WINNIPEG, MB, Sept. eight, 2020 Artis Actual Property Funding Belief (TSX: AX.UN) (“Artis REIT”) immediately introduced that its board of trustees has authorised a complete plan to unlock unitholder worth together with the spin-off of its Canadian retail properties right into a newly fashioned retail actual property funding belief (“Retail Spin-Off”), along with a strategic debt discount initiative.
The Retail Spin-Off will create a pure-play retail targeted REIT (Artis Retail REIT) enabling buyers to raised worth Artis REIT’s high quality retail portfolio. Artis REIT will deal with its institutional-grade North American industrial and workplace companies. The expanded non-core disposition program with web proceeds earmarked for debt discount will strengthen the steadiness sheet and enhance the calibre and progress profile of Artis REIT’s portfolio.
“We consider our high-quality, diversified business portfolio is being considerably undervalued by the market and that the proposed methods will serve to unlock worth for our unitholders”, said Armin Martens, CEO of Artis REIT.
The brand new retail-focused REIT will likely be named “Artis Retail Actual Property Funding Belief” (“Artis Retail REIT”).
At June 30, 2020, Artis REIT’s retail portfolio comprised 42 primarily open-air, service-based properties situated throughout 4 provinces in Western Canada totaling 2.9 million sq. toes of gross leasable space. In Q2-20, the retail portfolio generated Property NOI of $12.1 million, representing 17.2% of Artis REIT’s Proportionate Share Property NOI. At June 30, 2020, the retail portfolio represented a good worth of $819.three million and was 89.7% occupied.
Sure of the retail properties presently owned by Artis REIT are meant to be bought pursuant to the non-core asset gross sales program. Such gross sales are anticipated to be made by Artis REIT previous to the efficient date of the Retail Spin-Off with the proceeds used to scale back the general indebtedness of Artis REIT. Artis Retail REIT is anticipated to comprise 40 retail properties on the efficient date of the Retail Spin-Off. Additionally it is anticipated that Artis REIT will proceed to handle the retail properties of Artis Retail REIT following the Retail Spin-Off by an exterior administration association to scale back extra prices.
The next is a breakdown of Artis REIT’s Q2-20 Proportionate Share Property NOI by asset class and geographical area:
Artis REIT (AX.UN)
Artis REIT can also be implementing a debt discount initiative which includes the continuation of its profitable non-core asset sale program. The asset gross sales are anticipated to meaningfully decrease leverage, bolster liquidity and improve steadiness sheet power.
In November 2018, at the side of a variety of different strategic initiatives geared toward bettering Artis REIT’s progress profile and strengthening the steadiness sheet, Artis REIT introduced its intention to embark on a disposition program with a goal of $800 million to $1 billion of non-core belongings over a 3 12 months timeframe. Since that announcement, Artis REIT has efficiently accomplished roughly $800 million of asset gross sales forward of schedule and at an mixture worth in extra of the truthful worth of such belongings.
Along with the aforementioned Retail Spin-Off, Artis REIT is saying its intention to boost its non-core asset sale program. Along with the $800 million of asset gross sales accomplished, Artis REIT plans to promote an extra $550 million of non-core belongings with the online proceeds used for debt discount at Artis REIT. Roughly $200 million of non-core belongings are presently underneath conditional sale agreements, anticipated to be accomplished by the tip of 2020, which will likely be previous to the efficient date of the Retail Spin-Off. The remaining roughly $350 million of non-core asset gross sales, that are listed with exterior brokers, are anticipated to be accomplished by Q2-21. Consequently, Artis REIT expects to have bought a complete of roughly $1.35 billion of belongings between This autumn-18 and Q2-21.
Credit score Score
Artis REIT believes that upon completion of those initiatives, its credit score profile will likely be stronger and due to this fact doesn’t consider the transactions described herein can have any hostile impact on its credit score rankings.
ARTIS REIT HIGHLIGHTS
At June 30, 2020, Artis REIT’s industrial and workplace portfolio consisted of 174 properties totaling 21.zero million sq. toes of gross leasable space situated throughout 5 Canadian provinces and 6 U.S. states. Roughly 40% of gross income was generated from authorities and nationwide tenants. By asset class, excluding the retail portfolio, 42% of Artis REIT’s Q2-20 Proportionate Share Property NOI was contributed by the economic phase and the remaining 58% got here from the workplace phase. By geography, excluding the retail portfolio, 37% of Artis REIT’s Q2-20 Proportionate Share Property NOI was generated in Canada and 63% was derived from the U.S. At June 30, 2020, the truthful worth of the economic and workplace portfolio was $four.four billion.
