All amounts are in US dollars unless otherwise
stated
TORONTO, Oct. 3, 2018 /CNW/ - Firm Capital American
Realty Partners Corp. (the "Company"), (TSXV: FCA.U), (TSXV:
FCA) is pleased to announce the full repayment of its $4.1 million, 6.5% interest-only first mortgage
loan secured by 120 single family homes located in Atlanta, Georgia (the "Atlanta
Mortgage"), and updates regarding the Atlanta Single Family
Homes Disposition Program and the Brentwood, Maryland Joint Venture:
FULL REPAYMENT OF ATLANTA
MORTGAGE
As disclosed on September
13, 2018, to assist in the orderly disposition of the
remaining 120 single-family homes located in Atlanta, Georgia, the Company entered into the
Atlanta Mortgage. The proceeds received from the Atlanta Mortgage
were used to repay the existing blanket $4.0
million secured first mortgage loan plus a pre-payment
penalty of $0.1 million.
Due to a combination of working capital and single family home
sales as outlined below, the Company has fully repaid the
$4.1 million owing on the Atlanta
Mortgage. The Company will now commence repayment of the 7.0%
Convertible Unsecured Debenture (the "Debenture") which has
a principal balance of $6.8
million.
ATLANTA SINGLE FAMILY HOMES
DISPOSITION PROGRAM UPDATE
As previously disclosed, the
Company had listed for sale its remaining 120 single family homes
located in Atlanta, Georgia. To
date, the Company has sold or closed sales on 73 homes, or 61% of
the total portfolio, for gross proceeds of $7.8 million ($7.1
million net of estimated closing costs). Of these sales, 38
have officially closed for gross proceeds of $4.0 million ($3.7
million net of estimated closing costs) while the remaining
35 sales totalling gross proceeds of $3.8
million ($3.4 million net of
estimated closing costs) are expected to close during the early
part of Q4/2018. The net proceeds generated from these home sales
were used, in part, to repay the Atlanta Mortgage, while the
remainder will be used to further repay the Debenture. The
remaining unsold 47 single family homes, which have a current list
price of $6.0 million ($5.6 million net of estimated closing costs) are
anticipated to generate on closing, assuming that the current list
price is achieved, net proceeds sufficient to fully repay the
existing Debenture and provide the Company with additional working
capital.
BRENTWOOD, MARYLAND JOINT
VENTURE REFINANCING, IFRS VALUATION INCREASE AND VALUE-ADD
ACTIVITIES
In January 2017,
the Company invested $1.0 million in
a combination of preferred equity ($0.7
million) and common equity ($0.3
million), which represents a 25% ownership interest, in a
115 unit apartment building joint venture located in the
Washington, D.C. area (the
"Joint Venture"). The Joint Venture, which consists of eight
buildings, is located in Brentwood,
Maryland and was acquired for $9.8
million (including closing costs) at a 7.6% capitalization
rate. As part of the Joint Venture acquisition, the Joint Venture
assumed two mortgages totaling $7.8
million at a 5.18% weighted average interest rate.
The Company is pleased to report the following:
- New $10.3 Secured Mortgage
Financing: The Joint Venture has entered into a $10.3 million, 4.81% secured first mortgage
financing. (the "New Mortgage"). The New Mortgage has a 15
year term and includes an interest-only period of seven years and
then a 30 year amortization thereafter. The net proceeds received
from the New Mortgage were used to refinance the two assumed
mortgages and fully repay the preferred equity investment that was
in place in the Joint Venture;
- IFRS Valuation Increase: As part of the New Mortgage,
the Joint Venture received an independent third party appraisal
that appraises the value of the real estate investments at
$13.7 million. As such, the Joint
Venture will have a total overall IFRS valuation increase of
$3.4 million since acquisition. Given
the 25% ownership interest in the Joint Venture and including IFRS
valuation increases taken to date, the Company will record an IFRS
valuation increase of $0.3 million in
its equity investments during Q3/2018; and
- 14 New Apartment Units Expected to Generate 100% Return on
Cost: The Joint Venture has also been approved to construct 14
additional apartment units on site for an expected cost of
approximately $0.8 million or
$60,000 per apartment unit. Once
leased, these apartment units are expected to increase in value to
$120,000 per apartment unit, in line
with the recent IFRS valuation increase as outlined above,
generating an immediate 100% return on expected cost.
Overall, the immediate accretion impact of the New Mortgage and
the IFRS Valuation increase will impact Q3/2018 earnings positively
by approximately $0.05 per share.
Once completed, the accretion impact of the 14 apartment units are
expected to impact future earnings by an additional $0.14 per share.
ABOUT FIRM CAPITAL AMERICAN REALTY PARTNERS CORP.
Firm Capital American Realty Partners Corp. is a U.S. focused
real estate investment entity that pursues real estate and debt
investments through the following platforms:
- Income Producing Real Estate Investments: Acquiring
income producing real estate assets in major cities across
the United States. Acquisitions
are completed solely by the Company or in joint-venture partnership
with local industry expert partners who retain property management
responsibilities; and
- Mortgage Debt Investments: Real estate debt and equity
lending platform in major cities across the United States, focused on providing all
forms of bridge mortgage loans and joint venture capital.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "intend" and similar expressions. Forward-looking
statements in this news release include, but are not limited to,
statements with respect to the Company's intention to complete the
sale of its single-family homes (and the ability to do so for
consideration that accords with the estimated value of the
portfolio, as set out above) and ultimate debt repayments, the use
of proceeds from the new loan described
above, the use of proceeds from (and timing of) the disposition
of the Company's portfolio of single family homes located in
Atlanta, potential capital
financing and growth opportunities, as well as the Company's
intention to acquire income producing U.S. real estate assets and
complete joint venture partnerships and mortgage debt and equity
lending investments. Forward-looking statements necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse factors
affecting the U.S. real estate market generally or those specific
markets in which the Company holds properties; volatility of real
estate prices; inability to complete the Company's single family
property disposition program, debt repayments or debt restructuring
in a timely manner; inability to access sufficient capital from
internal and external sources, and/or inability to access
sufficient capital on favourable terms; industry and government
regulation; changes in legislation, income tax and regulatory
matters; the ability of the Company to implement its business
strategies; competition; currency and interest rate fluctuations
and other risks, including those described in the Company's public
disclosure documents on SEDAR at www.sedar.com.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
Neither the Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release. Additional information about the Company is available at
www.firmcapital.com or www.sedar.com.
SOURCE Firm Capital American Realty Partners Corp.