— Sale price is in line with IFRS values and the Transaction is aligned with the REIT's capital recycling strategy —

OTTAWA, ON, Jan. 9, 2024 /CNW/ - Minto Apartment Real Estate Investment Trust (the "REIT") (TSX: MI.UN) is pleased to announce the sale of two properties comprising 311 suites located in Ottawa, Ontario, to Ottawa Community Housing Corporation ("OCH") (the "Transaction"). The total sale price of $86 million for the Tanglewood and Chesterton/Bowhill properties is in line with the REIT's IFRS values for the assets. Upon closing, the proceeds of approximately $69 million, net of mortgages and commissions, will be used to repay a portion of the REIT's variable-rate revolving credit facility.

Transaction Highlights

• The agreement between OCH and the REIT marks a significant milestone in increasing and protecting Ottawa's affordable housing supply as the demand for housing solutions for low- to moderate-income levels has never been more pressing.
• ARRIV Properties, the banner for OCH's affordable housing rentals, will oversee the management of both properties following the Transaction and ensure a seamless transition, minimizing any disruptions to current tenants.
• The Transaction results in a reduction in the average age of the REIT's portfolio, and will also reduce future capital requirements.
• The sale price of $86 million is in line with the REIT's IFRS values for the assets and is supported by an appraisal commissioned by OCH.
• The Transaction strengthens the REIT's balance sheet, providing increased flexibility with respect to its refinancing, operating and investment strategies. As a result of the Transaction, pro forma net debt/GBV as at September 30, 2023, is reduced by 187 bps to 40.9%.
• The Transaction is immediately accretive to FFO and AFFO per unit on an annualized basis.
• Geographic exposure to Ottawa is reduced to approximately 37% from 39% based on IFRS value as at September 30, 2023.

"We are pleased to be playing a role in addressing the affordable housing issue in Canada by conveying these assets to OCH, who can maintain their affordability indefinitely," said Jonathan Li, President and Chief Executive Officer of the REIT. "We are also very pleased to generate cash from internal sources to reduce leverage in a transaction that is accretive to FFO and AFFO per unit. This is truly a win-win Transaction that helps alleviate some of the housing affordability challenges facing our country."

"OCH's acquisition of these 311 homes signifies a strategic milestone in preserving affordable housing solutions for low and moderate-income families" said Stéphane Giguère, Chief Executive Officer of OCH. "This transaction is a demonstration of our commitment to addressing the critical issue of housing affordability in Ottawa and also stands as a testament to our dedication to innovation and community-focused development partnerships."

Eddie Fu, Chief Financial Officer of the REIT, added, "Since the beginning of 2023, we will have reduced our expensive variable-rate debt exposure by approximately $215 million from its peak of approximately $290 million in early 2023. Our improved pro forma balance sheet will help us deliver cash flow per unit growth. It also provides us with increased financial flexibility and a strong foundation to optimize the REIT's refinancing strategies, operating strategies and investment strategies for 2024 and beyond."

Transaction Details

The two properties, Tanglewood and Chesterton/Bowhill, are located in close proximity to each other in the Nepean area of Ottawa, just southwest of the inner core. The Minto Group developed both properties approximately 50 years ago and it owned and operated them continuously until the IPO of the REIT in 2018. The Tanglewood property was built in 1975 and comprises 122 low-rise, wood-framed single-family rental homes on approximately eight acres of land. The Chesterton/Bowhill property was built in 1969 and comprises 189 low-rise, wood-framed single-family rental homes on approximately twelve acres of land.

The sale price for the Tanglewood property is $32.2 million and all conditions were waived by OCH on December 14, 2023. The sale price for the Chesterton/Bowhill property is $53.8 million and all conditions were waived by OCH on January 8, 2024. Closing of the Transaction is expected to occur in February 2024. Any impact on the REIT's taxable income and potential payment of a special distribution resulting from asset sales will be assessed and communicated later in fiscal 2024.

Strengthening the Balance Sheet

Under its capital recycling strategy, upon closing of the Transaction, the REIT will have completed the sale of five non-core properties (three in Edmonton, Alberta and two in Ottawa, Ontario) generating a total of $128 million of gross proceeds and approximately $78 million of net proceeds. In addition, as previously disclosed, the REIT is currently evaluating upward refinancing opportunities that may generate incremental net financing proceeds of $55 to $65 million. Lastly, on January 31, 2024, the REIT expects to receive $30 million for the repayment of the convertible development loan related to the Fifth + Bank property located in Ottawa, Ontario. All the net proceeds generated from the above transactions will be used to repay portions of the REIT's revolving credit facility, following which it is estimated that the REIT's variable-rate debt outstanding as a percentage of total debt outstanding will be in the low-single digits, furthering the REIT's ability to take advantage of future investment opportunities, subject to appropriate market conditions and cost of capital.

Minto Apartment Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario to own income-producing multi-residential properties located in Canada. The REIT owns a portfolio of high-quality multi-residential rental properties located primarily in urban centers in Canada's major markets of Toronto, Montreal, Ottawa and Calgary. For more information on Minto Apartment REIT, please visit the REIT's website at https://www.mintoapartmentreit.com.

OCH provides approximately 15,000 homes to more than 32,000 tenants, including seniors, parents, children, couples, singles, and persons with special needs, within many communities across the City of Ottawa. OCH houses a diverse population of varying languages, ethnicities, and cultures. OCH is Ottawa's largest social, community and affordable housing provider and the fourth largest in Canada. For more information on OCH, please visit OCH's website at www.och-lco.ca.

ARRIV Properties represents a new concept to fill the Ottawa affordable rental market gap. ARRIV Properties is a new banner for OCH's affordable housing rentals. It offers homes at average or below-average market prices, setting the standard for modern living and lifestyle at an affordable price. It is an exciting milestone because it signals another offering in the housing continuum by providing apartments and townhomes at affordable prices for low- to moderate-income households. For more information, please visit www.arriv.ca.

Ottawa Community Housing operates as ARRIV Properties.

SOURCE Minto Apartment Real Estate Investment Trust

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