Canadian Apartment Properties Real Estate Investment Trust
TSX : CAR.UN

Canadian Apartment Properties Real Estate Investment Trust

April 26, 2012 07:44 ET

Canadian Apartment Properties Real Estate Investment Trust Announces $455MM Acquisition of 3,562 Apartment Suites in 14 Properties and Public Unit Financing of $156 MM

TORONTO, CANADA--(Marketwire - April 26, 2012) -

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

Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT")(TSX:CAR.UN) of Toronto, Ontario announced today that it has entered into an agreement to acquire 3,562 apartment suites in 14 properties in the Greater Toronto Area, Southwestern Ontario, Montreal, Quebec City and Halifax (the "Acquisition Properties"), and to sell approximately 6,850,000 units (the "Public Unit Financing" or the "Offering") at a price of $22.75 per unit for gross proceeds of approximately $155.8 million to partially finance the purchase of the Acquisition Properties.

The purchase price for the Acquisition Properties (including transaction costs) of approximately $455.0 million is expected to be satisfied by a combination of:

  • Approximately $148.7 million from the net proceeds of the Public Unit Financing;
  • the assumption of approximately $183.7 million aggregate principal amount of mortgage debt on the Acquisition Properties, which will have an effective weighted average stated interest rate of approximately 3.99% per annum and an approximate weighted average term to maturity of 2.8 years; and
  • approximately $122.6 million from CAPREIT's Acquisition and Operating Facility.

THE ACQUISITION PROPERTIES

The following table highlights information about the Acquisition Properties:

Total Asset Demographic
Property Suites Type Sector
Greater Toronto Area
5 & 15 Tangreen Court, Toronto 428 High-Rise Luxury
2020 Sheppard Avenue West, Toronto 204 High-Rise Affordable
2180 & 2190 Weston Road, Toronto 138 High-Rise Affordable
2265 Victoria Park Avenue, Toronto 71 Mid-Rise Mid-tier
270 Sheldon Avenue, Toronto 71 Mid-Rise Luxury
2283 Eglinton Avenue East, Scarborough 101 High-Rise Mid-tier
2465 Hurontario Street, Mississauga 137 High-Rise Mid-tier
3122 Hurontario Street, Mississauga 89 High-Rise Mid-tier
Total Greater Toronto Area 1,239
Southwestern Ontario
200 - 450 Sandringham Crescent & 501 Wilkins Street, London 642 High-Rise Mid-tier
265 Lawrence Avenue, Kitchener 104 Low-Rise Mid-tier
Total Southwestern Ontario 746
Montreal Region
1620 Victoria Avenue, Montreal 73 High-Rise Mid-tier
335 Deguire Boulevard, St. Laurent 180 High-Rise Mid-tier
Total Montreal Region 253
Quebec City
Samuel Holland (7 buildings), Quebec City 819 High-Rise Luxury
Total Quebec City 819
Halifax
2309 - 2334 Brunswick Street & 5214 Gerrish Street, Halifax 505 Low & High-Rise Mid-tier
Total Halifax 505
Total 3,562

The Acquisition Properties will increase CAPREIT's portfolio from 30,878 suites and sites to 34,440 suites and sites. Including the Acquisition Properties, CAPREIT's suite and site geographic distribution will become: Greater Toronto Area (16,365), Other Ontario (5,919), Quebec (6,184), British Columbia (2,763), Nova Scotia (1,588), Alberta (1,380) and Saskatchewan (241) with the majority being luxury or mid-tier properties.

"We are pleased to be adding these high quality properties to CAPREIT's portfolio. We believe we are acquiring the most suitable properties from the vendor's portfolio, buildings that fit very well with our geographic, demographic and quality criteria. We are confident the new properties will be immediately accretive and that cash flow will grow as we capture available operating synergies and economies of scale, as well as the proven benefits of our hands-on property management programs," commented Thomas Schwartz, President and CEO.

CAPREIT, through its wholly-owned subsidiary, CAPREIT Limited Partnership, has entered into an agreement with Starlight Investments Ltd. ("Starlight") to acquire the Acquisition Properties upon closing of the announced transaction between Starlight and TransGlobe Apartment Real Estate Investment Trust (the "TransGlobe Transaction"). CAPREIT has completed its physical and financial due diligence in respect of the Acquisition Properties and the acquisition is subject to certain conditions relating to the TransGlobe Transaction, including TransGlobe Apartment Real Estate Investment Trust unitholder approval. Closing is expected to be on or about June 29, 2012.

THE PUBLIC UNIT FINANCING

CAPREIT has agreed to sell, subject to regulatory approval, 6,850,000 units for $22.75 per unit for aggregate gross proceeds of $155,837,500 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, to purchase up to an additional 900,000 units to cover over-allotments, if any.

The net proceeds from this Offering will initially be partially used to repay the approximately $66.1 million currently outstanding on CAPREIT's Acquisition and Operating Facility (adjusted for publicly disclosed subsequent events). Upon closing of the Acquisition Properties, the remainder of the net proceeds of this Offering will be applied toward the purchase price of the Acquisition Properties. In the event that the Acquisition Properties are not acquired, the remaining net proceeds of this Offering will be used to fund future acquisitions, repay expiring mortgages or for general trust purposes.

CAPREIT estimates that upon completion of this Offering and closing of the purchase of the Acquisition Properties, its Total Debt to Gross Book Value ratio will be approximately 52% and CAPREIT will have approximately $81.0 million undrawn on its Acquisition and Operating Facility (adjusted for publicly disclosed subsequent events), the combination of which will provide significant capacity for future growth.

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 May 17, 2012.

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 $0.09 per unit. The first cash distribution to which purchasers of the units under this Offering will be entitled to participate will be for the month of May, with a record date of May 30, 2012 and a payment date of June 15, 2012.

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 CAPREIT

As one of Canada's largest residential landlords, CAPREIT is a growth-oriented investment trust owning interests in 30,878 residential units, comprised of 29,545 residential suites and two manufactured home communities comprising 1,333 land lease sites located in and near major urban centres across Canada. Since its Initial Public Offering in May 1997, CAPREIT has grown monthly cash distributions per Unit by 51%. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net and our public disclosure, which can be found under our profile 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.

Contact Information

  • Canadian Apartment Properties Real Estate Investment Trust
    Mr. Thomas Schwartz
    President & CEO
    (416) 861-9404

    Canadian Apartment Properties Real Estate Investment Trust
    Mr. Michael Stein
    Chairman
    (416) 861-5788

    Canadian Apartment Properties Real Estate Investment Trust
    Mr. Scott Cryer
    Chief Financial Officer
    (416) 861-5771