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) -- 08/14/14 -- 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
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settl...
In his session at @ThingsExpo, Dr. Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, presented the findings of a series of six detailed case studies of how large corporations are implementing IoT. The session explored how IoT has improved their economic performance, had major impacts on business models and resulted in impressive ROIs. The companies covered span manufacturing and services firms. He also explored servicification, how manufacturing firms shift from se...
"I will be talking about ChatOps and ChatOps as a way to solve some problems in the DevOps space," explained Himanshu Chhetri, CTO of Addteq, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DevOpsSummit New York 2018, colocated with CloudEXPO | DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City. Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of bus...
For better or worse, DevOps has gone mainstream. All doubt was removed when IBM and HP threw up their respective DevOps microsites. Where are we on the hype cycle? It's hard to say for sure but there's a feeling we're heading for the "Peak of Inflated Expectations." What does this mean for the enterprise? Should they avoid DevOps? Definitely not. Should they be cautious though? Absolutely. The truth is that DevOps and the enterprise are at best strange bedfellows. The movement has its roots in t...
Learn how to solve the problem of keeping files in sync between multiple Docker containers. In his session at 16th Cloud Expo, Aaron Brongersma, Senior Infrastructure Engineer at Modulus, discussed using rsync, GlusterFS, EBS and Bit Torrent Sync. He broke down the tools that are needed to help create a seamless user experience. In the end, can we have an environment where we can easily move Docker containers, servers, and volumes without impacting our applications? He shared his results so yo...
For organizations that have amassed large sums of software complexity, taking a microservices approach is the first step toward DevOps and continuous improvement / development. Integrating system-level analysis with microservices makes it easier to change and add functionality to applications at any time without the increase of risk. Before you start big transformation projects or a cloud migration, make sure these changes won’t take down your entire organization.
The Jevons Paradox suggests that when technological advances increase efficiency of a resource, it results in an overall increase in consumption. Writing on the increased use of coal as a result of technological improvements, 19th-century economist William Stanley Jevons found that these improvements led to the development of new ways to utilize coal. In his session at 19th Cloud Expo, Mark Thiele, Chief Strategy Officer for Apcera, compared the Jevons Paradox to modern-day enterprise IT, examin...
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera MyS...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
Digital transformation has increased the pace of business creating a productivity divide between the technology haves and have nots. Managing financial information on spreadsheets and piecing together insight from numerous disconnected systems is no longer an option. Rapid market changes and aggressive competition are motivating business leaders to reevaluate legacy technology investments in search of modern technologies to achieve greater agility, reduced costs and organizational efficiencies. ...
Amazon started as an online bookseller 20 years ago. Since then, it has evolved into a technology juggernaut that has disrupted multiple markets and industries and touches many aspects of our lives. It is a relentless technology and business model innovator driving disruption throughout numerous ecosystems. Amazon’s AWS revenues alone are approaching $16B a year making it one of the largest IT companies in the world. With dominant offerings in Cloud, IoT, eCommerce, Big Data, AI, Digital Assista...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...