented Mark Kenney, President and Chief Executive Officer. "In addition, these acquisitions will further strengthen the diversification of our overall property portfolio and the stability of our cash flows by adding quality properties in markets with continuing strong demand."

Impact of the Offering and the Acquisitions

Upon closing of the MHC Portfolio Acquisition, the Q2 Acquisitions, and the Closed MHC Acquisition (collectively, the "Acquisitions"), the REIT's Debt to Gross Book Value ratio is expected to remain neutral at approximately 38%. The Acquisitions, which are being acquired at a blended cap rate of approximately 4.7%, are also expected to be accretive to the REIT's NFFO per unit in Q2 of 2019, due to the strong yield that CAPREIT expects to generate from the acquired portfolios, as well as due to the low cost of debt and equity financing. After the Acquisitions and the Offering, CAPREIT expects to have approximately $400 million of capacity on its acquisition and operating facility.

CAPREIT is scheduled to release its first quarter 2019 results after the market on May 14, 2019 to be followed by a conference call on May 15, 2019 at 10:00am. CAPREIT anticipates that its Q1 2019 results will be in line with its expectations and current market expectations, after adjusting for some one-time expenses relating to transaction and advisory costs incurred by the REIT as part of its transformational transaction with European Residential REIT ("ERES").

Mark Kenney added, "CAPREIT has a strong pipeline of potential Canadian acquisitions, some of which are newly constructed high quality apartment properties that are in the advanced stages of negotiation and are expected to close in Q2. Additionally, CAPREIT is evaluating several other attractive acquisition opportunities in Canada, and continues to see strong acquisition opportunities through the year. This equity offering will provide CAPREIT with additional financing capacity to capitalize on these exciting opportunities on a leverage-neutral and accretive basis, as well as provide capacity for future acquisition opportunities."

CAPREIT intends to make monthly cash distributions to unitholders of record on each record date, on or about the 15th day of the month following the record date. CAPREIT's current monthly cash distribution is $0.1150 per unit ($1.38 annually). The first cash distribution to which purchasers of the units under this Offering will be entitled to participate will be for the month of April, with a record date of April 30, 2019 and a payment date of May 15, 2019.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold in the United States absent registration or pursuant to applicable exemption from registration.

ABOUT CAPREITAs one of Canada's largest residential landlords, CAPREIT is a growth-oriented investment trust owning interests in 53,143 residential units, comprised of 45,446 residential suites and 45 manufactured home communities comprising 7,697 land lease sites, located in and near major urban centres across Canada and the Netherlands. Since its Initial Public Offering in May 1997, CAPREIT has grown monthly cash distributions per Unit by 93%. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.caprent.com or www.capreit.net and our public disclosure, which can be found under our profile at www.sedar.com.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTSAll statements in this press release that do not relate to historical facts constitute forward-looking statements. These statements represent CAPREIT's intentions, plans, expectations and beliefs and are subject to certain risks and uncertainties, including that the closing of the MHC Acquisition does not occur, that CAPREIT does not reach agreement in respect to the Q2 Acquisitions or those acquisitions if agreed do not close, the projected net operating income on which the blended cap rate is based on is not achieved, that could result in actual results differing materially from these forward-looking statements. These risks and uncertainties are more fully described in regulatory filings that can be obtained on SEDAR at www.sedar.com.

SOURCE Canadian Apartment Properties Real Estate Investment Trust (CAPREIT)

View original content: http://www.newswire.ca/en/releases/archive/April2019/01/c8801.html

SOURCE: Canadian Apartment Properties Real Estate Investment Trust (CAPREIT)

CAPREIT, Mr. Michael Stein, Chairman, (416) 861-5788; CAPREIT, Mr. Mark Kenney,
President & CEO, (416) 861-9404; CAPREIT, Mr. Scott Cryer, Chief Financial Officer,
(416) 861-5771

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