Welcome!

News Feed Item

CHC Realty Capital Corp. Announces Agreement in Principle for Qualifying Transaction

Transaction Initiates Company's Strategy to be Market Leader in Student Housing

TORONTO, ONTARIO -- (Marketwired) -- 01/09/14 -- CHC Realty Capital Corp. ("CHC" or the "Company") (TSX VENTURE: CHC.P), a capital pool company, is pleased to announce that it has entered into a purchase and sale agreement dated January 9, 2014 to acquire the "Liberty Terrace" student housing property located in Kingston, Ontario (the "Property"). Subject to the terms and conditions of the agreement and the completion of certain conditions precedent, including satisfactory due diligence and receipt of all necessary regulatory approvals, including TSX Venture Exchange ("TSXV") approval, the proposed transaction will qualify as CHC's "Qualifying Transaction" as defined in TSXV Policy 2.4 - Capital Pool Companies.

The Property is situated at 335 Barrie Street, Kingston, in close proximity (approximately 1.2 km) to Queen's University. It is comprised of 18 beds and 1,108 sq ft. of ground floor commercial space. The vendor of the Property is Q4 Realty Inc. (the "Vendor"), a corporation incorporated under the laws of Ontario. The Vendor is not related to CHC or any of its directors and officers. As such, the acquisition will not be a Non-Arm's Length Qualifying Transaction (as that term is defined in TSXV Policy 2.4) and approval of CHC's shareholders will not be required for the completion of the acquisition. The principal shareholders of the Vendor are Bernard Luttmer, Oskar Johansson and John Feaver all of Toronto, Ontario and Andrew Keilty of Kingston, Ontario.

The purchase price for the Property is $2.5 million, subject to adjustments, which CHC intends to satisfy through the assumption of an existing mortgage on the Property in the principal amount of approximately $1.3 million, and the payment to the Vendor of the balance of the purchase price in cash from CHC's existing funds. CHC has paid a refundable deposit to the Vendor in the amount of $25,000. The deposit will become non-refundable upon satisfaction or waiver of CHC's due diligence condition in respect of the acquisition.

"We are very excited to enter into this transaction as the first step in our growth plan to become the leading provider of student housing across Canada", said Mark Hansen, Chief Executive Officer of CHC. "Liberty Terrace meets our criteria for acquiring high quality assets in close proximity to a major university in a proven market. The property provides stable and secure cash flow and is managed by a strong local partner in Varsity Properties, who are the leading property manager of student accommodations in the Kingston market. This model represents our template for growth across the country."

In addition to the deposit paid by the Company, CHC Realty Investments Inc. ("CHC RI"), a company owned by Mark Hansen, President, CEO and a director of the Company and Craig Smith, a director of the Company, has paid the Vendor an additional $75,000 refundable deposit, which will also become non-refundable upon satisfaction or waiver of CHC's due diligence condition in respect of the acquisition. CHC RI will also pay the Vendor an additional non-refundable deposit of $100,000 upon satisfaction or waiver of CHC's due diligence condition. The deposits will be repaid by the Company to CHC RI on closing of the proposed transaction, without interest or fees.

There will be no changes to the directors and officers of CHC as a result of the Qualifying Transaction. The directors and officers of CHC are Mark Hansen, President, CEO and director, Robert Waxman, CFO, Vaughn MacLellan, Corporate Secretary and director, Craig Smith, director and Thomas Murphy, director. Additional information about the directors and officers of CHC is contained in the prospectus of the Company dated November 19, 2013 relating to its initial public offering, which is available under the Company's profile on SEDAR at www.sedar.com.

On closing of the acquisition of the Property, CHC anticipates meeting the "Tier 2" initial listing requirements of the TSXV for a real estate issuer. Closing of the acquisition is currently anticipated to be in the first quarter of 2014.

The acquisition of the Property is intended to form part of a series of transactions which will result in CHC carrying on business as an owner and operator of student housing properties located in Canada with an internalized executive management platform and, at an appropriate time, the effective conversion of CHC into a real estate investment trust focused on student housing.

Additional Information Regarding the Property

The Property's 18 student beds are fully occupied and the commercial space is currently 100% leased to two tenants. Both commercial leases expire later in 2014. One of the commercial tenants has decided not to renew its lease and will be vacating the space at the end of its term. The other tenant is Varsity Properties Inc. ("Varsity"), a related entity to the Vendor. The location leased by Varsity is its head office. Varsity has entered into a new 5 year lease for the entire commercial space upon expiry of the existing leases. The terms of the new lease will increase NOI by $10,000 annually.