- Robust progress in industrial portfolio. The commercial phase contains 115 properties encompassing roughly 12.four million sq. toes of gross leasable space which have been 93.four% occupied as at June 30, 2020. Since 2010, Identical Property NOI progress has averaged 5% and the pattern is poised to proceed given constructive fundamentals in Artis REIT’s key markets.
- Enticing industrial growth alternatives. The longer term growth pipeline consists of 1.9 million sq. toes of commercial developments in Texas and zero.5 million sq. toes of commercial developments in Arizona, in addition to the potential to develop the pipeline by joint-venture alternatives with institutional companions. There may be additionally a chance to leverage industrial growth experience within the U.S. and develop belongings for customers.
- Stability of the workplace portfolio. The workplace phase contains 59 properties with over 550 distinctive tenants and roughly eight.6 million sq. toes of gross leasable space. The portfolio resiliency is clear by its historic working outcomes. Since 2010, Identical Property NOI progress and whole portfolio occupancy have averaged 1% and 91.6%, respectively.
- Lowered publicity to Alberta. Complete publicity to Alberta is predicted to be lowered to roughly eight% of Proportionate Share Property NOI (of which roughly three% will likely be workplace and roughly 5% will likely be industrial). The realignment of the portfolio will enhance general high quality and slender focus to core and strategic markets.
- Improved entry to capital markets. The Retail Spin-Off and stronger steadiness sheet is predicted to slender the present buying and selling low cost permitting for better entry to capital offering enhanced monetary flexibility.
IMPLEMENTATION OF SPIN-OFF
The Retail Spin-Off will likely be carried out by the use of a statutory plan of association underneath the Canada Enterprise Firms Act. Following a variety of technical steps, every frequent unitholder of Artis REIT instantly previous to the association can have the identical proportionate useful possession in Artis REIT and Artis Retail REIT instantly following the association. Every holder of a most popular unit of Artis REIT will upon completion of the plan of association maintain a brand new most popular unit of Artis REIT and won’t obtain any securities of Artis Retail REIT.
Completion of the transaction will likely be topic to sure closing circumstances, together with: (i) the approval of at the least 66 2/three% of the votes solid by unitholders and at the least 66 2/three% of the votes solid by most popular unitholders at conferences thereof; (ii) approval of the Manitoba Court docket of Queen’s Bench; (iii) regulatory approvals; (iv) consents and approvals from sure of Artis REIT’s lenders, in addition to the satisfaction of different customary closing circumstances; and (v) the itemizing of the Artis Retail REIT models on the TSX, which will likely be topic to the satisfaction of all itemizing necessities of the TSX.
Artis REIT anticipates acquiring an interim order of the Manitoba Court docket of Queen’s Bench in early to mid-October 2020 and holding the conferences of unitholders and most popular unitholders in early to mid-November 2020. Assuming that the entire closing circumstances are happy, Artis REIT anticipates that the closing of the Retail Spin-Off will happen throughout Q1-21. There is no such thing as a assurance that any or the entire circumstances of closing will likely be happy or waived.
The Retail Spin-Off is topic to the satisfaction of a variety of closing circumstances extra significantly described above. An info round describing the Retail Spin-Off in full element is anticipated to be mailed out to unitholders and most popular unitholders in mid-October 2020 following receipt of the interim court docket order.
Scotiabank and CIBC World Markets are performing as monetary advisors to Artis REIT, MLT Aikins LLP is performing as authorized counsel to Artis REIT, Deloitte LLP is performing as tax advisor to Artis REIT and Blake, Cassels & Graydon LLP is performing as particular tax counsel to Artis REIT.
UPCOMING WEBCAST AND CONFERENCE CALL
events are invited to take part in a convention name with administration on Tuesday, September eight, 2020, at three:00 p.m. CT (four:00 p.m. ET). So as to take part, please dial 1-416-764-8688 or 1-888-390-0546. You may be required to determine your self and the group on whose behalf you’re collaborating. A presentation with respect to the Retail Spin-Off will likely be uploaded to Artis REIT’s web site at www.artisreit.com/investor-link/investor-presentations/ upfront of the convention name.
