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BSR Real Estate Investment Trust Announces Bought Deal Public Offering of US$40 Million of Convertible Unsecured Subordinated Debentures – Canada NewsWire

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/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

LITTLE ROCK, Ark. and TORONTO, Aug. 27, 2020 /CNW/ – BSR Real Estate Investment Trust (BSR, or the “REIT”) (TSX: HOM.U) (TSX: HOM.UN) announced today that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets, on a bought deal basis, US$40 million aggregate principal amount of 5.00% convertible unsecured subordinated debentures due September 30, 2025 (the “Debentures”) (the “Public Offering”).

In addition, the REIT has also granted the underwriters an option (the “Over-Allotment Option”), exercisable at any time, in whole or in part, for a period of 30 days following the closing of the Public Offering to purchase up to an additional US$6 million aggregate principal amount of Debentures, which, if exercised in full, would increase the gross proceeds of the Public Offering to approximately US$46 million.

The Debentures are convertible at the option of the holder into units of the REIT at US$14.40 per unit (the “Conversion Price”). The Conversion Price represents a conversion rate of approximately 69.4444 units for each US$1,000 principal amount of Debentures, subject to adjustment in accordance with a trust indenture to be entered into on or before closing of the Public Offering that will govern the Debentures. The Debentures will bear interest at a rate of 5.00% per annum and will be payable semi-annually on March 31 and September 30 until maturity on September 30, 2025, with interest payments commencing on March 31, 2021. The Debentures will not be redeemable by BSR prior to September 30, 2023. On or after September 30, 2023, but prior to September 30, 2024, the Debentures will be redeemable, in whole or in part, at a price equal to the principal amount plus accrued and unpaid interest, at BSR’s option, provided that the volume weighted average trading price of the US dollar denominated Units on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given is not less than 125% of the Conversion Price. On and after September 30, 2024, the Debentures will be redeemable by BSR, in whole or in part, at a price equal to the principal amount plus accrued and unpaid interest.

BSR intends to use the net proceeds from the Public Offering to repay a portion of amounts outstanding on its credit facility (current outstanding balance of US$193 million) and for general trust purposes. Upon completion of the Public Offering (and assuming the Over-Allotment Option is exercised in full), BSR expects to have access to approximately US$98 million of available liquidity through unrestricted cash and borrowing capacity available under its credit facility. Following closing of the Public Offering, BSR expects to have acquisition capacity of approximately US$200 million to US$220 million to pursue its acquisition pipeline.

The Debentures forming part of the Public Offering will be offered in Canada pursuant to a base shelf prospectus dated November 8, 2019. The terms of the Debentures will be described in a prospectus supplement to be filed with securities regulators in all provinces and territories of Canada. Closing of the Public Offering is expected to take place on or about September 3, 2020 and is subject to the REIT receiving all necessary regulatory approvals, including approval of the Toronto Stock Exchange.

The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the “1933 Act”) and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.

About BSR Real Estate Investment Trust
BSR Real Estate Investment Trust is an internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT owns a portfolio of multifamily garden-style residential properties located in attractive primary and secondary markets in the Sunbelt region of the United States.

Additional information about the REIT is available at www.bsrreit.com or www.sedar.com.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT’s current expectations regarding future events, including statements about the Public Offering and the proposed use of proceeds thereof available liquidity and acquisition capacity. In some cases forward-looking information 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. The REIT’s estimates, beliefs and assumptions, which may prove to be incorrect, including those relating to the REIT’s ability to complete the Public Offering and finance and complete future acquisitions, as well as that COVID-19 will not have a material impact on the REIT’s business. The risks and uncertainties that may impact such forward-looking information include, but are not limited to, the impact of COVID-19 on the REIT’s operations, business and financial results and the factors discussed under “Risks and Uncertainties” in the REIT’s Management’s Discussion and Analysis for the three and six months ended June 30, 2020 and in the REIT’s annual information form dated March 10, 2020, both of which are available on SEDAR (www.sedar.com). 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 BSR Real Estate Investment Trust

For further information: Susan Koehn, Chief Financial Officer, BSR Real Estate Investment Trust, Tel: 501.371.6335, Fax: 501.374.3383

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www.bsrtrust.com

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LACKIE: There are signs of a softening real-estate market – Toronto Sun

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How could house-poor Canadians, already saddled with alarming levels of consumer debt, manage their way through this, let alone out the other side?

But they did. And it was, quite frankly, astonishing.

According to CMHC, Canadians deferred $1 billion worth of mortgages per month during the pandemic, while the Canadian Bankers Association reports that more than 760,000 Canadians either skipped a mortgage payment or took advantage of a deferral program.

As of Sept. 13, more than $78 billion had been paid out to Canadians in the form of the Canada Emergency Response Benefit.

Yet, by the time the emergency lockdown restrictions started to relax, the real estate market was in full swing.

The June and July sales figures broke records set a year earlier, and the Toronto market spread its heat to the suburban and rural markets. In cottage country, properties were selling with multiple offers just hours after hitting the market.

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Could this really just be the result of pent-up demand? Of fundamental changes in consumer appetites? A hunger for more space, more land, less density?

There were tons of theories.

Maybe all along we haven’t fully appreciated the level of demand, I wondered.

Maybe people weren’t as hurt by lost earnings as one might have expected?

Maybe the busy summer was the combined effect of insatiable demand met with people hustling to get set up to more comfortably ride out the fall’s all but guaranteed second wave.