The existing mortgage on the Property will be assumed by CHC on closing. The mortgage is with a Canadian chartered bank and CHC is currently in discussions with the bank to assume the mortgage on closing. The principal balance outstanding on the mortgage is approximately $1.3 million. The mortgage comes due on June 1, 2014 with an above market interest rate. CHC intends to enter into discussions post-closing to renew the mortgage at current market rates.

The following table highlights additional information about the Property:

------------------------------------------------------------------------
Year                             NOI         NOI   Occupancy        AMR
Built               Beds       (LTM)    Cap Rate       (LTM)       (LTM)
------------------------------------------------------------------------
2009                  18    $149,527        6.0%        100%     $847.69
------------------------------------------------------------------------
Notes: NOI = net operating income. See also "Non-IFRS Measure".
LTM = last 12 months ended November 30, 2013.
AMR = average monthly rate per bed (excluding commercial and parking)

Property Management

In connection with the acquisition of the Property, CHC expects to enter into property management arrangements with Varsity, pursuant to which Varsity will become the property manager of the Property. Varsity is not related to CHC or any of its directors and officers. Varsity will be entitled to receive a fee for its property management services calculated on the basis of the Property's aggregate gross revenue to be negotiated.

Conditions of Completion

The acquisition of the Property will be subject to receipt of all necessary regulatory approvals, including the approval of the TSXV. In addition, the acquisition of the Property is subject to certain closing conditions, including completion of satisfactory due diligence and the completion of financing arrangements with the mortgage lender.

CHC Capitalization

As of the date hereof, CHC has 55,000,000 common shares issued and outstanding, 4,125,000 incentive options exercisable at $0.10 per share and 1,000,000 agent's options exercisable at $0.10 per share. There will be no change to the capitalization of CHC as a result of the acquisition of the Property, other than the new mortgage financings in respect of the Property to be obtained by CHC.

Sponsorship

Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available. CHC intends to seek a waiver from the TSXV of the sponsorship requirement but if such waiver is not obtained, CHC will then retain a qualified sponsor.

Trading Halt

CHC's common shares are currently halted and CHC anticipates they will remain halted until the documentation required by the TSXV for the proposed transaction can be provided to the TSXV.

About CHC Realty Capital Corp.

CHC is currently designated as a capital pool company by the TSXV. The Company has not commenced commercial operations and has no assets other than cash. Upon completion of its "Qualifying Transaction", CHC intends to carry on business as an owner and operator of student housing properties located in Canada with an internalized executive management platform. At an appropriate time in the future, CHC intends to convert into and carry on such business as a real estate investment trust.

Cautions Regarding Future Plans and Forward Looking Information

Completion of the proposed transaction is subject to a number of conditions, including but not limited to TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the proposed transaction may not be accurate or complete and should not be relied upon. Trading in the securities of CHC should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. 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 release.

This press release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding the completion of the proposed transaction and the business strategies of CHC. Although CHC believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. CHC cautions investors that any forward-looking information provided by CHC is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: CHC's ability to complete the proposed transaction; the state of the real estate sector in the event the proposed transaction is completed; recent market volatility; CHC's ability to secure the necessary mortgage financing or to be fully able to implement its business strategies and other risks and factors that CHC is unaware of at this time. The reader is referred to CHC's initial public offering prospectus and other continuous disclosure documents for a more complete discussion of risk factors relating to CHC and their potential effects, copies of which may be accessed through CHC's profile on SEDAR at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Non-IFRS Measure

This press release uses the term "NOI", which stands for net operating income. NOI is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. It is a supplemental measure of performance for issuers. CHC believes that NOI is an important measure of operating performance and is useful in assessing the company's property operating performance on an unlevered basis. The IFRS measurement most directly comparable to NOI is net income and NOI should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the company's performance.

Contacts:
CHC Realty Capital Corp.
Mark Hansen
President and Chief Executive Officer
(416) 863-1085
[email protected]

CHC Realty Capital Corp.
Robert Waxman
Chief Financial Officer
(416) 947-7084
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Conference Guru has been named “Media Sponsor” of the 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to gre...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
"ZeroStack is a startup in Silicon Valley. We're solving a very interesting problem around bringing public cloud convenience with private cloud control for enterprises and mid-size companies," explained Kamesh Pemmaraju, VP of Product Management at ZeroStack, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Large industrial manufacturing organizations are adopting the agile principles of cloud software companies. The industrial manufacturing development process has not scaled over time. Now that design CAD teams are geographically distributed, centralizing their work is key. With large multi-gigabyte projects, outdated tools have stifled industrial team agility, time-to-market milestones, and impacted P&L stakeholders.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...