Welcome!

News Feed Item

Partners REIT Announces Strategic Steps to Improve Financial Position

REIT will both reduce its monthly cash distribution and sell a small portfolio of Ontario properties

BARRIE, ONTARIO -- (Marketwired) -- 08/15/14 -- Partners Real Estate Investment Trust (the "REIT," or "Partners") (TSX:PAR.UN) today provided an update to the strategic review currently being undertaken by its Board of Trustees, as initially announced on May 6, 2014.

Partners' higher than anticipated general and administrative costs, expenses associated with the REIT's recent proxy battle, near-term cash requirements, and necessary capital expenditures have all combined to strain the REIT's financial flexibility. This flexibility has been further constrained by the REIT's difficulty in accessing traditional sources of capital, as potential lenders or investors seek clarity on the resolution of the REIT's attempts to unwind its April 2014 purchase of three Ontario retail centres from Holyrood Holdings (the "Holyrood Transaction"). In an effort to improve Partners' liquidity and establish a more secure financial position, the REIT's Board of Trustees have elected to take the following steps:


--  Effective as of the August 2014 distribution, Partners will reduce its
    monthly distribution to $0.02083 per unit per month, or $0.25 per unit
    per annum. This reduction will result in annual cash savings of
    approximately $7.7 million, based on the REIT's unit count at the end of
    the second quarter. 
--  The sale of a small portfolio of properties in Ontario in exchange for
    net cash consideration of approximately $14.0 million. 

Partners' Board of Trustees continues to work with both management and its advisor, National Bank Financial, to identify longer-term strategic alternatives, that could include potential strategic investments or a sale of the REIT. The Board of Trustees anticipate that this process will accelerate in early September 2014, once greater clarity is available regarding the REIT's attempts to unwind the Holyrood Transaction. The Board is also continuing its search for a new permanent Chief Executive Officer.

REDUCTION OF DISTRIBUTION

Due to Partners' current debt levels, sustaining capital requirements, and the liquidity pressures resulting from recent events, the REIT's Trustees believe that a reduction in the REIT's monthly distribution is both necessary and prudent. Effective as of the August distribution, Partners will reduce its monthly distribution to $0.02083 per unit per month, or $0.25 per unit per annum. This represents a 50% cut from the current annualized distribution rate of $0.50 per unit. This reduction will result in annual cash savings of approximately $7.7 million, based on the unit count at the end of the second quarter.

SALE OF PROPERTIES

Partners' has entered into a conditional agreement to sell a small portfolio of Ontario properties for aggregate net proceeds (after deducting mortgage debt assumed by the purchaser and transaction expenses) of approximately $14.0 million. The REIT expects to complete the sale of these properties, all of which are fully leased, during the third quarter of 2014. The capitalization rate for this transaction is considered to be at market. Proceeds from this transaction will be used to reduce the amounts owed on the revolving credit facility. These funds will therefore be available for planned capital expenditures and for general corporate purposes.

HOLYROOD TRANSACTION UPDATE

In April 2014, Partners purchased three retail centres in Ontario from Holyrood Holdings ("Holyrood") for a purchase price of approximately $83.2 million. This purchase price was satisfied by the issuance of 4,813,517 convertible units of a subsidiary of the REIT and the assumption of three new first mortgage debts. Concurrently, the REIT issued 1,188,188 units at $5.80 per unit to Holyrood and this issuance of $6.9 million was paid in full by Holyrood's issuance of a promissory note. A second promissory note of $524,000 was also issued by Holyrood to the REIT, representing mark to market interest rate adjustment on the 3 mortgages obtained with the Acquisition. This transaction resulted in Holyrood holding approximately 18.7% of the REIT's outstanding units, on a fully diluted basis.

At the time this acquisition was announced, Partners' Trustees considered the transaction to be in the REIT's best interests. The Trustees believed the acquisition would enhance the REIT's scale, create operational synergies, and increase net operating income.

In May 2014, shortly after the closing of the transaction, the REIT's Trustees were presented with information that persuaded them, after investigation and retention of independent counsel advice, that Ron McCowan, the REIT's interim Chief Executive Officer at the time (and holder of 15% of the REIT's outstanding units) had a sufficiently close business relationship with Laura Philp, Holyrood's owner, that they could be considered as acting together under applicable regulation. The REIT's Trustees would not have approved the Holyrood transaction had they known that Mr. McCowan and Ms. Philp may not have been acting at arm's length.

As a result of this development, the REIT's Trustees initiated a process to reverse the Holyrood Transaction. In June 2014, the REIT entered into a Rescission Agreement with Holyrood to unwind the Holyrood Transaction. The effect of the Agreement would be that the parties would apply to Court for an order rescinding the Holyrood Transaction and returning the parties (to the greatest extent possible) to the position they would have been in prior to its occurrence. The three properties would be returned to Holyrood, and the units issued to Holyrood would be returned to the REIT and its subsidiary for cancellation.

The Rescission Agreement is subject to a number of material conditions. For the past several months, the parties have been working to satisfy those conditions. Based on discussions to date, the REIT is confident that the lenders who have mortgages on the three properties acquired from Holyrood will not oppose the court application to be brought by the REIT and Holyrood to reverse the Holyrood Transaction. One outstanding material condition that has not yet been resolved is that Holyrood has pledged as collateral for a loan the units of the REIT and its subsidiary issued to Holyrood as part of the Holyrood Transaction. Holyrood continues to develop options to either repay the loan, or arrange for alternate security, so that the lender will release the pledged units so that they can be returned to Partners and cancelled.

