CAPREIT Announces Strategic Sale of MHC Portfolio for $740 Million
CAPREIT Announces Strategic Sale of MHC Portfolio for $740 Million
Company Release – 7/15/2024 7:30 AM ET
Toronto, July 15, 2024 (Globe Newswire) – Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) announced today that it has entered into an agreement with an entity controlled by TPG Real Estate to sell its manufactured home community (“MHC”) portfolio for a gross purchase price of $740.0 million (excluding transaction costs). The unencumbered MHC portfolio is comprised of 12,138 residential lots spread across 75 community sites located throughout Canada.
The purchase price will be satisfied in part through an interest-only vendor take-back loan of $140.0 million, bearing interest at a rate of 3.0% per annum for a five-year term, with the remaining $600.0 million to be satisfied in cash.
CAPREIT intends to utilize the net sale proceeds for: (1) the repayment of the balance outstanding on its Canadian revolving credit facility (approximately $187.0 million as of June 30, 2024); (2) future acquisitions of on-strategy rental properties in Canada; and (3) general business purposes, which may include capital expenditures, debt repayment and the repurchase of trust units under its normal course issuer bid.
“We look forward to a smooth and successful transition with TPG Real Estate. TPG Real Estate has advised CAPREIT that, as a longstanding investor in the Canadian real estate sector, it intends to partner with the existing team to manage and grow the MHC portfolio going forward,” said Mark Kenney, President and Chief Executive Officer of CAPREIT.
“We intend to use the net proceeds from this strategic sale to strengthen our balance sheet, enhance our liquidity and further fuel our high-grading capital allocation strategy,” added Julian Schonfeldt, Chief Investment Officer of CAPREIT. “This pivotal transaction is not only providing CAPREIT with a significant amount of capital, but it also increases management’s focus as a pure play apartment REIT. We’re excited to be simplifying our story and dedicating our resources to our core business, where our competitive advantages are strongest.”
The transaction is subject to compliance with the Competition Act (Canada) and other closing conditions customary in transactions of this nature. Subject to the receipt of all regulatory approvals and satisfaction of customary closing conditions, closing is anticipated in the fourth quarter of 2024. There can be no assurance that all conditions to closing will be satisfied or waived.
About CAPREIT
CAPREIT is Canada’s largest publicly traded provider of quality rental housing. As at March 31, 2024, CAPREIT owns approximately 64,200 residential apartment suites, townhomes and manufactured home community sites well-located across Canada and the Netherlands, with approximately $16.7 billion of investment properties in Canada and Europe. For more information about CAPREIT, its business and its investment highlights, please visit our website at www.capreit.ca and our public disclosure which can be found under our profile at www.sedarplus.ca.
Cautionary statements regarding forward-looking statements
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws. Forward-looking statements generally can be identified by the use of forward- looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plans”, “predict”, “estimate”, “forward”, “potential”, “could”, “likely”, “approximately”, “scheduled”, “forecast”, “variation” or “continue”, or similar expressions suggesting future outcomes or events. Forward-looking statements in this press release include, but are not limited, statements with respect to the closing of the MHC portfolio sale, the intended use of net disposition proceeds thereof and the timing of the sale transaction. The forward-looking statements made in this press release reflect CAPREIT’s current expectations and projections about future results and events based on information available to CAPREIT as of the date on which such statements are made. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward- looking statements contained in this press release. Any number of factors could cause actual results to differ materially from these forward-looking statements. Although CAPREIT believes that the expectations reflected in forward-looking statements contained herein are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Accordingly, readers should not place undue reliance on such forward-looking statements.
Forward looking statements in this press release are subject to certain risks and uncertainties, many of which are beyond CAPREIT’s control, which could result in actual results differing materially from these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described under the heading “Risks and Uncertainties” in CAPREIT’s 2023 Annual Report and under the heading “Risk Factors” in CAPREIT’s Annual Information Form for the year ended December 31, 2023, each of which is available under CAPREIT’s profile on SEDAR+ at www.sedarplus.ca.
Except as specifically required by applicable Canadian securities law, CAPREIT does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing CAPREIT’s views as of any date subsequent to the date of this press release.
For more information, please contact:
CAPREIT
Mr. Mark Kenney
President & Chief Executive Officer
(416) 861-9404
Mr. Stephen Co
Chief Financial Officer
(416) 306-3009
Mr. Julian Schonfeldt
Chief Investment Officer
(647) 535-2544