CHC Realty Capital Corp.
TSX VENTURE : CHC

August 08, 2014 12:11 ET

CHC Realty Capital Corp. Announces Additional Details Regarding Property Acquisitions

TORONTO, ONTARIO--(Marketwired - Aug. 8, 2014) - CHC Realty Capital Corp. ("CHC" or the "Company") (TSX VENTURE:CHC) wishes to provide additional details regarding its previously announced proposed acquisitions of three student housing properties located in Windsor, Ontario and Trois-Rivières, Québec. The acquisitions remain subject to certain conditions, including the completion of due diligence and financing arrangements to the satisfaction of the Company, and the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange (the "TSXV").

All of the acquisitions are viewed as repositioning opportunities by CHC and, subject to its ongoing review, CHC believes that all of the properties provide an opportunity for revenue and net operating income growth through improved occupancy, introduction of value-added leasing and operational revenue streams and increased management efficiencies.

The first acquisition, a property located in Windsor, Ontario approximately 0.75 km from the University of Windsor and having 117 beds in 87 student apartments in two buildings, has a purchase price of $5.9 million, subject to adjustments and excluding acquisition costs. CHC has paid the vendor a $100,000 initial refundable deposit in respect of the acquisition, which will become non-refundable (subject to certain exceptions) upon the removal of CHC's due diligence condition, and at which time CHC will pay the vendor a second $200,000 non-refundable (subject to certain exceptions) deposit. Both buildings are eight storey apartment buildings constructed in the 1970's which have undergone renovations within roughly the last half decade. At present, the property is approximately 95% occupied with average monthly rents of approximately $556 per bed and generates annual effective gross income of approximately $746,000. CHC expects year one net operating income of approximately $370,000, resulting in a going-in capitalization rate of approximately 6.24%.

The second acquisition, a property located in Windsor, Ontario approximately 0.8 km from the University of Windsor and having 51 beds in 32 student apartments in one building, has a purchase price of $1.6 million, subject to adjustments and excluding acquisition costs. CHC has paid the vendor a $50,000 initial refundable deposit in respect of the acquisition, which will become non-refundable (subject to certain exceptions) upon the removal of CHC's due diligence condition, and at which time CHC will pay the vendor a second $75,000 non-refundable (subject to certain exceptions) deposit. The building is a five storey apartment building constructed in the 1970's. At present, the property is approximately 100% occupied with average monthly rents of approximately $435 per bed and generates annual effective gross income of approximately $267,500. CHC expects year one net operating income of approximately $81,000, resulting in a going-in capitalization rate of approximately 5.04%.

The third acquisition, a property located in Trois-Rivières, Québec on the campus of the Université du Québec à Trois-Rivières and having 310 beds in 78 student apartments in six building complexes, has a purchase price of $5.5 million, subject to adjustments and excluding acquisition costs. CHC has paid the vendor a $75,000 initial refundable deposit in respect of the acquisition, which will become non-refundable (subject to certain exceptions) upon the removal of CHC's due diligence condition, and at which time CHC will pay the vendor a second $400,000 non-refundable (subject to certain exceptions) deposit. CHC has also paid the vendor a $25,000 initial non-refundable deposit. The buildings are four storey apartment buildings constructed in approximately 1987. At present, the property is approximately 60% occupied with average monthly rents of approximately $325 per bed and generates annual effective gross income of approximately $720,000. CHC expects year one net operating income of approximately $315,000, resulting in a going-in capitalization rate of approximately 5.72%.

The financial information relating to the properties disclosed in this press release is based on CHC's review of various current and historical leasing, operational and financial information of the properties and remains subject to its ongoing review and analysis. In the event of any material change to this information, CHC will publicly update the information as required by applicable securities laws or the TSXV.

As previously announced, in connection with the acquisitions, CHC is currently conducting a non-brokered private placement to raise approximately $8.0 million through the issuance of subscription receipts at a price of $0.11 per subscription receipt. The Company intends to use the net proceeds of the private placement, together with mortgage financing on the properties, to complete the acquisitions, and for general corporate purposes. On closing, the proceeds from the private placement, less an amount equal to the second deposits to be paid to the vendors in connection with the acquisitions, will be deposited in escrow pending completion of the acquisitions (including receipt of TSXV approval in respect of the acquisitions). Of the combined $13,000,000 purchase price for the properties, the Company expects to pay approximately $5,750,000 in cash, while the balance will be satisfied through mortgage financing on the properties. The terms of the mortgage financing are currently being negotiated and remain to be determined.

The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.

About CHC Realty Capital Corp.

CHC Realty Capital Corp. is an owner and operator of student housing properties which is focused on acquiring high quality properties in close proximity to universities and colleges in primary and well understood secondary markets in Canada.

Cautions Regarding Future Plans and Forward Looking Information

This press release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding the completion of the proposed transaction and the business strategies of CHC. Although CHC believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. CHC cautions investors that any forward-looking information provided by CHC is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: CHC's ability to complete the proposed transactions; the state of the real estate sector in the event the proposed transactions are completed; recent market volatility; CHC's ability to secure the necessary mortgage financing or to be fully able to implement its business strategies; and other risks and factors that CHC is unaware of at this time. The reader is referred to CHC's initial public offering prospectus and other continuous disclosure documents for a more complete discussion of risk factors relating to CHC and their potential effects, copies of which may be accessed through CHC's profile on SEDAR at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Non-IFRS Measure

This press release uses the term "NOI", which stands for net operating income. NOI is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. It is a supplemental measure of performance for issuers. CHC believes that NOI is an important measure of operating performance and is useful in assessing the company's property operating performance on an unlevered basis. The IFRS measurement most directly comparable to NOI is net income and NOI should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the company's performance.

The TSXV has in no way passed upon the merits of the proposed 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 the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • CHC Realty Capital Corp.
    Mark Hansen
    President and Chief Executive Officer
    (647) 288-9355
    mhansen@chcrealty.ca

    CHC Realty Capital Corp.
    Robert Waxman
    Chief Financial Officer
    (647) 288-9375
    rwaxman@chcrealty.ca