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Why real estate prices continue to rise despite the pandemic – CBC.ca

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Last May, I wrote an opinion piece titled Time to buy? What the pandemic means for Vancouver’s real estate market where I explained that historically for every one per cent rise in unemployment there is a four per cent decrease in housing prices. 

However, this is not what has happened during the last several months. Between February and August this year the unemployment rate doubled while the Canadian housing market hit all-time highs.  

Homeowners who lost their jobs due to the pandemic were able to keep their homes thanks to various government income replacement programs and banks offering the option to defer mortgage payments. These initiatives bought struggling homeowners some time and allowed them to keep their homes off the market. 

At the same time, interest rates dropped.

This lowered the cost of borrowing for buyers and increased the amount of “house” they could qualify for. The lower rates increased demand at a time when supply was relatively low and, as a result, despite unemployment numbers doubling, the prices of real estate hit new highs. 

Several factors will affect upward trend

Whether the upward trend in real estate sales and prices continues will depend on several factors, such as: the severity of future waves of COVID-19; how quickly the economy can recover; and when our borders will reopen to immigration. However, what will have the most impact will be government action and the policies they implement to keep Canadians and the economy afloat. As long as government aid is flowing — which I think will continue until we have a vaccine and/or the economy is back on track — asset prices can keep rising.  

Financially, on average, Canadians are in better shape now than they were pre-pandemic. Household spending has dropped by 13 per cent, which has increased our savings rate by 28 per cent. The government income replacement programs were effective, but it appears they overshot a bit as for every dollar in salary lost due to the pandemic, the government replaced it with approximately $2.50.

Now that these programs are being dialled back, it will be interesting to see how the changes will affect the economy and housing market.

As for the seven per cent of B.C. mortgage holders who deferred their payments, I don’t think many will default on their mortgages. Some deferred not because they needed to, but because it was an option and they felt it prudent to save money just in case things turned really bad.

Others deferred due to temporary job loss, but then the government programs helped fill their income gap until they could return to work.

In both these cases, most of these mortgage holders should be able to resume their payments.

Homeowners at risk

Unfortunately, there are some homeowners who remain unemployed and may have to sell their homes once their mortgage payment deferral option comes to an end.

For those forced to sell there is at least a silver lining in that real estate prices have gone up, putting them in a better position today than six months ago. 

The group I consider most at risk are condo speculators. 

There has been a fundamental shift in what is deemed desirable in real estate. Now that the work-from-home movement is no longer a trend but a necessity, living close to your workplace isn’t as important as it used to be. The items that are on top of today’s buyers’ wish lists include a backyard and an extra room for a home office. 

Many people are selling their downtown condos and purchasing houses in the suburbs.

As a result, we have a tight detached home market while new listings for condos are surging — a trend that I can see not only continuing but accelerating in the near term.

This column is part of CBC’s Opinion section. For more information about this section, please read our FAQ.

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United Property Resource Corporation unlocks value of real estate assets held by Canada's largest land owners – Canada NewsWire

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The Canada Mortgage and Housing Corporation (CMHC) is providing UPRC with a $20 million line of credit through the Affordable Housing Innovation Fund to be accessed for pre-development and pre-construction costs as it builds affordable housing across Canada. UPRC is committed to building a minimum of 5,000 new affordable housing units across the country over the next 15 years. This creates significant opportunity to repurpose assets and build sustainable communities.

UPRC has committed to ‘be building’ 1500 affordable units by 2025 and 5000 affordable units by 2035. That translates into approximately 20,000 new rental units within the same time period as many of these developments will be mixed income and mixed use ensuring much need community space will be incorporated.

“This is one of the largest opportunities to reimagine what our neighbourhoods could look like over the next 15 years and the common good that repurposing real estate can have on communities,” said Tim Blair, CEO, United Property Resource Corporation. “UPRC represents an exciting opportunity to fill a gap in the housing market across the country and advocate for progressive real estate models that are inclusive, environmentally and financially sustainable. None of this would be possible without the support from our partners; we are grateful to the Federal Government, and The United Church of Canada for their vision and commitment.”

UPRC will focus on providing affordable housing for Canadians in a range of housing types including housing for families. Many of UPRC’s projects will broaden housing choices, creating a unique opportunity to fill the “missing middle”, a range of housing types between single-detached houses and high-rise buildings that have gone missingfrom many of our cities in the last 60 to 70 years. As cities struggle to find ways to broaden housing choices, create walkable communities, and remain economically competitive, the missing middleis increasingly part of the discussion about intensification, complete communities, housing choices, and housing affordability.

The UCC undertook a national property inventory, in partnership with the CMHC, to assess the total real estate portfolio and create a strategy. The creation of a development corporation – UPRC – was a key tenet of the strategy.

“It’s incredible to see this vision come to fruition in the UPRC and to see the tremendous value it will bring to communities of faith across Canada,” said Nora Sanders, General Secretary of The United Church of Canada. “In the language that communities of faith would use, ‘this is the abundance that is available to create the world that we want to see'”.

The team of experts that make up UPRC today bring expertise in planning, development, investment banking, and business development. It has established partnerships with CMHC and The United Church of Canada.

Founded in 2019, UPRC brings professional real estate development and management expertise to communities of faith and non-profits to assist them in making astute decisions about their real estate while making lasting contributions to their communities. The development corporation collaborates with both public and private partners. To find out more, visit www.uprc.ca

SOURCE United Church of Canada

For further information: For more information, Backgrounder, Facts & Figures and Bios, please contact: Laura Currie Ryder, 416-317-9447, [email protected]

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http://www.united-church.ca/

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