Alternatively, you might entry the simultaneous webcast by following the hyperlink from our web site at www.artisreit.com/investor-link/conference-calls/ throughout or after the convention name and webcast. Previous to the webcast, you might observe the hyperlink to substantiate you could have the suitable software program and system necessities.
When you can’t take part on Tuesday, September eight, 2020, a replay of the convention name will likely be out there by dialing 1-416-764-8677 or 1-888-390-0541 and coming into passcode 485416#. The replay will likely be out there till Thursday, October eight, 2020. The webcast will likely be archived 24 hours after the tip of the convention name and will likely be accessible for 90 days.
NOTICE WITH RESPECT TO NON-GAAP MEASURES
Along with reported IFRS measures, sure non-GAAP measures are generally utilized by Canadian actual property funding trusts as an indicator of monetary efficiency, together with Proportionate Share, Property NOI, Identical Property NOI and Debt to GBV. “GAAP” means the commonly accepted accounting ideas described by the CPA Canada Handbook – Accounting, that are relevant as on the date on which any calculation utilizing GAAP is to be made. Artis REIT applies IFRS, which is the part of GAAP relevant to publicly accountable enterprises. The non-GAAP measures usually are not outlined underneath IFRS and usually are not meant to characterize working earnings for the interval, or from a property, nor ought to any of those measures be seen as an alternative choice to web earnings, money move from operations or different measures of monetary efficiency calculated in accordance with IFRS. Readers must be additional cautioned that the non-GAAP measures as calculated by Artis REIT might not be corresponding to comparable measures offered by different issuers. These non-GAAP measures are outlined in Artis REIT’s Q2-20 MD&A.
This press launch accommodates forward-looking statements. For this function, any statements contained herein that aren’t statements of historic reality could also be deemed to be forward-looking statements. Notably, statements concerning the proposed Retail Spin-Off and enhanced strategic debt discount plan and the ensuing impacts on Artis REIT and Artis Retail REIT are forward-looking statements. With out limiting the foregoing, the phrases “expects”, “anticipates”, “intends”, “estimates”, “initiatives”, and comparable expressions are meant to determine forward-looking statements.
Artis REIT is topic to vital dangers and uncertainties which can trigger the precise outcomes, efficiency or achievements of Artis REIT to be materially completely different from any future outcomes, efficiency or achievements expressed or implied in these forward-looking statements. Such threat components embody, however usually are not restricted to, dangers associated to the Retail Spin-Off and enhanced strategic debt discount technique, together with the potential of the non-satisfaction or waiver of the circumstances of closing or the chance that Artis REIT and its stakeholders is not going to understand the anticipated advantages of the transaction, and dangers regarding the COVID-19 pandemic, implementation of Artis REIT’s beforehand introduced initiatives, dangers related to actual property possession, debt financing, overseas foreign money, credit score and tenant focus, lease rollover, availability of money move, basic uninsured losses, future property acquisitions and tendencies, environmental issues, tax associated issues, modifications in laws and modifications within the tax therapy of trusts, cyber safety, new or (re)developments, unitholder legal responsibility, potential conflicts of curiosity, potential dilution and reliance on key personnel. Artis REIT can’t guarantee buyers that precise outcomes will likely be according to any forward-looking statements and Artis REIT assumes no obligation to replace or revise such forward-looking statements to mirror precise occasions or new circumstances. All forward-looking statements contained on this press launch are certified by this cautionary assertion.
ABOUT ARTIS REAL ESTATE INVESTMENT TRUST
Artis REIT is a diversified Canadian actual property funding belief investing primarily in workplace and industrial properties in Canada and the USA. Since 2004, Artis REIT has executed an aggressive however disciplined progress technique, constructing a portfolio of business properties in choose markets in Canada and the USA. As of June 30, 2020, Artis REIT’s business property contains roughly 23.eight million sq. toes of leasable space.
The Toronto Inventory Alternate has not reviewed and doesn’t settle for accountability for the adequacy or accuracy of this press launch.
SOURCE Artis Actual Property Funding Belief
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