Nobel Real Estate Investment Trust

TSX VENTURE : NEL.UN


Nobel Real Estate Investment Trust

December 30, 2013 17:01 ET

Nobel REIT Announces Its 2014 Growth Plan, a New Sustainable Leverage and Distribution Policy and an Upcoming Private Placement

MONTREAL, QUEBEC--(Marketwired - Dec. 30, 2013) - (TSX VENTURE:NEL.UN) Nobel REIT's board of trustees approved today a growth plan for 2014 which focuses on creating long-term value for unitholders utilizing a new innovative growth-focused structure. The 2014 plan contains a number of key elements that will enable Nobel to capitalize on its unique Quebec strategy and pursue its objective of quickly aggregating a portfolio of quality stable income producing properties in the province.

To execute on its strategy, Nobel has assembled an experienced team with deep expertise in the commercial real estate markets in Quebec. The Nobel team has strong relationships throughout the province which will allow for off-market transactions and accelerated growth. There is currently a unique opportunity in commercial real estate in Quebec and Nobel has the right team and strategy to accretively build a quality portfolio and generate growth-type returns for unitholders.

The Nobel REIT Plan

  1. Asset Focus

Nobel is targeting the acquisition of well leased properties ranging in size from $5 to $30 million that are located within secondary markets less than 2.5 hours drive from Montreal in locations with reduced competition from other buyers. Nobel is focused on consolidating properties in this segment as it believe these assets trade at higher capitalization rates relative to similar properties in the rest of Canada. A balance of commercial, retail, office and industrial properties are being considered.

  1. New Acquisitions

Nobel has already identified a portfolio of new acquisitions that meet its target objectives. Nobel has under firm and binding offers, subject to financing, four properties totalling 296,059 sq. ft. of leasable area. Together, these four assets represent an aggregate purchase price of $32.4 million and a weighted average acquisition capitalization rate of 7.62%. These four properties are all 100% leased and have an average remaining lease term of 6.26 years. The required equity for these acquisitions will be raised through a $17 million to $19 million fully marketed private placement offering which is expected to close in Q1-2014.

  1. Low Leverage and Sustainable Distribution Policy

Starting January 1st, 2014, Nobel's innovative growth plan will include two key distinguishing elements; (1) The REIT will target a long-term leverage level of below 50% which is lower than the majority of Nobel's office and industrial public comparables, and (2) Nobel will pay a monthly distribution equal to 25% of its annual forecasted adjusted funds from operation (AFFO). This low-payout policy is unique to the REIT space where it is more common for payouts of 80% to 100% of free cash flow. This policy is centered around maintaining a sustainable distribution while retaining surplus funds to finance Nobel's growth. Nobel believes that the combination of conservative leverage and low distribution payout will be attractive to investors seeking capital appreciation and outperformance over time. The previously announced December 2013 distributions, payable on January 15th 2014, will however remain unchanged.

  1. Upcoming Private Placement

Nobel has hired Beacon Securities Limited ("Beacon") as agent and lead book runner for its upcoming private placement required to finance the new acquisitions. Beacon has a strong track record raising equity for small to mid-cap growth companies. Nobel has also engaged Trimaven Capital Advisors Inc. ("Trimaven") as its independent financial advisor. Trimaven's role has been to provide Nobel advice on its 2014 growth plan and what structure is optimal to maximize returns to Nobel's existing and future unitholders.

Jean Teasdale, CEO of Nobel REIT commented; "We continue to believe a unique opportunity exists to consolidate the underserved Quebec market at cap rates and returns that are higher than the rest of Canada. We also believe that we have created an innovative structure that will resonate with growth focused investors across the country. Our new distribution payout structure will be unique in the Canadian REIT space and will allow the REIT to grow organically by reinvesting its free cash flow in new properties and by driving tax-efficient price appreciation for our unitholders".

About Nobel Real Estate Investment Trust

The REIT is a recently created unincorporated open-ended real estate investment trust governed by the laws of the Province of Quebec. The REIT has been created for the purpose offering it's investors the opportunity to participate in a growth oriented and Quebec focused consolidation of income producing properties. The REIT focuses on owning, acquiring and managing commercial retail, mixed-used retail, industrial and suburban office properties in the primary and secondary markets in the Province of Quebec where there is reduced competition and more favourable capitalization rates compared to the rest of Canada. The REIT currently owns two commercial properties located in Québec, comprising 71,747 square feet of gross leasable area.

For additional information, please contact: Louis Lemire, CPA, CA, Chief Financial Officer, at (450) 655-4338.

About Beacon Securities Limited

Beacon Securities Limited is one of the few full-service independent investment dealers in Canada with an emphasis on small to mid-market institutional equities. Founded in 1988, the firm employs close to 50 professionals in four offices across Canada providing equity research, sales & trading, investment banking and fixed income services to institutional and retail investors, as well as its issuer clients. Beacon's Equity Capital Markets group focuses on growth companies within the non-resource special situations, infrastructure, technology, energy and mining sectors.

For additional information, please contact: Daniel Holland, Executive Vice Chair and Managing Director, at (902) 422-1322.

About Trimaven Capital Advisors Inc.

Trimaven Capital Advisors Inc. ("Trimaven") is an independently owned real estate investment bank based in Toronto. Trimaven offers clients highly specialized advice in real estate advisory, corporate finance, mergers and acquisitions and private equity. Trimaven's clients include public, private and corporate owners of real estate. With a reputation and expertise built over 40 years as owners, managers and advisors, Trimaven is known for its deep industry knowledge, quality advice and transaction execution capabilities. Trimaven's principals are accomplished advisors with significant transactional experience. Prior to forming Trimaven, the principals advised on over $30 billion of transactions during their tenures at other top-tiered firms.

For additional information, please contact: Craig Shannon, Managing Director, at (416) 602-6417.

Contact Information

  • Nobel Real Estate Investment Trust
    Louis Lemire, CPA, CA
    Chief Financial Officer
    (450) 655-4338

    Beacon Securities Limited
    Daniel Holland
    Executive Vice Chair and Managing Director
    (902) 422-1322

    Trimaven Capital Advisors Inc.
    Craig Shannon
    Managing Director
    (416) 602-6417