SmartCentres Real Estate Investment Trust (“SmartCentres” or the
“REIT”) (TSX:SRU.UN), announces a $513 million strategic
acquisition of a two-thirds interest in 53 acres (“Acquired
Lands”), in ‘SmartVMC’, the 100+ acre master-planned City Centre in
the Vaughan Metropolitan Centre. This more than doubles
SmartCentres’ interest in SmartVMC, uniting ownership across the
property and making SmartCentres the largest landowner in Vaughan’s
dynamic TTC subway-connected Downtown.
“These 53 acres represent the most strategic
property in the country for SmartCentres REIT,” said Mitchell
Goldhar, Executive Chairman and CEO of SmartCentres. “With 45,000
people expected to ultimately call SmartVMC home, it is the jewel
in the crown of SmartCentres’ portfolio.”
The Acquired Lands have in-place Permissions for
multi-residential, condominium, seniors’ residences, office,
retail, recreational, entertainment, and other uses, aligned with
the REIT’s transformation strategy. Mr. Goldhar’s Penguin Group of
Companies (“Penguin”) owns the remaining 33.33% of Acquired Lands,
therefore extending the successful SmartCentres/Penguin partnership
to now own the entire 105-acre SmartVMC City Centre, on which 21
million square feet is envisioned. SmartLiving, SmartCentres’
wholly owned in-house residential development platform, is poised
to grow exponentially with this acquisition.
“This is truly a unique situation. It is not
every day a company can be involved in building an entire
downtown,” said Mr. Goldhar. “SmartVMC is at the confluence of $3.5
billion in public transportation infrastructure, including the
TTC’s new Vaughan Metropolitan Centre subway station, connecting
the site directly to Downtown Toronto. While it may be difficult to
imagine now, in time this will reveal itself as a new benchmark for
modern living in our city and beyond.”
Approximately 11 acres of the Acquired Lands are
currently occupied by various retailers, including a 146,000 square
foot Lowe’s Home Improvement store and several quick service
restaurants, providing strong holding income.
Merging these two parcels of land under common
ownership enables the unleashing of creativity and maximizing of
synergies, such as environmental sustainability, open space
connectivity, renewable energy, and recycling management. Combined
with its existing holdings in SmartVMC, this strategic investment
will deliver growth to the REIT for years to come.
Transaction Highlights
- One of a kind large, high-quality
entitled mixed-use development land at the confluence of Hwy 400,
Hwy 407, and Hwy 7, Vaughan Metropolitan Centre University line TTC
Subway Station, VIVA Bus Terminal and York Region Bus
Terminal.
- Located in one of the fastest
growing communities in Canada.
- Contributes to the demand for
housing.
- Highly unique ownership of a
majority of a 100+ acre City Centre.
- Significant NAV creation through
multi-residential and other development for years to come; and
- Partial funding from units to be
issued at $34.50; a 15.7% premium over most recent closing price of
SmartCentres units.
- Closing expected to take place
prior to December 31, 2021.
Funding
SmartCentres intends to fund the acquisition
through:
- The issuance of approximately $200
million in subsidiary SmartCentres REIT Limited Partnership Units,
to be issued at $34.50 per unit, and exchangeable into SmartCentres
REIT Units on a one-for-one basis (subject to TSX approval),
and
- Approximately $313 million from
debt facilities and cash on hand.
About SmartCentres
SmartCentres Real Estate Investment Trust is one
of Canada’s largest fully integrated REITs, with a best-in-class
portfolio featuring 168 strategically located properties in
communities across the country. SmartCentres has approximately
$10.2 billion in assets and owns 33.9 million square feet of income
producing value-oriented retail space with 97.6% occupancy, on
3,500 acres of owned land across Canada.
SmartCentres continues to focus on enhancing the
lives of Canadians by planning and developing complete, connected,
mixed-use communities on its existing retail properties. Project
512, a publicly announced $13.1 billion intensification program
($7.8 billion at SmartCentres' share) represents the REIT’s current
major development focus on which construction is expected to
commence within the next five years. This intensification program
consists of rental apartments, condos, seniors’ residences and
hotels, to be developed under the SmartLiving banner, and retail,
office, and storage facilities, to be developed under the
SmartCentres banner.
SmartCentres' intensification program is
expected to produce an additional 54.7 million square feet (32.2
million square feet at SmartCentres’ share) of space, 27.0 million
square feet (15.9 million square feet at SmartCentres’ share) of
which has or will commence construction within the next five years.
From shopping centres to city centres, SmartCentres is uniquely
positioned to reshape the Canadian urban and urban-suburban
landscape.
Certain statements in this Press Release are
"forward-looking statements" that reflect management's expectations
regarding the Trust's future growth, results of operations,
performance and business prospects and opportunities. More
specifically, certain statements including, but not limited to,
statements related to SmartCentres’ expected or planned development
plans and joint venture projects, including the described type,
scope, costs and other financial metrics, expectations surrounding
the closing of the acquisition including purchase price and
anticipated funding of the purchase price and statements that
contain words such as "could", "should", "can", "anticipate",
"expect", "believe", "will", "may" and similar expressions and
statements relating to matters that are not historical facts,
constitute "forward-looking statements". These forward-looking
statements are presented for the purpose of assisting the Trust's
Unitholders and financial analysts in understanding the Trust's
operating environment, and may not be appropriate for other
purposes. Such forward-looking statements reflect management's
current beliefs and are based on information currently available to
management.
However, such forward-looking statements involve
significant risks and uncertainties. A number of factors could
cause actual results to differ materially from the results
discussed in the forward-looking statements, including risks
associated with potential acquisitions not being completed or not
being completed on the contemplated terms, public health crises
such as the COVID-19 pandemic, real property ownership and
development, debt and equity financing for development, interest
and financing costs, construction and development risks, ability to
obtain commercial and municipal consents for development. These
risks and others are more fully discussed under the heading “Risks
and Uncertainties” and elsewhere in the SmartCentres’ most recent
Management’s Discussion and Analysis, as well as under the heading
“Risk Factors” in SmartCentres’ most recent annual information
form. Although the forward-looking statements contained in this
press release are based on what management believes to be
reasonable assumptions, SmartCentres cannot assure investors that
actual results will be consistent with these forward-looking
statements. The forward-looking statements contained herein are
expressly qualified in their entirety by this cautionary statement.
These forward-looking statements are made as at the date of this
Press Release and SmartCentres assumes no obligation to update or
revise them to reflect new events or circumstances unless otherwise
required by applicable securities legislation.
Material factors or assumptions that were
applied in drawing a conclusion or making an estimate set out in
the forward-looking information may include, but are not limited
to: a stable retail environment; relatively low and stable interest
costs; a continuing trend toward land use intensification,
including residential development in urban markets and continued
growth along transportation nodes; access to equity and debt
capital markets to fund, at acceptable costs, future capital
requirements and to enable our refinancing of debts as they mature;
that requisite consents for development will be obtained in the
ordinary course, construction and permitting costs consistent with
the past year and recent inflation trends.
For more information, visit www.smartcentres.com
or please contact:
Mitchell Goldhar |
Peter Sweeney |
Executive Chairman and CEO |
Chief Financial Officer |
SmartCentres |
SmartCentres |
(905) 326-6400 ext. 7674 |
(905) 326-6400 ext. 7865 |
mgoldhar@smartcentres.com |
psweeney@smartcentres.com |
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