Northview Apartment REIT Announces $132 Million Strategic Acquisition in Ontario, Further Diversifying Portfolio
CALGARY, Alberta, Nov. 26, 2018 (GLOBE NEWSWIRE) — Northview Apartment Real Estate Investment Trust (“Northview”) (NVU.UN – TSX) announced today that it has agreed to acquire a portfolio of six apartment properties located in Ontario comprising a total of 644 units (the “Acquisition Properties” or the “Acquisitions”). Five of the Acquisition Properties are being acquired from independent vendors and one of the Acquisition Properties is being acquired from affiliates of Starlight Group Property Holdings Inc. (“Starlight”). The aggregate purchase price of the Acquisition Properties is $131.9 million (excluding closing costs), representing a weighted average capitalization rate of 4.2%.
- Acquisition of 644 units in Ontario including 418 units in London, 145 units in Toronto, and 81 units in Guelph
- Located in Ontario with strong market demand with average overall occupancy rate of 96% on the Acquisition Properties
- Equity issuance of $35.0 million Class B LP units at $27.00 per unit to one of the independent vendors and Starlight, a premium to Northview’s current trading price
- Opportunity for value creation with approximately 500 units suitable for Northview’s proven high-end renovation program
“These transactions provide Northview with opportunities to generate significant income and net asset value growth driven by our high-end renovation program at five of the properties,” said Todd Cook, President and CEO of Northview. “These acquisitions are consistent with Northview’s strategy of expanding its high-quality portfolio in strong and growing markets, further expands our presence in Ontario and increases future potential units eligible for our successful high-end renovation program.”
Mr. Cook continued, “These acquisitions complete the deployment of the equity raised in June as well as the redeployment of the proceeds from our non-core asset sale in the third quarter. We have completed $535 million of acquisitions over the last twelve months, of which a significant portion were through our strategic relationship with Starlight. We have been successful in generating value from our recent transactions, with over $17 million in net asset value created on last December’s transactions.”
Mr. Cook concluded, “We expect the pace of acquisition activity to moderate in 2019. This will allow us to focus on both delivering on the growth potential from our recently completed acquisitions and on our development program which will further enhance the quality of our portfolio. However, we will remain opportunistic should the right assets become available at the right price.”
SUMMARY OF ACQUISITION PROPERTIES
|2 Hill Heights Road||Toronto||1954||30|
|143 Stephen Drive||Toronto||1954||31|
|245 Lake Shore Drive||Toronto||1966||52|
|317 Park Lawn Road||Toronto||1953||32|
|171 Kortright Road West (1)||Guelph||2018||81|
|520-560 Mornington Avenue||London||1962-1969||418|
(1) Properties acquired from Starlight.
The aggregate purchase price for the Acquisitions will be funded by:
- Cash consideration of $16.6 million funded from existing credit facilities;
- The issuance of $35.0 million in Class B LP Units to one of the independent vendors and Starlight, at a price of $27.00 per unit; and
- New and assumed mortgage debt of approximately $80.3 million.
Closing costs for the Acquisitions will be funded from existing credit facilities.
The new and assumed mortgage debt is expected to have an aggregate weighted average interest rate of approximately 3.2% per annum and a weighted average term to maturity of approximately nine years.
The Acquisitions are subject to customary closing conditions, including but not limited to, TSX approval, and are expected to close in stages by December 31, 2018. Although Northview has waived its due diligence conditions in relation to the Acquisitions, no assurance can be given that any or all the Acquisitions will close as expected or at all.
RELATED PARTY TRANSACTION
The Acquisition Properties included the acquisition of one property from Starlight for total consideration of $28.2 million (excluding closing costs). Consideration will include the issuance of $1.0 million in Class B LP Units at a price of $27.00 per unit. In conjunction with the Acquisitions, a $1.0 million fee is payable to Starlight from Northview on the properties acquired from independent vendors. The Acquisitions and related issuance of Class B LP Units were unanimously approved by the independent trustees of Northview.
CAUTIONARY AND FORWARD-LOOKING STATEMENTS
This media release contains forward-looking statements including, but not limited to, statements relating to the Acquisitions, the closing date of the Acquisitions, the closing conditions (including TSX approval), the impact of the Acquisitions on Northview, including its financial position, obtaining additional mortgage financing and the use of the proceeds therefrom, the use of proceeds from the future draw-downs of our credit facilities, and execution of our strategic priorities, including VCIs. These statements are not guarantees of future events, performance or results and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved.
Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management’s good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally, which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to, risks related to: the failure to complete the Acquisitions; real property ownership; availability of cash flow and mortgage financing; demand for rental accommodation and commercial space; natural resource prices; development and construction risks; reliance on key personnel; concentration of tenants; capital requirements; interest rate risk; credit risk; liquidity risk; general uninsured losses; government regulation; environmental risk; utility costs; potential conflicts of interest; integration of acquired properties; income tax related risk factors; and other risk factors more particularly described in Northview’s most recent Annual Information Form and MD&A, both of which are available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to Northview or that Northview currently believes to be less significant may also adversely affect Northview.
Readers are cautioned that the above list of factors is not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by Northview will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, Northview. Readers, therefore, should not place undue importance on forward-looking information. Further, these forward-looking statements speak only as of the date of this media release. Northview disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
Northview is one of Canada’s largest publicly traded multi-family REITs with a portfolio of approximately 26,000 quality residential suites and 1.2 million square feet of commercial space in more than 60 markets across eight provinces and two territories. Northview’s well-diversified portfolio includes markets characterized by expanding populations and growing economies, which provides Northview the means to deliver stable and growing profitability and distributions to Unitholders of Northview over time. Northview currently trades on the TSX under the ticker symbol: NVU.UN. Additional information concerning Northview is available at www.sedar.com or www.northviewreit.com.
Northview Apartment Real Estate Investment Trust
Mr. Todd Cook
President and Chief Executive Officer
Mr. Travis Beatty
Chief Financial Officer
Mr. Leslie Veiner
Chief Operating Officer