NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
CALGARY, Alberta, — Northview Apartment Real Estate Investment Trust (NVU.UN – TSX) (“Northview”) today announced that it has agreed to sell on a bought deal basis, subject to regulatory approval, 2,800,000 trust units (“Trust Units”) at a price of $26.80 per Trust Unit (the “Offer Price”) to a syndicate of underwriters (the “Underwriters”) co-led by CIBC Capital Markets and Scotiabank for gross proceeds of approximately $75 million (the “Offering”). The Underwriters have been granted an over‐allotment option to purchase up to an additional 420,000 Trust Units at the Offer Price, exercisable up to 30 days after the closing of the Offering. The Offering is expected to close on or about June 6, 2019 and is subject to regulatory approval, including the approval of the Toronto Stock Exchange (“TSX”).
Northview intends to use the net proceeds from the Offering to fund the acquisition of a property located in Guelph, Ontario (the “Guelph Property”) for a purchase price of $52.7 million and to repay a portion of its credit facilities. These credit facilities were previously used to internally fund growth. Northview’s increased borrowing capacity will support current and future developments, acquisitions, and working capital requirements.
The first cash distribution which purchasers of Trust Units under the Offering will be entitled to receive will be for the month of June 2019, with an expected record date of June 28, 2019 and an expected payment date of July 15, 2019. Northview’s current monthly cash distribution is $0.1358 per Trust Unit.
The Trust Units will be offered by way of a short form prospectus to be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada. The securities offered 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 absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
SUMMARY OF ACQUISITION
Northview has agreed to acquire a newly built three-building apartment complex comprising 161 suites located in Guelph, Ontario, which was completed in the first quarter of 2019. The Guelph Property is being acquired from an affiliate of Starlight Group Property Holdings Inc. (“Starlight”) for a purchase price of $52.7 million (excluding closing costs), representing a capitalization rate of approximately 4.4%. The Guelph Property is subject to customary closing conditions and is expected to close in June 2019. No assurance can be given that the acquisition will close as expected. The Offering is not conditional on closing of the Guelph Property.
Todd Cook, President and CEO, commented, “This acquisition is a newly constructed, luxury rental apartment building and the acquisition supports Northview’s strategy of growing its portfolio of high-quality multi-family assets in strong and growing markets. We are excited to further grow our presence in the Ontario market which continues to generate significant same door NOI growth.”
RELATED PARTY TRANSACTION
The Guelph Property is being acquired from an affiliate of Starlight for total consideration of $52.7 million (excluding closing costs), where such consideration will include the issuance of $5.0 million in class B limited partnership units of certain subsidiaries of Northview (“Class B LP Units”) to an affiliate of Starlight at the Offer Price. The issuance of the Class B LP Units is subject to approval from the TSX. There is no fee payable to Starlight in relation to the acquisition of the Guelph Property under the Transactional Fee Agreement. Starlight will provide a one-year head lease to Northview on the Guelph Property, which is currently in lease up. The acquisition of the Guelph Property and related issuance of Class B LP Units were unanimously approved by the independent trustees of Northview. Pro forma closing of the Offering and the issuance of Class B LP Units in connection with the acquisition of the Guelph Property, Daniel Drimmer, President & CEO of Starlight, together with his affiliates, will hold Trust Units and Class B LP Units of Northview representing approximately 13.1% of the total Trust Units and Class B LP Units outstanding (prior to any exercise of the underwriters’ over-allotment option).
CAUTIONARY AND FORWARD-LOOKING STATEMENTS
This media release contains forward-looking statements including, but not limited to, statements relating to the Guelph Property acquisition, the impact of the Guelph Property acquisition on Northview, including its financial position, the Offering and the use of the proceeds therefrom, the use of proceeds from the future draw-downs of our credit facilities, execution of our strategic priorities, including the high-end renovation program, development opportunities and initiatives, completion and occupancy of development projects, and the financial returns from our development program. These statements are not guarantees of future events, performance or results and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved.
Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management’s good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally, which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to, risks related to: the failure to complete the Acquisition; real property ownership; availability of cash flow and mortgage financing; demand for rental accommodation and commercial space; natural resource prices; development and construction risks; reliance on key personnel; concentration of tenants; capital requirements; interest rate risk; credit risk; liquidity risk; general uninsured losses; government regulation; environmental risk; utility costs; potential conflicts of interest; integration of acquired properties; income tax related risk factors; and other risk factors more particularly described in Northview’s most recent Annual Information Form and MD&A, both of which are available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to Northview or that Northview currently believes to be less significant may also adversely affect Northview.
Readers are cautioned that the above list of factors is not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by Northview will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, Northview. Readers, therefore, should not place undue importance on forward-looking information. Further, these forward-looking statements speak only as of the date of this media release. Northview disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
Northview is one of Canada’s largest publicly traded multi-family REITs with a portfolio of approximately 27,000 residential units and 1.2 million square feet of commercial space in over 60 markets across eight provinces and two territories. Northview’s well-diversified portfolio includes markets characterized by expanding populations and growing economies, which provides Northview the means to deliver stable and growing profitability and distributions to Unitholders of Northview over time. Northview currently trades on the TSX under the ticker symbol: NVU.UN. Additional information concerning Northview is available at www.sedar.com or www.northviewreit.com.
Northview Apartment Real Estate Investment Trust
Mr. Todd Cook
President and Chief Executive Officer
Mr. Travis Beatty
Chief Financial Officer
Mr. Leslie Veiner
Chief Operating Officer