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WINNIPEG, MB, Sept. 24, 2021 /CNW/ - 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.
Related Party Transaction
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.
SOURCE Marwest Apartment Real Estate Investment Trust