RICHMOND, BC, Feb. 11, 2013 /CNW/ - FAM Real Estate Investment Trust
(TSX: F.UN, F.WT) ("FAM REIT" or the "REIT") announced today that it
has entered into binding agreements, which, as described below,
strategically facilitate a two-step sale of a 100% interest in an urban
office property municipally known as 220 Portage Avenue, Winnipeg
Manitoba ("220 Portage" or the "Property"), to Artis Real Estate
Investment Trust ("Artis") for an aggregate price of $41 million,
subject to certain adjustments. FAM REIT currently owns a 50%
non-managing interest in 220 Portage.
FAM REIT enters into binding agreement with its co-owner to acquire its
co-owner's interest in 220 Portage and has assigned such acquisition
right to Artis on the same terms and conditions
Pursuant to a sale notice dated January 17, 2013 given by FAM REIT's
co-owner, FAM REIT has exercised its right of first offer to purchase
the 50% managing interest held by its co-owner in 220 Portage, and has
immediately thereafter assigned its purchase right, with the consent of
FAM REIT's co-owner, on the same terms and conditions, to a subsidiary
of Artis. The purchase price for the 50% interest in the Property will
be $20.5 million subject to typical closing adjustments. No net cash
outlay or receipt is anticipated by FAM REIT in the facilitation of
this transaction.
Put-Call Option for acquisition by Artis of FAM REIT's 50% non-managing
interest in 220 Portage for $20.5 million
In connection with the above transactions, FAM REIT and Artis have
entered into a binding memorandum of understanding (the "MOU") pursuant
to which Artis has granted to FAM REIT an irrevocable right and option
to compel Artis to buy the REIT's 50% interest in the Property (the
"Put Option"). The Put Option may be exercised by FAM REIT for a
period of twelve months following the date on which Artis acquires FAM
REIT's co-owner's 50% interest in the Property.
Also pursuant to the MOU, FAM REIT has granted to Artis an irrevocable
right and option to purchase the REIT's 50% interest in the Property
(the "Call Option"). The Call Option may be exercised by Artis for a
period of ninety days following the expiration of the Put Option.
If either the Put Option or the Call Option is exercised, the purchase
price for the REIT's 50% interest in the Property will be $20.5 million
subject to typical closing adjustments.
Deal structure is accretive to FAM REIT's underlying value on a per unit
basis and provides unique capital recycling opportunity
Prior to the aforementioned agreements, FAM REIT had purchased its 50%
non-managing interest as part of its initial IPO portfolio, which
closed on December 28, 2012.
Pursuant to a sale of FAM REIT's 50% non-managing interest for $20.5
million under the Put-Call, FAM REIT expects to realize a gain on the
sale, thereby creating material accretion to underlying value per unit.
Shant Poladian, Chief Executive Officer of FAM REIT, commented, "The
opportunity to dispose of our 50% non-managing interest through this
Put-Call structure will enable us to redeploy capital accretively with
significant timing flexibility. This transaction is indicative of our
relentless focus on the creation of equity value for our owners,
irrespective of whether it is through acquisitions, dispositions, M&A
or organic growth."
About FAM Real Estate Investment Trust
The REIT is a diversified commercial real estate investment trust
focused on owning and acquiring strategically well-located industrial,
office and retail real estate located primarily across Canada's large
population centres.
The REIT's initial portfolio consists of a diversified mix of such
properties with an aggregate of approximately 1.7 million square feet
of gross leasable area. The REIT's properties are located in Manitoba
(eighteen properties), Alberta (four properties), Saskatchewan (two
properties), Ontario (two properties) and the Northwest Territories
(one property). 84% of the gross leasable area of the REIT's properties
is concentrated in large population centres (as defined by Statistics
Canada), including Winnipeg, the Greater Toronto Area, Calgary and
Regina.
Forward-Looking Statements
This press release contains forward-looking information within the
meaning of applicable securities legislation, which reflects the REIT's
current expectations regarding future events. Forward-looking
information is based on a number of assumptions and is subject to a
number of risks and uncertainties, many of which are beyond the REIT's
control, that could cause actual results and events to differ
materially from those that are disclosed in or implied by such
forward-looking information. Such risks and uncertainties include, but
are not limited to, the failure by Artis to complete the acquisition of
the 50% managing interest in the Property or the failure to complete
transactions contemplated by the MOU. These forward-looking statements
are made as of the date of this press release and, except as expressly
required by applicable law, the REIT assumes no obligation to publicly
update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
SOURCE: FAM Real Estate Investment Trust
