TORONTO, June 30, 2020 (GLOBE NEWSWIRE) — Canadian Apartment Properties Real Estate Investment Trust (âCAPREITâ) (TSX:CAR.UN) announced today that it has completed the previously-announced buyout of eight operating leases for properties in Toronto. The aggregate purchase price for the eight operating lease buyouts was approximately $123 million.
The operating lease buyouts were financed, in part, by a draw on CAPREITâs Acquisition and Operating Facility. CAPREIT expects to replace the draw with CMHC-insured mortgage financing in the near-term. In addition, certain vendors of the operating lease buyouts completed today elected to receive, in aggregate, approximately 633,000 in CAPREIT Limited Partnership Class B Units (âClass B LP Unitsâ) at an agreed upon price of $48.00, with an aggregate value of $30.4 million. The Class B LP Units are exchangeable into CAPREIT trust units on a 1-for-1 basis.
CAPREIT previously closed the early buyout of three other operating leases in Toronto for approximately $31 million, and has now successfully converted eleven of its fifteen operating lease properties to fee simple ownership. The total eleven operating lease buyouts are expected to result in a net fair value gain of over $150 million, after deducting the cost of prepaying the operating lease buyouts, of which $130 million has been previously recognized. The operating lease buyouts are expected to provide CAPREIT with significant additional financing capacity due to the increase in fair market value of these properties, the current low leverage on these properties, as well as the elimination of lending restrictions applicable to the operating lease structure. CAPREIT expects that the fee simple ownership of the eleven properties could have incremental CMHC-insured mortgage capacity of over $500 million over the amount of mortgages currently outstanding on the properties.
CAPREIT will continue to evaluate prepaying the buyouts on its remaining four operating leases which have contractual buyout periods commencing between 2024 and 2028.
âWe are very pleased to complete these further eight operating lease buyouts, adding material incremental financial capacity, a meaningful increase in our Net Asset Value, and unlocking the potential for future accretive development opportunities,â commented Mark Kenney, President and CEO.
CAPREIT is one of Canadaâs largest real estate investment trusts. CAPREIT owns approximately 56,800 suites and sites, including townhomes and manufactured housing sites, in Canada and, indirectly through its investment in ERES, approximately 5,600 suites in the Netherlands. CAPREIT manages approximately 60,900 of its own suites and sites in Canada and the Netherlands, and additionally, approximately 3,700 suites in Ireland. 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 at www.sedar.com.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
All 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 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.
For more information, please contact:
Mr. Michael Stein
Mr. Mark Kenney
President & CEO
Mr. Scott Cryer
Chief Financial Officer