Boulevard Industrial Real Estate Investment Trust

TSX VENTURE : BVD.UN


March 28, 2014 15:50 ET

Boulevard Industrial Real Estate Investment Trust Completes Qualifying Transaction and Concurrent $5,000,000 Prospectus Offering

TORONTO, ONTARIO--(Marketwired - March 28, 2014) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Boulevard Industrial Real Estate Investment Trust (the "REIT") (TSX VENTURE:BVD.UN) (formerly HHT.P) is pleased to announce the completion of its Qualifying Transaction (as described in Policy 2.4 of the TSX Venture Exchange ("TSXV") Corporate Finance Manual), previously announced in the news releases of HHT Investments Inc. (the "Corporation") on December 18, 2013, February 10, 2014 and February 21, 2014, by way of a plan of arrangement under Section 182 of the Business Corporations Act (Ontario) (the "Arrangement"). The Arrangement was approved pursuant to a final order issued by the Ontario Superior Court of Justice (Commercial List) on March 11, 2014, but remains subject to receipt of final approval of the TSXV through the issuance of the TSXV's final exchange bulletin regarding the Qualifying Transaction (the "Final Exchange Bulletin"), which is expected in the next few days.

Acquisition of the Properties

As part of its Qualifying Transaction, the REIT acquired the lands and buildings located at 1070 St. George Blvd., 1180 St. George Blvd. and 205 Commerce Street in Moncton, New Brunswick (collectively, the "Properties") from an arm's length vendor (the "Vendor"), as more fully described in the Corporation's management information circular dated February 5, 2014. A copy of the acquisition agreement entered into in connection with the acquisition of the Properties is available on the REIT's profile at www.sedar.com. The acquisition of the Properties and the Arrangement constitute the Corporation's Qualifying Transaction as defined in the CPC Policy (collectively, the "Transaction").

The REIT purchased the Properties, indirectly through a wholly-owned limited partnership, for a purchase price of $15,000,000 (the "Purchase Price"), subject to customary adjustments. The Purchase Price was satisfied by way of new and assumed mortgage financing of approximately $9.6M, cash on hand and the $5M proceeds from a prospectus offering by the REIT in all provinces of Canada, other than Quebec (the "Prospectus Offering"), completed in connection with the Transaction.

The Purchase Price equates to a value of approximately $63.40 per square foot. Net operating income for the first year is expected to be approximately $1.36 million, resulting in a capitalization rate of approximately 9.06%. The Properties, which are well located with prominent locations in established business parks, are comprised of over 236,000 square feet of gross leaseable area in modern and well maintained facilities that have excellent shipping and ceiling heights. In addition, the Properties located at 1070 St. George Blvd. and 1180 St. George Blvd. permit future expansion by up to 115,000 square feet. The Vendor has provided a rental guarantee in respect of one lease and has leased back approximately 13,000 square feet of space at market rates for up to three years. Including the head lease, the Properties are 97% leased.

Plan of Arrangement

Pursuant to the Arrangement, among other things: (i) the issued and outstanding common shares ("Shares") of the Corporation were exchanged for units ("Units") of the REIT on a one (1) for one (1) basis (the "Exchange Ratio"); and (ii) the issued and outstanding options and warrants to purchase Shares of the Corporation were exchanged for options and warrants of the REIT to purchase Units based upon the Exchange Ratio, on terms and conditions identical to the terms and conditions of the original options and warrants. No Shareholders elected to receive class B limited partnership units (the "Class B LP Units") of Boulevard Industrial Limited Partnership as consideration for their Shares which were exchangeable on a one-for-one basis for Units pursuant to the exchange agreement. Copies of the arrangement agreement entered into in connection with the Arrangement and the exchange agreement are available on the REIT's profile at www.sedar.com.

Shareholders of the Corporation approved all matters voted on at the special meeting of shareholders held on March 7, 2014, including unanimous disinterested shareholder approval of the Unitholders' rights plan, Long Term Incentive Plan, Unit Option Plan, Asset Management Agreement, and the acquisition fee being payable upon the completion of the acquisition of the Properties.

