Fronsac Real Estate Investment Trust Enters into Acquisition Agreements to Purchase Three Commercial Properties in Québec and Ontario
January 20, 2020 at 04:34 pm EST
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Fronsac Real Estate Investment Trust announce that it has entered into acquisition agreements to purchase three commercial properties in Québec and Ontario (collectively, the "Acquisition Properties"), and its intention to undertake a public offering (the "Offering") of units of Fronsac (the "Units") at a price of $0.62 per Unit for minimum gross proceeds of approximately $15.0 million (the "Minimum Offering") and maximum gross proceeds of approximately $18.0 million (the "Maximum Offering"). Use of Proceeds: The REIT intends to use the net proceeds of the Offering as follows: (i) approximately $3.6 million to partially fund the acquisition of a property located in Kenora, Ontario and leased to Walmart. The total consideration to be paid for the property will be approximately $12.0 million (excluding any transaction costs) and will be paid in cash; (ii) approximately $1.3 million to partially fund the acquisition of a property located in Farnham, Québec and leased to a gas station and restaurant operated by Petro-Canada, a convenience store operator and Tim Hortons. The total consideration to be paid for the property will be approximately $4.0 million (excluding any transaction costs) and will be paid in cash; (iii) approximately $1.0 million to partially fund the acquisition of a 75%-interest in property located in
Saint-Étienne-des-Grès, Québec and leased to a gas station and restaurant operated by Parkland, a convenience store operator and Tim Hortons. The total consideration to be paid for the property will be $3.0 million (excluding any transaction costs) and will be paid in cash; (iv) approximately $7.5 million assuming the Minimum Offering is completed and approximately $10.3
million assuming the Maximum Offering is completed to repay a portion of the outstanding indebtedness under certain of Fronsac's credit facilities, which may be subsequently redrawn in
connection with the acquisition by the REIT of the Acquisition Properties; (v) approximately $0.3 million for expenses incurred by the REIT in connection with the Offering; and (vi) approximately $0.5 million for real estate transaction costs expected to be incurred in connection with the acquisition of the Acquisition Properties, primarily comprised of land transfer and other taxes, insurance, bank underwriting fees, legal fees and third-party consultant fees; and the combined net operating income in respect of the Acquisition Properties is approximately $1.5 million, representing a 7.9% weighted average capitalization rate based on the aggregate purchase price of approximately $19.0 million (excluding transaction costs) in respect of the Acquisition Properties.
Canadian Net Real Estate Investment Trust (the Trust) is a Canada-based open-ended real estate investment trust. The Trust owns and rents commercial real estate properties directly, through its wholly owned subsidiaries and joint ventures. The Trust operates in one segment, commercial real estate located in Canada. The Trust holds approximately 101 investment properties, 83 residing in the province of Quebec, nine in the province of Ontario and nine in the province of Nova Scotia. The properties are occupied by four distinct groups of tenants composed of retailers, national service station and convenience store chains, quick-service restaurant chains, and others. The Trust's properties include 40-50 Brunet Street, 230 St-Luc Blvd, 196 Hotel-de-Ville Blvd, 1349-1351 Road 117, 275 Barkoff Street, 530 Barkoff Street, 340-344 Montee du Comte, 1440-50 St-Laurent East Blvd, 1460 St-Laurent East Blvd, 7335 Guillaume Couture Blvd, 4200 Bernard-Pilon Street and others.