TORONTO, Jan. 02, 2019 (GLOBE NEWSWIRE) — Partners Real Estate Investment Trust (the “REIT” or “Partners”) (TSX: PAR.UN) announces it has entered into an agreement for the sale of its 11 Quebec retail properties (the “Quebec Sale Transaction”). The Quebec Sale Transaction is subject to completion of satisfactory due diligence by the purchaser, satisfaction of any applicable Competition Act (Canada) requirements and certain customary closing conditions. Subject to satisfaction or waiver of all conditions, the Quebec Sale Transaction is expected to close early in the second quarter of 2019. If completed, the Quebec Sale Transaction is currently expected to result in net cash proceeds to the REIT, after payment of related mortgages and transaction expenses, of approximately $65 million.
In September 2018, the REIT retained BMO Capital Markets Real Estate Inc. (“BMO Capital Markets”) to explore the possible sale of some or all of the REIT’s retail properties in Quebec. After considering a variety of factors, including among others, general industry, retailer and economic conditions in the markets in which the REIT operates and the anticipated effect of those conditions on the value of the REIT’s properties, and after receiving financial and legal advice, the board of trustees of the REIT (the “Board”) determined that pursuing the Quebec Sale Transaction is in the best interests of the REIT. The carrying value of the Quebec retail properties on the REIT’s September 30, 2018 interim financial statements was approximately $194 million. Current negative market conditions in Quebec, including recent increases in the supply of retail properties on the market and reduced demand for these properties, have resulted in the selling price under the Quebec Sale Transaction being lower than such September 30, 2018 carrying value.
In the event that the Quebec Sale Transaction is completed, the REIT will then own 11 retail properties in Ontario and one in Manitoba, aggregating approximately 623,000 square feet of leasable space. As the REIT previously disclosed, in those circumstances the Board expects it would likely consider a possible sale of either the REIT itself or such remaining 12 properties. The carrying value of these 12 properties on the REIT’s September 30, 2018 interim financial statements was approximately $120 million. However, the REIT believes that the realizable value of these properties would currently be lower as a result of negative market conditions in Ontario, including recent increases in the supply of retail properties on the market and reduced demand for these properties, which are generally resulting in higher capitalization rates and lower values particularly for retail properties in secondary markets such as those owned in Ontario by the REIT. Partners will update the carrying value of its properties in the ordinary course when it releases its audited financial statements for the year ended December 31, 2018.
In the event that the Quebec Sale Transaction is completed, the Board expects to consider the payment of a special cash distribution to all unitholders of a portion of the net cash proceeds from the sale of the Quebec properties. The Board will determine the amount of that special cash distribution in due course based upon, among other things, the ongoing cash requirements of the REIT.
In the event that the Quebec Sale Transaction is completed, the Board also expects it will review the appropriateness of Partners’ current normal monthly distribution of $0.015 per unit ($0.18 per unit annually), including whether such distribution should be reduced or discontinued in light of the smaller size of the remaining portfolio and other relevant factors.
About Partners REIT
Partners REIT is a real estate investment trust that manages a portfolio of retail and mixed-use community and neighbourhood shopping centres located in both primary and secondary markets located mainly in Ontario and Quebec, Canada.
Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions “expect”, “will” and similar expressions to the extent they relate to Partners REIT. The forward-looking statements are not historical facts but reflect Partners REIT’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the inability of the REIT to complete the Quebec Sale Transaction, including as a result of failure to receive all required approvals and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Quebec Sale Transaction. The anticipated dates provided may change for a number of reasons, including the inability to secure necessary third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Quebec Sale Transaction. Although the REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.
FOR FURTHER INFORMATION PLEASE CONTACT:
Partners REIT Investor Relations
1 (844) 474-9620 ext. 401
Chief Executive Officer
(416) 855-3313 ext. 401