SYS-CON MEDIA Authors: Pat Romanski, Xenia von Wedel, Peter Silva, Glenn Rossman, Ava Smith

News Feed Item

CHC Realty Capital Corp. Announces Agreement in Principle for Qualifying Transaction

Transaction Initiates Company's Strategy to be Market Leader in Student Housing

TORONTO, ONTARIO -- (Marketwired) -- 01/09/14 -- CHC Realty Capital Corp. ("CHC" or the "Company") (TSX VENTURE: CHC.P), a capital pool company, is pleased to announce that it has entered into a purchase and sale agreement dated January 9, 2014 to acquire the "Liberty Terrace" student housing property located in Kingston, Ontario (the "Property"). Subject to the terms and conditions of the agreement and the completion of certain conditions precedent, including satisfactory due diligence and receipt of all necessary regulatory approvals, including TSX Venture Exchange ("TSXV") approval, the proposed transaction will qualify as CHC's "Qualifying Transaction" as defined in TSXV Policy 2.4 - Capital Pool Companies.

The Property is situated at 335 Barrie Street, Kingston, in close proximity (approximately 1.2 km) to Queen's University. It is comprised of 18 beds and 1,108 sq ft. of ground floor commercial space. The vendor of the Property is Q4 Realty Inc. (the "Vendor"), a corporation incorporated under the laws of Ontario. The Vendor is not related to CHC or any of its directors and officers. As such, the acquisition will not be a Non-Arm's Length Qualifying Transaction (as that term is defined in TSXV Policy 2.4) and approval of CHC's shareholders will not be required for the completion of the acquisition. The principal shareholders of the Vendor are Bernard Luttmer, Oskar Johansson and John Feaver all of Toronto, Ontario and Andrew Keilty of Kingston, Ontario.

The purchase price for the Property is $2.5 million, subject to adjustments, which CHC intends to satisfy through the assumption of an existing mortgage on the Property in the principal amount of approximately $1.3 million, and the payment to the Vendor of the balance of the purchase price in cash from CHC's existing funds. CHC has paid a refundable deposit to the Vendor in the amount of $25,000. The deposit will become non-refundable upon satisfaction or waiver of CHC's due diligence condition in respect of the acquisition.

"We are very excited to enter into this transaction as the first step in our growth plan to become the leading provider of student housing across Canada", said Mark Hansen, Chief Executive Officer of CHC. "Liberty Terrace meets our criteria for acquiring high quality assets in close proximity to a major university in a proven market. The property provides stable and secure cash flow and is managed by a strong local partner in Varsity Properties, who are the leading property manager of student accommodations in the Kingston market. This model represents our template for growth across the country."

In addition to the deposit paid by the Company, CHC Realty Investments Inc. ("CHC RI"), a company owned by Mark Hansen, President, CEO and a director of the Company and Craig Smith, a director of the Company, has paid the Vendor an additional $75,000 refundable deposit, which will also become non-refundable upon satisfaction or waiver of CHC's due diligence condition in respect of the acquisition. CHC RI will also pay the Vendor an additional non-refundable deposit of $100,000 upon satisfaction or waiver of CHC's due diligence condition. The deposits will be repaid by the Company to CHC RI on closing of the proposed transaction, without interest or fees.

There will be no changes to the directors and officers of CHC as a result of the Qualifying Transaction. The directors and officers of CHC are Mark Hansen, President, CEO and director, Robert Waxman, CFO, Vaughn MacLellan, Corporate Secretary and director, Craig Smith, director and Thomas Murphy, director. Additional information about the directors and officers of CHC is contained in the prospectus of the Company dated November 19, 2013 relating to its initial public offering, which is available under the Company's profile on SEDAR at www.sedar.com.

On closing of the acquisition of the Property, CHC anticipates meeting the "Tier 2" initial listing requirements of the TSXV for a real estate issuer. Closing of the acquisition is currently anticipated to be in the first quarter of 2014.

The acquisition of the Property is intended to form part of a series of transactions which will result in CHC carrying on business as an owner and operator of student housing properties located in Canada with an internalized executive management platform and, at an appropriate time, the effective conversion of CHC into a real estate investment trust focused on student housing.

Additional Information Regarding the Property

The Property's 18 student beds are fully occupied and the commercial space is currently 100% leased to two tenants. Both commercial leases expire later in 2014. One of the commercial tenants has decided not to renew its lease and will be vacating the space at the end of its term. The other tenant is Varsity Properties Inc. ("Varsity"), a related entity to the Vendor. The location leased by Varsity is its head office. Varsity has entered into a new 5 year lease for the entire commercial space upon expiry of the existing leases. The terms of the new lease will increase NOI by $10,000 annually.