The Units will trade under the symbol "BVD.UN" when trading commences, following the issuance by the TSXV of the Final Exchange Bulleting regarding the Qualifying Transaction.

Prospectus Offering

Immediately following the closing of the Arrangement, the REIT completed the Prospectus Offering. Pursuant to the Prospectus Offering, the REIT issued a total of 8,823,530 Units at an offering price of $0.17 per Unit for gross proceeds of $1,500,000 and 3,500 convertible debentures (the "Convertible Debentures") at $1,000 principal amount per Convertible Debenture for gross proceeds of $3,500,000, for total gross proceeds of $5,000,000 in the aggregate. Each Convertible Debenture in the principal amount of $1,000 is an unsecured subordinated debenture of the REIT, bearing interest at 7% per annum, payable semi-annually in arrears, maturing on January 31, 2019, convertible by the holder thereof into 4,000 Units, representing a conversion price of $0.25 per Unit, pursuant to a trust indenture entered into between the REIT and Equity Financial Trust Company and more particularly described in the prospectus filed in connection with the Prospectus Offering.

Laurentian Bank Securities Inc. and Paradigm Securities Inc. co-led a syndicate of agents that included Burgeonvest Bick Securities Limited (collectively, the "Agents"). In connection with the Prospectus Offering, the REIT granted to the Agents non-transferable warrants (the "Compensation Warrants") to purchase up to an aggregate of 1,200,000 Units at a price of $0.17 per Unit, exercisable for a period of two (2) years from the date of issuance. In addition, the REIT paid the Agent a cash commission equal to 7.0% of the gross proceeds from the sale of the Units and Convertible Debentures under the Prospectus Offering.

Securities Ownership

Following the completion of the Arrangement and the Prospectus Offering, there are 38,824,030 Units and no Class B LP Units issued and outstanding.

Pursuant to the requirements of the TSXV, 200,000 Units will be subject to a value security escrow whereby 10% of the escrowed securities will become eligible for release from escrow on the issuance of the Final Exchange Bulletin (the "Initial Release"). The REIT expects to be listed on the TSXV as a Tier 2 issuer upon receipt of the Final Exchange Bulletin and accordingly, an additional 15% of the escrowed Units will be released on the dates that are 6 months, 12 months, 18 months, 24 months, 30 months, and 36 months following the Initial Release.

Trustees and Officers

Following the completion of the Arrangement, the following individuals are the trustees and officers of the REIT:

Board of Trustees

Scott Hayes
Mark Hogan
R.S. (Rob) Doman
Andrew Lepper
Christopher Murray

Officers

Scott Hayes, Chief Executive Officer
Scott Franklin, Chief Financial Officer
Mark Hogan, President and Corporate Secretary

About Boulevard REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT was established to grow and manage a portfolio of light industrial properties in primary and secondary markets in Canada. Its objectives are to generate stable cash distributions, expand the asset base of the REIT and increase distributable cash flow and enhance the value of the REIT's assets to maximize long-term unit value.

Disclaimer for Forward-Looking Information

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. Particularly, statements regarding future results, performance, achievements and prospects or opportunities for the REIT or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the following: the expected commencement of trading of Units of the REIT on the TSXV and the use of proceeds of the Concurrent Prospectus Offering.

Although the forward-looking statements contained in this press release are based upon assumptions that management of the REIT believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the REIT's control, which may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

The forward-looking statements made in this press release relate only to events or information as of the date hereof. Except as required by applicable law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

The TSXV has in no way passed upon the merits of the Qualifying Transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Copies of all constating and material documents of the REIT are available for review at www.sedar.com.

Contact Information

  • Boulevard Industrial Real Estate Investment Trust
    Scott Hayes
    Chief Executive Officer
    (647) 795-8629
    shayes@bvdreit.com