Smart Real Estate Investment Trust
TSX : SRU.UN

Smart Real Estate Investment Trust

March 09, 2016 13:13 ET

SmartREIT Announces Settlement With Target Canada Co. and Target Corporation

TORONTO, ONTARIO--(Marketwired - March 9, 2016) - Smart Real Estate Investment Trust ("SmartREIT") (TSX:SRU.UN) is pleased to announce that along with all of Target Canada's ("Target") former landlords whose leases were disclaimed as part of Target's wind-down under the Companies' Creditors Arrangement Act ("CCAA"), it has entered into a conditional settlement agreement with Target and with its US parent, Target Corporation, ("Target Corp.") relating to its two (2) Target leases (the "Subject Leases").

Under the conditional agreement, in consideration of a settlement payment to SmartREIT (from a pool of funds to be established by Target and Target Corp. for the benefit of the landlords with guarantees), SmartREIT has agreed to release Target Corp. and Target from their financial obligation relating to the Subject Leases. Target Corp. entered into limited guaranty agreements (the "Guarantees") with SmartREIT wherein Target Corp. guaranteed SmartREIT for, among other matters, obligations of Target pursuant to the Subject Leases.

SmartREIT's settlement agreement is conditional upon Target's creditors voting in favour of an Amended and Restated Plan of Settlement (the "Amended Plan") and the Amended Plan being sanctioned by the court, which sanction motion is currently scheduled to take place during the first week of June, 2016.

SmartREIT is scheduled to receive payment in full of the settlement amount within seven (7) days from the date on which the sanction and vesting order becomes a final order. Accordingly, the financial impact of the proposed settlement will not be recognized in SmartREIT's financial statements until such final settlement is received.

At the time of Target's announcement that it would close all of its Canadian stores, SmartREIT's exposure was limited to two (2) locations totaling approximately 226,000 sf that were under lease to Target being South Oakville Centre, Oakville ON, and Laurentian Power Centre, Kitchener, ON. SmartREIT continues to work diligently to backfill these premises with the appropriate tenants with the objective to effectively improve these two shopping centres where the former Target stores were located and increase revenues. The Subject Leases, which were assumed from Zellers Inc., offered no to very minimal rental growth through the remaining lease term and extension periods and SmartREIT expects that over time the premises will be backfilled to generate a faster growing cashflow stream and increased traffic to the centres.

About SmartREIT

SmartREIT is one of Canada's largest real estate investment trusts with total assets of approximately $8.5 billion. It owns and manages in excess of 30 million square feet in value-oriented, principally Walmart-anchored retail centres, having the strongest national and regional retailers as well as strong neighbourhood merchants. In addition, SmartREIT is a joint-venture partner in the Toronto and Montreal Premium Outlets with Simon Property Group. SmartREIT's core vision is to provide a value-oriented shopping experience in all forms to Canadian consumers and over time create high quality mixed use developments in urban settings.

With SmartREIT's 2015 acquisition of SmartCentres, SmartREIT has transformed into a fully integrated real estate provider. SmartREIT and SmartCentres have had a long and successful alliance, helping to provide Canadians with value-focused retail shopping centres across the country. Now, our alliance has grown even stronger, the result is a fully integrated real estate provider with expertise in planning, development, leasing, operations, and construction - all under one roof. Our name is a reflection of our combined capabilities: SmartREIT. For more information on SmartREIT, visit www.smartreit.com.

Contact Information

  • Smart Real Estate Investment Trust
    Huw Thomas
    President and Chief Executive Officer
    (905) 326-6400 ext. 7649
    hthomas@smartreit.com

    Smart Real Estate Investment Trust
    Peter Sweeney
    Chief Financial Officer
    (905) 326-6400 ext. 7865
    psweeney@smartreit.com