Woodfine Capital Projects Inc.

July 17, 2015 18:45 ET

Woodfine Capital Projects Announces Public Non-Listed Commercial Real Estate Funds

VANCOUVER, BRITISH COLUMBIA--(Marketwired - July 17, 2015) -

NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES.

Woodfine Capital Projects Inc. announces that it has initiated four public non-listed commercial real estate funds that are planned to develop four distinct classes of real estate in Western Canada's secondary centres. The four funds will focus on professional offices, light industrial, retail outlets, and suburban offices, and investors may choose to participate in any or all of these sectors through the purchase of units issued by one or more of the funds.

The funds may invest only in building sites located within a predetermined distance from an existing Power Centre, defined as a large aggregation of retail stores surrounded and anchored by free-standing large box-store commercial retail tenants of good reputation, with at least one store in excess of 60,000 square feet. The funds will not purchase existing buildings.

Woodfine Professional Centres LP is the first of the funds to start operations. It has, through wholly owned subsidiaries, signed conditional purchase agreements, and paid deposits, on building sites in Airdrie and Okotoks, Alberta, two satellite communities near Calgary, Alberta.

Each fund will follow the model of Woodfine Professional Centres LP with the features listed below:

  • reporting issuer, subject to continuous disclosure requirements of securities laws in all Canadian jurisdictions, except Québec, including quarterly reporting, audited yearly financials, and mandatory public disclosure of material changes.

  • units are freely transferable, except for initial 4-month hold period when issued by private placement.

  • units are not listed on a stock exchange, so that the value of units is not correlated to general market fluctuations that may be inconsistent with the value of the assets held in each fund.

  • income and capital gains taxes are not payable at the level of the fund. As the funds are unlisted limited partnerships, the funds' income and capital gains are taxable in the hands of the unit holders (as limited partners) at the rates applicable to them individually.

  • a majority of directors in the manager of each fund are experienced real estate professionals who are independent of the Woodfine family.

  • management's only financial interest in each fund's equity is provided by an escrowed 10% interest in the same class of units as is issued to investors. The financial interests of management and investors are aligned. The value of management's equity in a fund increases or decreases in lockstep with the value of equity held by investors.

  • management's units remain escrowed until distributions to other investors are at least equal to their original investment, or all assets are sold, or a successful takeover bid is made for all units.

  • management does not receive fees calculated by reference to the appraised market value of assets (NAV fees), or any other incentive fee.

  • management service fees are calculated as a fixed percentage of subscriptions received by a fund, subject to cost of living increases as published by Statistics Canada.

  • the funds do not incur the cost of paying a profit to a previous developer/builder. Funds control the building process, and acquire buildings at commercial construction cost, not at current market value.

  • no additional units may be issued once a fund has reached its stated maximum ($50 million in the case of Woodfine Professional Centres LP). This provides anti-dilution protection for investors. Options to purchase units may not be issued to management.

The funds will issue first secured mortgage debentures backed by their assets, enabling them to obtain required loan capital directly from investors. These debentures will be transferable, subject to the same conditions as apply to the units issued by each fund. Total borrowing by a fund may not exceed a maximum calculated by reference to a stated interest coverage ratio. Holders of units will have a right of first refusal to purchase the first secured mortgage debentures.

An investment in one or more of the funds offers several of the features of an investment in a listed real estate investment trust (REIT):

  • freely transferable units, except for initial 4-month hold period when issued by private placement.

  • a fractional ownership interest in a pool of real estate.

  • access to financing by independent investors.

  • experienced professional management.

  • full disclosure of financial and other material information on a timely basis.

The funds also have features that are usually associated only with a private investment:

  • application of a fund's entire capital to the procurement, development, and management of commercial real estate, from bare serviced land to completed leased buildings. There is no requirement to purchase income-producing properties in order to attain non-taxable status at the partnership level.

  • the opportunity for a greater return on investment than can be expected when a portion of capital must be retained in liquid investments, or invested in existing income-producing properties.

  • mandatory payout of 90% of distributable income after the development phase in each fund is completed. Retention of income is not a prerequisite for the growth of a fund, which is forecast to be achieved through a fund's profits from being its own developer.

  • participation of management in the risks and rewards of developing real estate on the same footing as investors.

  • a higher degree of risk and reward than is expected from a listed REIT.

  • each fund will invest only in one market sector in Western Canada, and hold buildings constructed to uniform standards and specifications. Management expects that this will constitute the funds as attractive purchase targets for pension funds and REITS once the development phase of each fund is completed.

An investment in the funds is suitable for investors who have a longer-term investment horizon, and seek realistic returns and balanced stable growth of periodic income.

Units in the limited partnerships have not been, and will not be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from registration requirements. This news release does not constitute an offer to sell or the solicitation of an offer to buy. There will be no sale of units in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under applicable securities laws and regulations.

Forward-Looking Statements

This press release contains forward-looking statements, including information concerning the structure and plans of the funds. The forward-looking statements are based on certain expectations and assumptions made by the management of Woodfine Capital Projects Inc. and the funds. Although management believes that those expectations and assumptions are reasonable, undue reliance should not be placed on them because management can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve risks and uncertainties. Actual results and plans, as implemented, can differ materially from those anticipated due to a number of factors and risks. The forward-looking statements made in this press release are made as of the date hereof, and Woodfine Capital Projects Inc., the funds, and management disclaim any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required pursuant to applicable securities legislation.

About Woodfine Capital Projects

Woodfine Capital Projects Inc. is an alternative asset manager that originates funds for the procurement, development, and management of real property. Peter M. Woodfine and other members of the company have been involved in the construction, leasing, development, management, and syndication of commercial real estate in Western Canada since the early 1980s.

Contact Information

  • Woodfine Capital Projects Inc.
    Peter M. Woodfine
    Chief Executive Officer
    +1 (604) 375-1196