Firm Capital Apartment REIT announces acquisition of $ 26.8 million Houston Property Joint Venture. $ 3.5 million, 12% preferred equity investment and $ 13 million Bridge loan

Real Estate Investment Company Capital Apartment

Real Estate Investment Company Capital Apartment

All amounts are in US dollars, unless otherwise stated.

TORONTO, April 18, 2022 (GLOBE NEWSWIRE) – Firm Capital Apartment REIT (the «Confidence(TSXV: FCA.U), (TSXV: FCA) is pleased to announce the acquisition of a 50% stake in another of Trust’s equity investments based in Houston, Texas with a valuation of $ 26.8 million. dollars (the “Houston Transaction“and the”Houston property”); $ 3.4 million, 12% preferred capital investment and $ 13 million CAD bridge loan (the “Bridge Loan”):

  • $ 26.8 Million Acquisition of Houston Property Consortium: The Trust is pleased to announce that it will acquire a 50% stake in its affiliate in one of the Trust’s equity investments in Houston, Texas. The 50% interest rate redemption price from the unrelated partner is based on a valuation of $ 26.8 million for 100% of Houston’s property received through an unsolicited offer from an unrelated third party. Houston Property was initially purchased in 2018 in a 50/50 consortium with the third party for $ 15.3 million. Based on the existing first $ 11.1 million mortgage and the Trust’s current joint and preferred investment of $ 4.7 million, the Trust will acquire the offline partner for approximately $ 4.9 million (excluding closing costs).

    The Trust will finance the Houston Transaction from the proceeds of the Bridge Loan as described below. Based on the valuation of $ 26.8 million, the Trust acquires controlling interest with a projected five-year return on equity or ROE of approximately 7.5% and a weighted average capitalization rate of 6.7%. Upon closing, the Trust will control 100% of Houston’s assets and will hereinafter refer to it as an Investment Property in the Trust’s financial statements. The management of the Houston property will be continued by the same unrelated third party administrator who currently manages the property. The Houston transaction is expected to close in the first half of 2022. The Trust continues to pursue its strategy of growing its entire investment portfolio through, in part, the acquisition of its affiliates.

  • $ 3.5 million, 12% preferred capital investment: The Trust has agreed to provide $ 3.5 million in Preferred Capital to an unrelated third party to recapitalize a block of flats located in Sioux Falls, South Dakota. The terms of the three-year Preferred Capital Investment are as follows: (i) 12% per annum for the entire three years, of which 7% per annum is current pay, with the remaining 5% per annum being collected and renewed monthly for the first year; (ii) 8% per annum with the remaining 4% per annum being collected and reconstituted on a monthly basis for the second year. (iii) 9% per annum with the remaining 3% per annum accumulating and renewing monthly for the third year. The closing of the Preferred Capital Investment is expected in the first half of 2022 and will also be financed by the income received from the Bridge Loan as described below. and

  • Bridge $ 13 Million CAD Loan: The Trust will enter into an agreement with an entity affiliated with the Trust Asset Manager to borrow up to $ 13 million in CAD to be used for Transaction and Preferred Capital Investment. Bridge Loan Conditions are (i) an interest rate equal to or greater than 6.0% per annum or the Canadian Chartered Bank Prime Rate plus a margin. (ii) two-year term; (iii) fully open for repayment at any time before maturity; (iv) 1% commitment fee. (v) a commitment to commit all net excess cash flows arising from any mortgage refinancing and capital increases completed by the Trust until the Bridge Loan is repaid in full; and (vi) a general security agreement. The Bridge Loan will take the form of a lottery facility that can be obtained in increments of $ 1 million. Closing the Bridge Loan is still subject to regulatory approval.

    The Bridge Loan will be provided by an affiliate of the Trust. In addition, the Trust agreed to guarantee the payment and repayment of the Bridge Loan. Therefore, the provision of both the guarantee and the Bridge Loan to and from the Trust constitutes a “related party transaction” as defined in Multilateral Instrument 61-101 – Protection of Minority Securities Holders in Special Transactions (“MI 61-101“), but is exempted from the valuation requirement and the requirement of minority approval in accordance with subsections 5.5 (a) and 5.7 (a) of MI 61-101, respectively, as the value of the Bridge Loan and the related guarantee does not represent more than 25 % of the market capitalization of the Trust, as determined in accordance with MI 61-101.

    The Entity that provides the Bridge Loan to the Trust is an affiliate of the Trust due to the fact that certain executives and managers have an interest in it. The guarantee provided by the Trust in this regard was approved by the Trust Administrator who is independent of the transaction. The report of significant changes in relation to the transaction will be submitted less than 21 days before the closing of the transaction, as the Trust would like to proceed with the transaction in a timely manner.

ABOUT THE CORPORATE CAPITAL APARTMENT REAL ESTATE INVESTMENT TRUST
The Firm Capital Apartment Real Estate Investment Trust is a US-based real estate investment firm that seeks real estate income that generates real estate and related debt investments in both wholly owned and joint ventures. The Trust owns a total of 1,846 apartment units located in different locations in Florida, Connecticut, Texas, New York, New Jersey, Georgia and Maryland.

ATTENTION NOTE ABOUT FUTURE STATEMENTS

Some information in this press release is a future statement in accordance with current securities legislation. Any statements contained in this press release that are not historical event statements may be considered forward-looking statements. Future statements are often identified with terms such as “can”, “should”, “expect”, “expect”, “intend” and similar expressions.

Future statements necessarily involve known and unknown risks, including, without limitation, risks related to general economic conditions; adverse factors affecting the US real estate market in general or the specific markets in which the Trust owns real estate; volatility of property prices; inability to access sufficient capital from internal and external sources and / or inadequate access to sufficient capital on favorable terms; industry and government; changes in legislation, income taxation and regulation; the Trust’s ability to implement its business strategies; ; exchange rate and interest rate fluctuations and other risks. Additional risk factors that may affect the Trust or differ from actual results and performance from the future statements contained herein are listed in the Trust Information Annual Form under the heading Risk Factors (a copy of which can be found in the trust profile in the www.sedar.com).

Readers are warned that the above list is not exhaustive. Readers are further warned not to rely unreasonably on future statements, as there can be no certainty that their plans, intentions or expectations will be realized. This information, although considered reasonable by management at the time of preparation, may prove to be inaccurate and the actual results may differ substantially from what is expected. Future statements contained in this press release are expressly marked by this warning statement. Unless required by applicable law, the Trust undertakes no obligation to publicly update or revise any future statements, either as a result of new information, future events or otherwise.

Neither Exchange nor its Regulatory Service Provider (as defined in the TSX Venture Exchange policies) accept responsibility for the adequacy or accuracy of this version.

For more information, contact:

Sandy Poklar

Mark Goldrich

President & CEO

Head of financial services

(416) 635-0221

(416) 635-0221

For information on investing relationships, contact:

Victoria Moaydi

Manager, Investor Relations

(416) 635-0221

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