Northern Property completes $3-billion Northview deal
Company acquires True North and apartment portfolio to become third largest publically-traded landlord in Canada
Karen K. Ho
Northern News Services
Monday, November 9, 2015
CALGARY/TORONTO
Northern Property Real Estate Investment Trust (REIT), one of the largest landlords in the territory, officially completed the deal that transforms the company into a $3 billion real estate investment trust making it the third-largest publicly traded landlord in Canada.
The Qamutiq building in downtown Iqaluit owned by Northern Property REIT. The company recently completed a $3 billion deal that includes the acquisition of True North, the apartment portfolio from Starlight Investments, a name change to Northview Apartment REIT and a new ticker on the Toronto Stock Exchange. - NNSL file photo |
The company first announced the acquisition of True North Apartment Real Estate Trust, as well as the $535 million, 4,650 suite portfolio of Toronto-based Starlight Investments Inc. in August, but only recently received approval for the transaction.
The company's latest news release said it would begin trading under its new name, Northview Apartment REIT, and its new trading symbol, NVU.UN, at the Toronto Stock Exchange on Nov. 4.
In a previous interview with Northern News Services, chief financial officer Rob Palmer said that Northern Property plans on continuing to invest in its apartments, hotels and commercial real estate holdings in the territory well after the deal was completed.
"The commitment and the approach for us is still the same," he said. "We are 100 per cent committed to the North and investing in the North.
"It'll be an important strategic asset of our business going forward."
Northview's portfolio will have approximately 25,000 residential suites spanning eight provinces and two territories with a value of approximately $3 billion.
Prior to the completion of the deal on Oct. 30, Northern Properties' assets in Northern Canada were highlighted in a news release as providing strong returns and contributing approximately 20 per cent of the net operating income of the new company.
"The North is a very consistent, steady, profitable business for us that we've been in for a very long time," Palmer said.
In the territory, the company has 1,096 apartment units, 117 executive suite and hotel rooms through its Capital Suites brand, as well as 243,000-square-feet of commercial space.
Palmer said while the company considers Iqaluit one of its three main hubs in Northern Canada, it has properties in 11 smaller communities in Nunavut, including Arctic Bay, Pond Inlet and Pangnirtung.
"The creation of Northview, Canada's third largest multi-family REIT with a national platform, is a vital step in our strategic direction, and positions Northview to continue the sustainable growth and value creation that our unit holders have come to expect," stated Todd Cook, Northview president and CEO in a news release on Oct. 30. "We are now focused on ensuring a smooth and efficient integration of the new portfolios and operations, and look forward to executing on our value creation strategy."
Through the deal, NPR acquired all of the assets and properties of True North. NPR also acquired 33 apartment properties held by Starlight for $535.1 million in assets, including cash, the assumption of debt and the issue of different kinds of trust units.
Unlike other companies trading in shares in shares, real estate investment trusts (REITs) trade on stock exchanges using trust units.
NPR has assumed all of the rights and obligations of True North relating to the True North debentures. Debentures are unsecured bonds. Bonds are used to raise funds and are also sold or traded. Under the terms of the completed deal, True North debentures were converted to NPR Trust Units and will trade on the Toronto Stock Exchange under the symbol "NVU.DB."
For Northern tenants living, staying or working in Northern Property's holdings, Palmer said in August there should be no concerns about how things will operate going forward.
"The day to day running of the business will remain as it is today."
On Nov. 4, Northview also announced financial results for the financial quarter and nine months ending on Sept. 30. The company saw an increase in the funds from operation of its trust unit from $0.67 in the third quarter of 2014 to $0.68, an increase of 1.5 per cent.
In a news release, Cook said that the company was experiencing increased vacancy in its resource-based markets but those were being offset by positive financial results from new developments that became available for occupancy over the last year.
"Sustained low natural resource prices continue to negatively impact vacancy and financial results in NPR's natural resource based markets," Cook stated. "As a result, internal growth in the NPR portfolio will remain constrained until there is a recovery in the natural resource sector."