The Rescission Agreement requires the parties to use their reasonable commercial efforts to complete the rescission by August 31, 2014. The REIT and Holyrood intend to continue to work towards the completion of this Rescission Agreement. However, there can be no assurance at this time that the rescission will be completed.

SECOND QUARTER RESULTS

Partners has also released its results for the three-month period ended June 30, 2014 (the "second quarter"). The second quarter results are discussed in a separate press release issued today, entitled "Partners REIT announces results for the second quarter of 2014." Results remain strong at the real estate asset level with improvement in occupancy and revenue. Results were negatively impacted by $2.5 million of one-time costs associated with the proxy battle with Orange Capital, the unwinding of the Holyrood transaction, and the strategic review.

Conference Call Details

Partners will host a conference call at 8:30 AM Eastern tomorrow, August 15, 2014, at which time management will review the REIT's second quarter financial results and discuss the REIT's strategic outlook.


  Toll Free (North America): 866-225-0198                                   
                                                                            
  Local: 416-340-2218                                                       
                                                                            
Instant Replay Details (Available until August 29, 2014)                    
                                                                            
  Toll Free (North America): 800-408-3053                                   
                                                                            
  Passcode: 9562542                                                         
                                                                            
A recording of the conference call will also be available via Partners'     
 website.                                                                   

About Partners REIT

Partners REIT is a growth-oriented real estate investment trust, which currently owns (directly or indirectly) 42 retail properties, located in British Columbia, Alberta, Manitoba, Ontario, and Quebec, aggregating approximately 3.2 million square feet of leasable space. Partners REIT focuses on expanding and managing a portfolio of retail and mixed-use community and neighbourhood shopping centres located in both primary and secondary markets across Canada.

Disclaimer

Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect," "will" and similar expressions to the extent they relate to Partners REIT. The forward- looking statements are not historical facts but reflect Partners REIT's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the timing of the offering, success of the offering, listing of the units, use of proceeds of the Offering, access to capital, regulatory approvals, intended acquisitions and general economic and industry conditions. Although Partners REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.

Contacts:
Partners Real Estate Investment Trust
Investor Relations
(705) 725-6020 ext. 401
[email protected]

Renmark Financial Communications Inc.
Barry Mire
(514) 939-3989 or (416) 644-2020
[email protected]

Renmark Financial Communications Inc.
Robert Thaemlitz
(514) 939-3989 or (416) 644-2020
[email protected]
www.renmarkfinancial.com

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
Digitization is driving a fundamental change in society that is transforming the way businesses work with their customers, their supply chains and their people. Digital transformation leverages DevOps best practices, such as Agile Parallel Development, Continuous Delivery and Agile Operations to capitalize on opportunities and create competitive differentiation in the application economy. However, information security has been notably absent from the DevOps movement. Speed doesn’t have to negat...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
While DevOps promises a better and tighter integration among an organization’s development and operation teams and transforms an application life cycle into a continual deployment, Chef and Azure together provides a speedy, cost-effective and highly scalable vehicle for realizing the business values of this transformation. In his session at @DevOpsSummit at 19th Cloud Expo, Yung Chou, a Technology Evangelist at Microsoft, will present a unique opportunity to witness how Chef and Azure work tog...
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
Your business relies on your applications and your employees to stay in business. Whether you develop apps or manage business critical apps that help fuel your business, what happens when users experience sluggish performance? You and all technical teams across the organization – application, network, operations, among others, as well as, those outside the organization, like ISPs and third-party providers – are called in to solve the problem.
Digital transformation is too big and important for our future success to not understand the rules that apply to it. The first three rules for winning in this age of hyper-digital transformation are: Advantages in speed, analytics and operational tempos must be captured by implementing an optimized information logistics system (OILS) Real-time operational tempos (IT, people and business processes) must be achieved Businesses that can "analyze data and act and with speed" will dominate those t...
If you had a chance to enter on the ground level of the largest e-commerce market in the world – would you? China is the world’s most populated country with the second largest economy and the world’s fastest growing market. It is estimated that by 2018 the Chinese market will be reaching over $30 billion in gaming revenue alone. Admittedly for a foreign company, doing business in China can be challenging. Often changing laws, administrative regulations and the often inscrutable Chinese Interne...
I'm a lonely sensor. I spend all day telling the world how I'm feeling, but none of the other sensors seem to care. I want to be connected. I want to build relationships with other sensors to be more useful for my human. I want my human to understand that when my friends next door are too hot for a while, I'll soon be flaming. And when all my friends go outside without me, I may be left behind. Don't just log my data; use the relationship graph. In his session at @ThingsExpo, Ryan Boyd, Engi...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
If you’re responsible for an application that depends on the data or functionality of various IoT endpoints – either sensors or devices – your brand reputation depends on the security, reliability, and compliance of its many integrated parts. If your application fails to deliver the expected business results, your customers and partners won't care if that failure stems from the code you developed or from a component that you integrated. What can you do to ensure that the endpoints work as expect...
WebRTC adoption has generated a wave of creative uses of communications and collaboration through websites, sales apps, customer care and business applications. As WebRTC has become more mainstream it has evolved to use cases beyond the original peer-to-peer case, which has led to a repeating requirement for interoperability with existing infrastructures. In his session at @ThingsExpo, Graham Holt, Executive Vice President of Daitan Group, will cover implementation examples that have enabled ea...
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...