All amounts are in US dollars unless otherwise
stated
TORONTO, Sept. 13, 2018 /CNW/ - Firm Capital American
Realty Partners Corp. (the "Company"), (TSXV: FCA.U), (TSXV:
FCA) is pleased to announce the refinancing of its $4.0 million first mortgage loan secured by 120
single family homes located in Atlanta,
Georgia (the "Atlanta Mortgage") and provide a
positive update regarding the Atlanta Single Family Homes
Disposition Program:
ATLANTA MORTGAGE
REFINANCING
To assist in the orderly disposition of the
remaining 120 single-family homes as outlined below, the Company
has entered into a new first mortgage financing with the Firm
Capital Corporation, a mortgage banker related to certain officers
and directors of the Company. The new mortgage is a one-year,
$4.1 million first mortgage loan with
a 6.5% annual interest rate, payable monthly and interest-only,
that is fully secured by the 120 single-family homes. The proceeds
received from this new loan will be used to repay the existing
blanket $4.0 million first mortgage
loan secured by the 120 single-family homes, plus a pre-payment
penalty of approximately $0.1
million. The current Atlanta Mortgage does not permit
partial discharges as house sales close, so the existing financing
needs to be replaced with one that does. The new first mortgage
allows for greater flexibility to discharge individual single
family homes as they are sold.
The Company also agreed to guarantee the payment and performance
of the new first mortgage. Since the lender is an affiliate of the
Company, the provision of a guarantee by the Company in connection
with the refinancing of the Atlanta Mortgage constitutes a "related
party transaction" as defined in Multilateral Instrument 61-101 –
Protection of Minority Securityholders in Special Transactions
("MI 61-101"), but is exempt from the valuation requirement
and the minority approval requirement pursuant to subsections
5.5(a) and 5.7(a) of MI 61-101, respectively, as the value of the
guarantee does not represent more than 25% of the Company's market
capitalization, as determined in accordance with MI 61-101. The
refinancing and the guarantee provided by the Company in connection
therewith were approved by the directors of the Company who are
independent in connection of such transactions.
ATLANTA SINGLE FAMILY HOMES
DISPOSITION PROGRAM
As disclosed in the Q2/2018 results, the
Company had previously entered into a conditional contract with an
unrelated third party to dispose of its entire portfolio of 120
single family homes located in Atlanta for an anticipated gross value of
approximately $10.6 million. This
conditional contract was ultimately terminated, as the buyer did
not waive conditions unless they received both a purchase price
abatement and dropped out a larger number of homes. Management felt
a price abatement and sale amendment was not warranted and the
Company would benefit by having the single family homes sold
individually.
The Company has since proceeded to dispose of the single family
homes individually in an effort to maximize value. The Company has
since then listed the homes for sale individually with multiple
third-party brokers who had provided to the Company their opinions
of value that approximated $14.1
million ($13.1 million net of
estimated closing costs), or a 33% increase over the previously
entered into conditional contract.
To date, the Company has sold firm 63 of the homes, or
approximately 53% of the total portfolio, for gross proceeds of
approximately $6.0 million
($5.6 million net of estimated
closing costs). The gross proceeds are consistent with the opinions
of value received from the brokers. These sales are expected to
close during Q3/2018 and the net proceeds will be used to first
repay the new mortgage financing as outlined above and then further
repay the 7.0% Convertible Unsecured Debenture (the
"Debenture") which has a principal balance of $6.8 million. The remaining 57 single family
homes, which have a current list price of approximately
$8.1 million ($7.5 million net of estimated closing costs) are
anticipated to generate on closing, assuming that the current list
price is achieved, net proceeds sufficient to fully repay the
existing Debenture and provide the Company with additional working
capital.
ABOUT FIRM CAPITAL AMERICAN REALTY PARTNERS CORP.
Firm Capital American Realty Partners Corp. is a U.S. focused
real estate investment entity that pursues real estate and debt
investments through the following platforms:
- Income Producing Real Estate Investments: Acquiring
income producing real estate assets in major cities across
the United States. Acquisitions
are completed solely by the Company or in joint-venture partnership
with local industry expert partners who retain property management
responsibilities; and
- Mortgage Debt Investments: Real estate debt and equity
lending platform in major cities across the United States, focused on providing all
forms of bridge mortgage loans and joint venture capital.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "intend" and similar expressions. Forward-looking
statements in this news release include, but are not limited to,
statements with respect to the Company's intention to complete the
sale of its single-family homes (and the ability to do so for
consideration that accords with the estimated value of the
portfolio, as set out above) and ultimate debt repayments, the use
of proceeds from the new loan described above, the use of proceeds
from (and timing of) the disposition of the Company's portfolio of
single family homes located in Atlanta, potential capital financing and
growth opportunities, as well as the Company's intention to acquire
income producing U.S. real estate assets and complete joint venture
partnerships and mortgage debt and equity lending investments.
Forward-looking statements necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse factors affecting the U.S. real estate
market generally or those specific markets in which the Company
holds properties; volatility of real estate prices; inability to
complete the Company's single family property disposition program,
debt repayments or debt restructuring in a timely manner; inability
to access sufficient capital from internal and external sources,
and/or inability to access sufficient capital on favourable terms;
industry and government regulation; changes in legislation, income
tax and regulatory matters; the ability of the Company to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks, including those described in the
Company's public disclosure documents on SEDAR at
www.sedar.com.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
Neither the Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release. Additional information about the Company is available at
www.firmcapital.com or www.sedar.com.
SOURCE Firm Capital American Realty Partners Corp.
