HHT Investments Inc.

December 18, 2013 08:30 ET

HHT Investments Inc. Announces Proposed Acquisition of Industrial Properties as Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - Dec. 18, 2013) -


HHT Investments Inc. (the "Corporation") (TSX VENTURE:TQ.P), a capital pool company (as defined in Policy 2.4 (the "CPC Policy") of the TSX Venture Exchange Inc.'s (the "TSXV") Corporate Finance Manual), is pleased to announce that it has entered into an assignment and assumption agreement ("Assignment and Assumption Agreement") with Boulevard Capital Corporation ("Boulevard Capital"), whereby the Corporation has taken an assignment of all rights and benefits and assumed all obligations of Boulevard Capital, as purchaser, in respect of that certain agreement of purchase and sale (the "Purchase Agreement") between Boulevard Capital as purchaser and NBIMC Realty Corp. (the "Vendor"), as vendor, dated as of the 4th day of November, 2013, as amended, pursuant to which the Corporation will acquire from the arm's length vendor the industrial lands and buildings located at 1070 St. George Blvd., 1180 St. George Blvd. and 205 Commerce Street in Moncton, New Brunswick (collectively, the "Properties") for an aggregate purchase price of $15,000,000 (the "Purchase Price"). Fiera Properties Ltd. acted as advisor for the Vendor in respect to the purchase of the Properties by the Corporation.

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. Under the Purchase Agreement, the Vendor has agreed to provide a rental guarantee in respect of one lease and to lease 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.

As previously disclosed in the Corporation's (final) prospectus dated June 20, 2013, the Corporation intends to reorganize pursuant to a plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement") into a real estate investment trust to be named Boulevard Industrial Real Estate Investment Trust (the "REIT"). The acquisition of the Properties and the Arrangement are proposed to constitute the Corporation's Qualifying Transaction as defined in the CPC Policy (collectively, the "Proposed Transaction").

Pursuant to the Arrangement, among other things: (i) the issued and outstanding common shares ("Shares") of the Corporation will be exchanged for units ("Units") of the REIT on an one (1) for one (1) basis (the "Exchange Ratio"); and (ii) the existing issued and outstanding options and warrants to purchase Shares of the Corporation will be 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.

After completion of the Arrangement, as successor in interest to Boulevard Capital under the Purchase Agreement, the REIT will indirectly through a wholly-owned limited partnership, purchase the Properties from the Vendor for the Purchase Price, subject to customary adjustments. The Purchase Price will be satisfied by way of mortgage financing, cash from existing working capital and the proceeds of a private placement financing by the Corporation (the "Private Placement") to be completed in connection with the Proposed Transaction. Prior to the closing of the Arrangement, the Corporation intends to complete a brokered Private Placement financing for a minimum of $4,500,000 and a maximum of $7,500,000 in gross proceeds. Further details in respect of the terms of the Private Placement will be provided in a future press release of the Corporation.

Shareholders will be asked to approve the Proposed Transaction at a special meeting to be held in early 2014 in Toronto, Ontario. Details of the Proposed Transaction will be included in a management information circular of the Corporation, which will be mailed to shareholders and filed on SEDAR at www.sedar.com in accordance with applicable law.

Boulevard Capital, a corporation owned and controlled by Scott Hayes, Mark Hogan and Heidi Tibben, will be the asset manager of the REIT pursuant to an asset management agreement to be entered into between the REIT and Boulevard on the effective date of the Arrangement. As Scott Hayes, Mark Hogan and Heidi Tibben are directors and officers of the Corporation and currently own an aggregate of approximately 16.02% interest in the Corporation, and are the sole directors, officers and shareholders of Boulevard, certain aspects of the Arrangement will constitute "related party transactions" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and therefore must be approved by the affirmative vote of a majority of minority shareholders of the Corporation.

Boulevard Capital paid a $100,000 deposit (the "Deposit") upon execution of the Purchase Agreement. Under the terms of the Assignment and Assumption Agreement, the Deposit will be repaid by the Corporation to Boulevard Capital on closing of the Proposed Transaction, including interest at a rate of 10% per annum (to reimburse Boulevard Capital for its cost of borrowing) and an administration fee of $2,500. Save and except for the forgoing repayment of the Deposit with interest and the $2,500 administration fee, Boulevard Capital will not receive any other consideration under the Purchase Agreement or the Assignment and Assumption Agreement.

Management and Proposed Trustees

Upon completion of the Arrangement, Scott Hayes and Mark Hogan, both current directors of the Corporation, will become trustees of the REIT, as well as its Chief Executive Officer and President, respectively. In addition, the Corporation is pleased to announce that Scott Franklin will be appointed as the Chief Financial Officer of the REIT and shareholders will be asked to elect three additional trustees. The three additional proposed trustees of the REIT are Rob Doman, Andrew Lepper and Christopher Murray.

Scott Franklin, proposed CFO

Mr. Franklin is part-time Chief Financial Officer of Lorne Park Capital Partners Inc. (TSXV) and was part-time Chief Financial Officer of Silvore Fox Minerals Corp. (TSXV) until July 29, 2013. Mr. Franklin is responsible for overseeing the preparation of financial statements and MD&A and corporate audits for these companies. Mr. Franklin has a BA in business from the University of Toronto and a Chartered Professional Accountant (CPA) and Chartered Accountant (CA) designation. Mr. Franklin has thirty years of experience as a Chief Financial Officer (CFO) or Controller in the regulated financial services industry, manufacturing, retail and the Canadian Cooperative movement. Mr. Franklin was Chief Financial Officer of IPC Financial Network Inc. when it was public, prior to being acquired by IGM Financial Inc., and continued as Chief Financial Officer of this subsidiary once it became Investment Planning Counsel.

Rob Doman, proposed trustee and chair of trustees

Mr. Doman is a lawyer, founder and is president of Waterstone Partners Inc., a private consulting corporation providing business, corporate finance and strategic and regulatory advisory services. Mr. Doman works across a broad range of key practice areas and business sectors, including real estate and building materials, public and private mergers and acquisitions, private equity/venture capital, securities, equity and debt finance and corporate finance. Mr. Doman is also the Corporate Secretary of TSX listed CanWel Building Materials Group Ltd., one of Canada's largest national distributors in the building materials sector, operating across Canada, and is an officer and director of CanWel Building Materials Ltd., CanWel's operating subsidiary (itself formerly listed on TSX) and other subsidiaries. Prior to forming Waterstone Partners in 2004, Mr. Doman specialized in corporate finance and securities law in Vancouver and practiced most recently as a securities lawyer in the corporate and commercial department at Davis LLP. Mr. Doman was also an independent director and member of the investment committee of Western Income Properties, a multi-family residential limited partnership, prior to its acquisition by Transglobe Properties. Mr. Doman is also former member of the Board of Governors of the British Columbia Institute of Technology and former Chair of its Governance Committee. Mr. Doman obtained a Bachelor of Commerce (Finance) degree and a Master of Business Administration from the University of British Columbia and his Bachelor of Laws degree from the University of Victoria. He is called to the British Columbia Bar and is a member of the Law Society of British Columbia.

Andrew Lepper, proposed trustee

Andrew Lepper is the Chief Financial Officer of Freed Developments Ltd. and has more than fifteen years of experience in real estate asset management on behalf of private and institutional investors. Prior to joining the Freed group in 2010, Andrew was an investment consultant to a number of Ontario-based multi-employer pension and health and welfare trust fund clients. He provided trustees with investment due diligence, market analysis and asset management services through his private consulting company, Markdale Management Inc. Andrew has worked extensively in the field of commercial and residential real estate and private equity since 1998, managing purchase, sale and financing transactions involving office, retail and hotel projects in Canada and the Caribbean. Andrew also advised pension and welfare plan trustees on governance issues and investment policy statements. Andrew worked as a public accountant with De Visser & Company, Chartered Accountants, in Vancouver, British Columbia for four years before moving to Toronto in 1997 to join the BPA Financial Group of Companies. Andrew graduated from the University of British Columbia in 1990 with a Bachelor of Arts (History) and the British Columbia Institute of Technology in 1993 with a Diploma of Technology in Financial Management. Andrew was granted the Certified General Accountant designation in 1996 and is a member of the Certified General Accountants Association of Ontario. Andrew completed the CFA Program and earned the right to use the Chartered Financial Analyst designation in 2006 and is a member of the Toronto CFA Institute.

Christopher Murray, proposed trustee

Chris Murray is a partner in the Business Law group at Osler, Hoskin & Harcourt LLP. Chris co-heads Osler's Pension and Private Equity Investor group. Chris' practice focuses on mergers and investments for public corporations, private equity sponsors and pension funds. In addition, Chris has a wealth of experience in corporate finance having advised numerous REIT's and other companies on over 100 public offerings of equity, debt, stapled and other securities and dozens of IPOs, including income trust conversions and other complex capital markets transactions. Chris advises a number of public reporting issuers and their boards as well as Canadian pension plans as their principal trusted legal adviser on a range of matters.

Sponsorship of a Qualifying Transaction is required by the TSXV unless exempt in accordance with TSXV policies. The Corporation intends to apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that the Corporation will ultimately obtain this exemption.

Completion of the acquisition of the Properties is conditional upon, among other things, the Corporation waiving its remaining due diligence conditions and completion of the of the Arrangement. Completion of the Arrangement is subject to receipt of all necessary regulatory and other approvals, including the approvals of the TSXV, the shareholders of the Corporation and the Ontario Superior Court of Justice, and completion of the Private Placement.

HHT Investments Inc.

The principal business of the Corporation is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction. The Corporation has not commenced commercial operations and has no assets other than cash.

This press release contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Examples of such statements include the intention to complete the Proposed Transaction and the intention to reorganize the Corporation into a real estate investment trust. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the Corporation.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the Information Circular, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. 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 policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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