– Investment Further Diversifies the REIT’s Portfolio with Value-Add Exposure within U.S. Multifamily Sector –
/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR DISSEMINATION IN THE UNITED STATES/
TORONTO / DALLAS, May 25, 2016 /CNW/ – Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) (the “REIT”) today announced that it has entered into an agreement to invest US$50 million in Milestone Real Estate Investors IV, LP (the “Fund”), a private discretionary equity investment fund focused on value-add multifamily investments that is sponsored by an affiliate of the REIT’s external asset manager, The Milestone Group, LLC.
“This transaction provides the REIT with the opportunity to further expand and diversify its asset base in the value-add multifamily asset class, which is complementary to the REIT’s current investment strategy,” said Graham Senst, chair of the REIT’s investment committee. “Returns from this investment will be enhanced by the REIT’s right to provide property management services to the Fund and the REIT’s exemption from all Fund-related fees.”
Investment Summary
- The Fund’s investment strategy is similar to previous investment funds managed by the REIT’s external asset manager and is intended to provide a value-add component to, and further diversify, the REIT’s current investment strategy.
- The REIT has committed US$50 million to the Fund. The REIT expects to fund a majority of its commitment over a period of approximately 36 – 48 months using a combination of the REIT’s available cash and revolving line of credit. The REIT’s capital commitment is not expected to exceed 20% of the total aggregate capital commitments to the Fund.
- The REIT will not pay or incur any asset management fees to the Fund or its general partner. The REIT will not pay or incur any carried interest or “promote” fees in connection with the investment.
- Milestone Management, the REIT’s property management subsidiary, will provide property management services to the Fund’s properties on market terms.
- The REIT’s existing non-competition agreement will continue to provide the REIT with first priority on acquisition opportunities that are identified by the REIT’s asset manager and are suitable for the REIT with regard to the REIT’s investment guidelines, operating policies and other relevant investment considerations.
- The REIT expects its investment in the Fund to further enhance its pipeline of potential acquisition opportunities after such assets have been improved and stabilized, though the REIT will not have a formal first priority right on such asset dispositions.
Since the general partner of the Fund is an affiliate of the REIT’s external asset manager, the investment constitutes a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Accordingly, the investment was reviewed and considered by the independent members of the REIT’s board of trustees and investment committee. The independent chair of the REIT’s investment committee took a lead role in the examination, review and negotiation of the investment and related documentation on behalf of the REIT. The investment was not subject to the formal valuation and minority approval requirements of MI 61-101 as the fair market value of the transaction was not more than 25% of the REIT’s market capitalization.
Due to its contractual obligation of confidentiality, as well as certain United States securities laws, the REIT is not able to provide further details regarding the Fund at this time but expects to do so in the future in the ordinary course of business.
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT’s portfolio consists of 72 multifamily garden-style residential properties, comprising 22,546 apartment units that are located in 14 major metropolitan markets throughout the Southeast and Southwest United States. The REIT is the largest real estate investment trust listed on the TSX focused solely on the United States multifamily sector. The REIT operates its portfolio through its internal property management company, Milestone Management, LLC, which has approximately 1,500 employees and manages more than 50,000 apartment units across the United States. Based in Dallas, TX, TMG Partners, L.P., an affiliate of The Milestone Group, LLC, is the external asset manager of the REIT. For more information, please visit www.milestonereit.com.
About The Milestone Group, LLC
The Milestone Group is a privately-held real estate investment management company with expertise and presence in major metropolitan markets throughout the United States. The firm has corporate offices in Dallas, Texas and New York, New York with regional acquisition and management offices across the United States. Founded in 2004, The Milestone Group has a strong track record of investing in the U.S. multifamily sector, including completion of approximately US$10 billion in multifamily transactions. For more information, please visit www.milestonegp.com.
Legal Disclaimers
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the REIT and the environment in which it operates. Forward-looking statements are identified by words such as “believe”, “anticipate”, “expect”, “intend”, “plan”, “will”, “may” and other similar expressions. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to the size of the Fund, the timing of funding for the REIT’s commitment and the sources relating thereto, future returns, future property management arrangements and the impact of the investment on the REIT’s acquisition pipeline. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the risk that the Fund may not achieve be able to source, acquire and sell appropriate properties and thus achieve its objectives, as well as general factors affecting the U.S. multifamily industry as discussed under the heading “Risk Factors” in the REIT’s annual information form available at www.sedar.com. The forward-looking statements in this news release are based on certain assumptions. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
This news release is provided for informational purposes only and is intended to convey certain facts regarding a REIT investment to current and prospective investors in the REIT only. It is not, and is not intended to be, an offer or a solicitation to make an offer to purchase interests in the Fund.
SOURCE Milestone Apartments REIT