The existing mortgage on the Property will be assumed by CHC on closing. The mortgage is with a Canadian chartered bank and CHC is currently in discussions with the bank to assume the mortgage on closing. The principal balance outstanding on the mortgage is approximately $1.3 million. The mortgage comes due on June 1, 2014 with an above market interest rate. CHC intends to enter into discussions post-closing to renew the mortgage at current market rates.

The following table highlights additional information about the Property:


------------------------------------------------------------------------
Year                             NOI         NOI   Occupancy        AMR
Built               Beds       (LTM)    Cap Rate       (LTM)       (LTM)
------------------------------------------------------------------------
2009                  18    $149,527        6.0%        100%     $847.69
------------------------------------------------------------------------
Notes: NOI = net operating income. See also "Non-IFRS Measure".
LTM = last 12 months ended November 30, 2013.
AMR = average monthly rate per bed (excluding commercial and parking)

Property Management

In connection with the acquisition of the Property, CHC expects to enter into property management arrangements with Varsity, pursuant to which Varsity will become the property manager of the Property. Varsity is not related to CHC or any of its directors and officers. Varsity will be entitled to receive a fee for its property management services calculated on the basis of the Property's aggregate gross revenue to be negotiated.

Conditions of Completion

The acquisition of the Property will be subject to receipt of all necessary regulatory approvals, including the approval of the TSXV. In addition, the acquisition of the Property is subject to certain closing conditions, including completion of satisfactory due diligence and the completion of financing arrangements with the mortgage lender.

CHC Capitalization

As of the date hereof, CHC has 55,000,000 common shares issued and outstanding, 4,125,000 incentive options exercisable at $0.10 per share and 1,000,000 agent's options exercisable at $0.10 per share. There will be no change to the capitalization of CHC as a result of the acquisition of the Property, other than the new mortgage financings in respect of the Property to be obtained by CHC.

Sponsorship

Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available. CHC intends to seek a waiver from the TSXV of the sponsorship requirement but if such waiver is not obtained, CHC will then retain a qualified sponsor.

Trading Halt

CHC's common shares are currently halted and CHC anticipates they will remain halted until the documentation required by the TSXV for the proposed transaction can be provided to the TSXV.

About CHC Realty Capital Corp.

CHC is currently designated as a capital pool company by the TSXV. The Company has not commenced commercial operations and has no assets other than cash. Upon completion of its "Qualifying Transaction", CHC intends to carry on business as an owner and operator of student housing properties located in Canada with an internalized executive management platform. At an appropriate time in the future, CHC intends to convert into and carry on such business as a real estate investment trust.

Cautions Regarding Future Plans and Forward Looking Information

Completion of the proposed transaction is subject to a number of conditions, including but not limited to TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the proposed transaction may not be accurate or complete and should not be relied upon. Trading in the securities of CHC should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

This press release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding the completion of the proposed transaction and the business strategies of CHC. Although CHC believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. CHC cautions investors that any forward-looking information provided by CHC is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: CHC's ability to complete the proposed transaction; the state of the real estate sector in the event the proposed transaction is completed; recent market volatility; CHC's ability to secure the necessary mortgage financing or to be fully able to implement its business strategies and other risks and factors that CHC is unaware of at this time. The reader is referred to CHC's initial public offering prospectus and other continuous disclosure documents for a more complete discussion of risk factors relating to CHC and their potential effects, copies of which may be accessed through CHC's profile on SEDAR at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Non-IFRS Measure

This press release uses the term "NOI", which stands for net operating income. NOI is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. It is a supplemental measure of performance for issuers. CHC believes that NOI is an important measure of operating performance and is useful in assessing the company's property operating performance on an unlevered basis. The IFRS measurement most directly comparable to NOI is net income and NOI should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the company's performance.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrateg...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water,...
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will w...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Want to enable self-service provisioning of application environments in minutes that mirror production? Can you automatically provide rich data with code-level detail back to the developers when issues occur in production? In his session at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how to accomplish this and more utilizing technologies such as Microsoft Azure, Visual Studio online, and Application Insights in this demo-heavy session.
When an enterprise builds a hybrid IaaS cloud connecting its data center to one or more public clouds, security is often a major topic along with the other challenges involved. Security is closely intertwined with the networking choices made for the hybrid cloud. Traditional networking approaches for building a hybrid cloud try to kludge together the enterprise infrastructure with the public cloud. Consequently this approach requires risky, deep "surgery" including changes to firewalls, subnets...
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device exp...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
High-performing enterprise Software Quality Assurance (SQA) teams validate systems that are ready for use - getting most actively involved as components integrate and form complete systems. These teams catch and report on defects, making sure the customer gets the best software possible. SQA teams have leveraged automation and virtualization to execute more thorough testing in less time - bringing Dev and Ops together, ensuring production readiness. Does the emergence of DevOps mean the end of E...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...