By Kenneth Brown
The Kindersley Clarion
Things could be looking up for the Kindersley Mall after a rough year. The mall’s property management trust is selling the property to a private company.
An announcement on Aug. 4 by all parties involved in the transaction stated that a subsidiary of Strathallen Capital Corp., which manages and operates four private funds, has entered into an agreement to acquire a portfolio of properties from a subsidiary of OneREIT.
OneREIT, a publicly-traded real estate investment trust based in Vaughan, Ont., is the owner of the Kindersley Mall. The mall is one of 44 retail properties to be acquired by Strathallen, a real estate management firm based in Toronto.
According to press releases, the 44 properties in the Strathallen transaction have a total of 4.6 million square feet of retail space. The primary uses of the properties include grocery stores, drug stores and services. The purchase price for the portfolio of properties is $703.5 million, along with other costs and considerations.
A release by OneREIT states that another real estate investment trust, SmartREIT, will also acquire assets and liabilities from OneREIT, along with Strathallen Acquisitions Inc. The companies will purchase 100 per cent of OneREIT for cash and units of SmartREIT.
The total transaction has been valued at $1.1 billion. It was announced on Aug. 18 that OneREIT had obtained an interim order from the Ontario Superior Court of Justice with respect to the transaction.
OneREIT, which is on the Toronto Stock Exchange, has been authorized to hold a special meeting of its unit holders to consider the transaction. The meeting will be held on Sept. 25 with a record date of Aug. 18, the press release says. That’s when the unit holders will vote to approve or deny the transaction. The board of trustees for OneREIT has unanimously recommended unit holders to vote in favour of the transaction.
Richard Michaeloff, the chief executive officer for OneREIT, confirmed that the Kindersley Mall will be acquired by Strathallen if the transaction is approved. He said he believes the arrangement will be good for all of the properties.
“I feel pretty optimistic about the changes that will be coming through at Kindersley,” he said. He added that the company was working on things related to the property.
He said that OneREIT and SmartREIT have a common shareholder, Mitchell Goldhar, who owns about 25 per cent of both real estate investment trusts. Michaeloff said OneREIT was once known as Retrocom REIT, but the company was rebranded about two years ago.
He said the company made a lot of changes to its portfolio. It had grown substantially over the past seven years, going from 23 to 58 properties. OneREIT acquired several new properties, sold others and made improvements to others.
Michaeloff said the company’s board of trustees became frustrated because the market was not recognizing the changes and improvements, so the upgrades and growth were not reflected in OneREIT’s stock value.
“We didn’t see the price of the units performing as well as we had hoped and wanted it to (perform), so we launched and announced a strategic review,” he said. It’s a direction companies take when they want to consider all options to maximize the value for unit holders.
The strategic review was launched in June 2016. The company retained TD Bank as a financial adviser and the transaction is the culmination of the review, Michaeloff said. He said the price was attractive to company officials.
It was recognized that the retail sector is challenging and the current market benefits larger players. OneREIT aims to have all regulatory approvals in place around the time of the unit holder meeting. If two-thirds of the unit holders vote in favour of the transaction, he said the target closing date is the end of September.
Michaeloff said the company has 56 properties in total. He added that 44 of the properties will be acquired by Strathallen and SmartREIT, one of Canada’s largest real estate investment trusts, will acquire the other 12 properties.
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