QUÉBEC CITY, Dec. 18, 2017 /CNW/ -
Cominar Real Estate Investment Trust ("Cominar" or the "REIT")
(TSX: CUF.UN) announced on August 22,
2017 its debt reduction plan and its intention to focus on
its core markets in the Province of Québec and Ottawa (the "2017 Plan"). In the pursuit of
the 2017 Plan, Cominar is pleased to announce that it has entered
into a definitive agreement with Slate Acquisitions Inc. ("Slate")
for the sale of its entire non-core market property portfolio for
total gross proceeds of $1.14
billion. The non-core market portfolio is composed of 97
properties totalling 6.2 million square feet located in the
Greater Toronto Area, the Atlantic
Provinces and in Western Canada
(the "Non-Core Market Portfolio").
"We are very pleased with the successful execution of the
disposition plan and the sale of our entire non-core market
portfolio in one transaction. This transaction will enable Cominar
to capitalize on its core markets while also strengthening its
balance sheet" said Michel
Dallaire, Chairman of the Board of Trustees and Chief
Executive Officer of Cominar.
Overview of Non-Core Market Portfolio
Cominar has
entered into a definitive agreement to sell the entirety of its
properties located outside of the Province of Québec and
Ottawa:
BY GEOGRAPHIC
MARKET
|
Market
|
GLA
|
# of
Properties
|
|
Greater Toronto
Area
|
2,466,000
|
24
|
|
Atlantic
Provinces
|
2,647,000
|
59
|
|
Western
Canada
|
1,108,000
|
14
|
Total
|
6,221,000
|
97
|
BY OPERATING
SEGMENT
|
Asset
Class
|
GLA
|
# of
Properties
|
|
Office
|
2,967,000
|
37
|
|
Industrial and
mixed-use
|
1,716,000
|
37
|
|
Retail
|
1,538,000
|
23
|
Total
|
6,221,000
|
97
|
The Non-Core Market Portfolio to be sold includes a combination
of income-producing properties (approximately 90% of the Non-Core
Market Portfolio) and land and properties under development
(approximately 10% of the Non-Core Market Portfolio).
The overall capitalization rate of the income-producing
properties to be sold is estimated at 6.2%, including 5.3% for the
Greater Toronto Area.
The aggregate gross sales price of the Greater Toronto Area and the Atlantic
Provinces income-producing properties is in line with their
aggregate book value. In addition, Cominar has decided to sell the
entirety of its Western Canada
portfolio given the continued challenges in the Calgary market, primarily the downtown
Calgary office sector, allowing it
to better focus on the opportunities available in its core markets.
Cominar will thus be recognizing a fair value write down of
approximately $275 million related to
the Western Canada assets and non
income-producing properties.
Slate will be assuming approximately $107.1 million of mortgage debt and Cominar will
be repaying $164.5 million of
mortgage debt.
Closing of the transaction remains subject to customary closing
conditions including regulatory approvals, and is expected by the
end of March 2018. There can be no
assurance that the closing conditions will be satisfied, or will be
satisfied by such time.
Following the transaction, Cominar will not own any properties
in Western Canada, the
Greater Toronto Area or the
Atlantic Provinces.
Use of Proceeds
As contemplated in the 2017 Plan, the
net proceeds from the sale of the Non-Core Market Portfolio will be
used to reduce indebtedness by approximately $875 million, thereby paying down the entire
amount currently outstanding on its credit facility.
Given the acceleration of the execution of the 2017 Plan, the
Board of Trustees of Cominar has authorized an increase in its
normal course issuer bid program up to a maximum of 17.6 million
outstanding units of the REIT, up from the 9.0 million units
originally approved by the TSX. This increase in the normal course
issuer bid is subject to the approval of the Toronto Stock
Exchange. Cominar believes that these initiatives will contribute
to narrowing the trading discount to its net asset value.
Continuation of Value Creation Initiatives
In the
context of Cominar's continuous review of its portfolio and of
initiatives to create value, the REIT has identified key assets in
its main markets within its core portfolio on which it intends to
focus going forward. As part of the sale process of its Non-Core
Market Portfolio, Cominar has been able to leverage a solid
Canadian real estate market and believes that there is meaningful
interest for a number of properties in its core markets. As part of
its value creation initiatives, Cominar intends to sell a further
$1.0 to $1.5
billion of properties. Cominar expects to finalize this
review by mid Q1 2018 and to crystalize the value in these
properties to be sold by the end of 2018.
Cominar expects to use the proceeds from these additional asset
sales to further reduce indebtedness and repurchase units.
"This value enhancing initiative will allow us to capitalize
on our leadership position in our core markets. With this greater
focussed portfolio, Cominar will be better positioned to maximize
the value of its assets" said Sylvain
Cossette, President and Chief Operating Officer of
Cominar.
PROFILE AS AT DECEMBER 18th,
2017
Cominar is the third largest diversified real
estate investment trust in Canada
and currently remains the largest commercial property owner in the
Province of Quebec. The REIT owns
a real estate portfolio of 524 properties in three different market
segments, that is, office properties, retail properties and
industrial and mixed-use properties. Cominar's portfolio totals
44.1 million square feet spread out across Quebec, Ontario, the Atlantic Provinces and
Western Canada. Cominar's
objectives are to pay growing cash distributions to unitholders and
to maximize unitholder value through proactive management.
FORWARD-LOOKING STATEMENTS
This press release may
contain forward-looking statements with respect to Cominar and its
operations, strategy, financial performance and financial
condition. These statements generally can be identified by the use
of forward-looking words such as "may", "will", "expect",
"estimate", "anticipate", "intend", "believe" or "continue" or the
negative thereof or similar variations. The actual results and
performance of Cominar discussed herein could differ materially
from those expressed or implied by such statements. Such statements
are qualified in their entirety by the inherent risks and
uncertainties surrounding future expectations. Some important
factors that could cause actual results to differ materially from
expectations include, among other things, general economic and
market factors, competition, changes in government regulation and
the factors described under "Risk Factors" in Cominar's Annual
Information Form. The cautionary statements qualify all
forward-looking statements attributable to Cominar and persons
acting on its behalf. Unless otherwise stated, all forward-looking
statements speak only as of the date of this press release. Cominar
does not assume any obligation to update the aforementioned
forward-looking statements, except as required by applicable
laws.
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST