WINNIPEG, MB – September 24, 2021 – Marwest Apartment Real Estate Investment Trust (“Marwest Apartment REIT” or the “REIT”) (TSXV: MAR.UN) is pleased to announce that it has entered into agreements, on September 23, 2021, to purchase 112 units over two adjacent multi-family residential properties (the “Element Properties”) in Winnipeg, Manitoba.
The purchase consists of 112 new-generation units, which were completed between 2019 and 2021. The Element Properties are currently 99% occupied.
“We are thrilled to be able to add to our growing portfolio with this significant acquisition that will increase our current unit count by over 40%. I’m also extremely proud of our team to have been able to act on an acquisition of this quality within only 45 days of closing our most recent equity offering.” said William Martens, CEO of the REIT.
The Element Properties
Marwest (Element) Apartments L.P. (“Element LP”) is a Manitoba limited partnership which owns two complexes comprising a total of 112 units located at 85 Fiorentino Street (“Element I”) and 30 El Tassi Drive (“Element II”) in Winnipeg, Manitoba. Element I consists of 40 units and Element II consists of 72 units.
The only material assets and liabilities of the Element LP relate to the Element Properties. Prior to closing, the REIT will enter into assumption agreements with the lenders for the mortgages that will be in place on Element I and Element II.
Element Acquisition
The total value of the Element Properties has been set at $27,000,000 for the acquisition. As the REIT will be purchasing all of the current limited partnership units in the Element Properties, the purchase price is the value of $27,000,000 less the outstanding debt of the Element LP, which will be assumed and is anticipated to be $24,631,607, leading to a purchase price for the limited partnership units of $2,368,393. There are no finder’s fees payable in connection with the proposed transaction.
On closing, the REIT anticipates paying $1,184,197 in cash, and issuing 1,029,736 Exchangeable Units at a price of $1.15 per unit to satisfy the approximated $2,368,393 purchase price. The REIT will also repay $1,200,000 to the vendors for current and outstanding loans to affiliates.
Independent Trustee Review and Approval Process
The independent trustees of the REIT negotiated and approved the terms of the Element Purchase Agreements.
Independent Appraisal of Element Properties
Although the REIT was not required to obtain a formal valuation (within the meaning of Multilateral Instrument 61-101 (“MI 61-101”) and TSXV Policy 5.9) of the Element LP Units, the REIT obtained an independent appraisal of the Element Properties which supports the consideration to be paid for Element LP as it appraised the Element Properties at $27,410,000, which is greater than the $27,000,000 value used to calculate the Aggregate Element LP Purchase Price. The independent appraisal is subject to customary assumptions, qualifications and limitations, will be summarized in the management information circular (the “Special Meeting Circular”) to be prepared and sent to unitholders in connection with the Special Meeting and will be available on the REIT’s profile on the System for Electronic Document Analysis and Retrieval (SEDAR).
Element LP Historical Financial Information
Audited annual financial statements of Element LP for the fiscal years ended December 31, 2020 and December 31, 2019, and unaudited interim financial statements of Element LP for the six month period ended June 30, 2021 will be included in the Special Meeting Circular.
The Element Acquisition is a “related party transaction” within the meaning of MI 61-101 and TSXV Policy 5.9 and closing is subject to receipt of unitholder approval of the Element Acquisition on a “majority of the minority” basis at a special meeting of unitholders (the “Special Meeting”). The Special Meeting will be called and held in due course, but is currently anticipated to be held on or about November 12, 2021.
Certain “related parties” of the REIT, being associates of: (i) Mr. William Martens, CEO and a Trustee of the REIT; (ii) Mr. Armin W. Martens, Executive Vice-President of the REIT; (iii) Mr. Cornelius W.V. Martens, a director and officer of Marwest Asset Management Inc., the asset manager of the REIT (the “Manager”); (iv) Mr. Karl Martens, a director and officer of the Manager; and (v) Mr. Victor Martens, a family member of the foregoing individuals who has an indirect interest in the Manager, own an aggregate of 1,000 Element LP Units, representing 50% of the outstanding Element LP Units and 50% of the shares of the general partner of Element LP, all of which will be acquired by the Partnership in consideration for Exchangeable LP Units.
Unison Homes Ltd. owns the remaining 50% of the outstanding Element LP Units which will be acquired for cash consideration.
Conditions of Closing
The Element Acquisition is currently anticipated to close in November 2021. The completion of the Element Acquisition is subject to a number of closing conditions including TSXV approval, unitholder approval on a “majority of the minority” basis, lender consents, confirmatory due diligence with respect to the Element Properties and no material adverse change occurring in the Element LP (or the Element Properties).
For further information, please contact Mr. William Martens, Chief Executive Officer, Telephone: (204) 947-1200.
Forward-looking Statements
The information in this news release includes certain information and statements about management’s views of future events, expectations, plans and prospects that constitute forward‐ looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward‐looking statements. Forward‐looking statements in this news release include, but are not limited to, the potential completion of the Element Acquisition. Any number of factors could cause actual results to differ materially from these forward‐looking statements as well as future results. Although management of the REIT believes that the expectations reflected in forward‐ looking statements are reasonable, it can give no assurances that the expectations of any forward‐ looking statements will prove to be correct. Except as required by law, the REIT disclaims any intention and assumes no obligation to update or revise any forward‐looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward‐looking statements or otherwise.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.
Information regarding Element LP and Element Properties
This press release sets forth certain information relating to the Element LP and the Element Properties. Such information was provided by the general partners of the Element LP. Neither the REIT nor any other person makes any representation or warranty regarding the accuracy of such information contained in this press release and readers are cautioned not to place undue reliance on such information.
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