All figures in $USD unless otherwise noted.
TORONTO, May 22, 2024 (GLOBE NEWSWIRE) -- Firm Capital Apartment Real Estate Investment Trust ("the "Trust"), (TSXV: FCA.U), (TSXV: FCA.UN) is pleased to report the following:
$30.5 MILLION DISPOSITION OF FLORIDA PROPERTY
The Trust has completed the sale of one of its wholly-owned multi-family assets located in Florida (the "Florida Property") for $30.5 million. The Florida Property had a sales price in line with its IFRS value.
Net of associated mortgage debt and closing costs, the net sale proceeds were approximately $12.0 million. As part of the transaction, the Trust has agreed to provide seller financing for $4 million due in 12 months (with a possible further one time six month extension) that will provide the Trust a possible escalating return on its investment as follows: (i) for the first six months, the interest rate is 9%, (ii) 11% from months 6 -12 and (iii) 15% from months 12 – 18.
On closing, the Trust received net sale proceeds of approximately $8.0 million which are being used for working capital purposes and debt reduction, which includes the Convertible Debenture (see below).
EARLY REDEMPTION OF $14.0 MILLION FCA.DB CONVERTIBLE DEBENTURE
The Trust is pleased to announce that it intends to redeem early all of its outstanding $13.8 million (CAD$18.8 million) aggregate principal amount of 6.25% convertible unsecured subordinated debentures due June 30, 2026 (the "Convertible Debentures") on or about July 2, 2024 (the "Redemption Date"). The Convertible Debentures, which have a maturity date of June 30, 2026, will be redeemed by the Trust early in accordance with the terms of the trust indenture. The Convertible Debentures, which are listed and posted for trading on the TSX Venture Exchange under the symbol FCA.DB, will cease trading on the Redemption Date.
On the Redemption Date, the Trust will pay holders of Convertible Debentures a redemption price equal to $1,000 for each $1,000 principal amount of Convertible Debentures and all accrued and unpaid interest up to but excluding the Redemption Date. The Trust intends to use cash on hand to pay the redemption price of the redeemed Convertible Debentures.
Formal notice of redemption is being delivered to the Convertible Debenture holders through the Debenture Trustee, TSX Trust Company, in accordance with the trust indenture. Beneficial holders of the Convertible Debentures are encouraged to contact their investment dealer to coordinate the surrender of their Convertible Debentures or if they have any questions about the redemption. No action is required to be taken by holders of the Convertible Debentures in connection with the redemption.
STRATEGIC REVIEW UPDATE
As a result of the Florida Property sale, the Trust has the following remaining Real Estate Investments:
Wholly Owned: Two actively-managed properties located in Houston, Texas comprised of 485 multi-family units;
Joint Ventures: Four joint venture investment properties managed by our partners located in Connecticut, Georgia, Maryland and New York comprised of 614 multi-family units; and
Preferred Capital: Three preferred capital investments located in South Dakota, Texas and Florida.
Currently, the remaining Wholly Owned properties are listed for sale, while the Trust is working with the various Joint Venture sponsors in either various sale processes or to hold for longer periods of time until unitholder value is realized. In the interim, the Trust has ample liquidity in dealing with the Convertible Debenture two years prior to maturity and has made the decision to repay early given its current cash position. Post repayment of the Convertible Debenture, the Trust will only have conventional, non-recourse mortgages secured against its various Wholly Owned and Joint Venture Real Estate Investments.
The Board will continue to assess matters on a quarterly basis and determine if the Trust should: (i) distribute excess income; (ii) distribute net proceeds from asset sales, after debt repayment; (iii) reinvest net proceeds into other investments; (iv) distribute proceeds as a return of capital or special distribution; and/or (v) use excess proceeds to repurchase Trust units in the marketplace. It is the Trust's current intention not to disclose developments with respect to the Strategic Review unless and until it is determined that disclosure is necessary or appropriate, or as required under applicable securities laws.
