Minto Apartment REIT Enters Victoria, British Columbia Market with Financing for University Heights Redevelopment
- REIT to provide $51.7 million convertible development loan to fund Minto Properties' interest in redevelopment joint venture -
OTTAWA, March 24, 2022 /CNW/ - Minto Apartment Real Estate Investment Trust ("the REIT") (TSX: MI.UN) today announced an agreement to provide a convertible development loan of $51.7 million (the "Financing") to Minto Properties Inc. ("MPI") to finance 80% of MPI's 45% equity interest in a joint venture ("JV") with subsidiaries of Greystar Real Estate Partners ("Greystar") and one of Canada's largest institutional investment managers. Today, the JV acquired the University Heights shopping mall located in Saanich, British Columbia in the Greater Victoria Area ("University Heights" or the "Property") with the intention of redeveloping a portion of the 11.5-acre site. MPI and the institutional investment manager each hold 45% interests in the JV, while Greystar holds a 10% interest and will act as the development manager. The Financing consists of a $40.5 million direct facility and a $11.2 million interest reserve.
The Property is currently occupied by a 119,000 square foot shopping centre and a 76,000 square foot Home Depot store. The JV will redevelop the shopping centre into a mixed-use multi-residential and retail property, with five six-storey wood-frame buildings comprising 593 rental suites atop 113,485 square feet of grocery-anchored retail. The Property is subject to a long-term lease with the Home Depot, who will be expanding their store by approximately 9,200 square feet and adding a new garden centre and seasonal outdoor area of approximately 20,000 square feet.
University Heights is situated in an attractive location in Saanich's Shelbourne Valley neighbourhood within 1.4 kilometres of the University of Victoria (22,000 students enrolled and 5,350 staff), and within 2.8 kilometres of Camosun College's downtown campus (20,400 students enrolled and 1,200 staff located across two campuses in the Greater Victoria Area). There is good access to public transit, and the Property is surrounded by attractive amenities including parks, beaches and a library. University Heights has a Walk Score of 77 and a Bike Score of 88. There is significant demand for student rental housing in the area, with little purpose-built rental supply and a historically low vacancy rate. Two of the five buildings on the Property will specifically target students with smaller furnished suites and student-focused amenities.
"Our first investment in the Greater Victoria Area represents an important strategic milestone for the REIT," said Michael Waters, Chief Executive Officer of the REIT. "It provides geographical diversification and exposure to a strong rental market. The Victoria rental market is characterized by low vacancy rates and is supported by strong population and employment growth. University Heights is located proximate to two post-secondary institutions. We see this attractive investment as a building block for continued growth in the region."
The Financing will bear interest at 7% per annum, which will accrue and be payable in full on the maturity of the loan. The REIT intends to fund the Financing through existing cash-on-hand and draws on its revolving credit facility. The Financing has full financial recourse to MPI and is secured by, among other things, a mortgage on the property. The Financing will be subordinate to senior construction and land financing.
Development permit approval is expected in the spring of 2022 and construction is expected to commence in late 2022 or early 2023 with stabilization anticipated in 2026. Upon stabilization, the REIT will have the option to purchase MPI's 45% interest in University Heights at a 5% discount to its then-appraised fair market value.
MPI is a related party to the REIT. Accordingly, the terms of the Financing were reviewed, considered and approved by a committee of the REIT's independent trustees.
About Minto Apartment Real Estate Investment Trust
Minto Apartment Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario to own, develop, and operate income-producing multi-residential properties located in urban markets in Canada. The REIT owns a portfolio of high-quality income-producing multi-residential rental properties located in Toronto, Montréal, Ottawa, Calgary and Edmonton. For more information on Minto Apartment REIT, please visit the REIT's website at: www.mintoapartments.com.
Greystar a global leader in rental housing with expertise in real estate sectors across multiple geographies. The company's business model is unique in its ability to own, operate, and develop collegiate, multifamily, corporate, and senior housing across the globe. Greystar has 64 offices and over 22,000 employees operating in 215 global markets. Greystone's business services include development and construction, property management and investment management and it has more than $49 billion in assets under management. For more information on Greystar please visit its website at www.greystar.com.
This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expected". Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the completion of the transactions contemplated in this news release in the manner anticipated, and the factors discussed under "Risks and Uncertainties" in the REIT's most recent Management's Discussion and Analysis which is available on SEDAR+ (www.sedarplus.ca). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.
SOURCE MINTO Real Estate Investment Trust