WINNIPEG, MB, Dec. 12, 2024 /CNW/ - Artis Real Estate Investment Trust ("Artis" or the "REIT") (TSX: AX.UN) announced today that it has concluded the strategic review process, first announced on August 2, 2023 (the "Strategic Review").
Artis Real Estate Investment Trust Logo (CNW Group/Artis Real Estate Investment Trust)
The Strategic Review was overseen by a special committee of trustees (the "Special Committee") and its external advisors and was initiated for the purpose of considering and evaluating strategic alternatives available to the REIT to unlock and maximize value for unitholders.
"Since announcing the strategic review in August 2023, we have been navigating a very challenging interest rate environment," said Samir Manji, President and Chief Executive Officer of Artis. "Despite the significant headwinds we faced, the quality and resilience of Artis's portfolio enabled us to monetize $1.1 billion of real estate and, through this active disposition exercise, we have been able to materially reduce leverage and de-risk Artis's balance sheet. We are very pleased with what we have achieved during this time on behalf of our owners with the guidance and efforts of the Special Committee and Board."
As part of the Strategic Review, the Special Committee considered external macroeconomic factors, including rising interest rates, combined with Artis's near-term debt profile. A key area of focus during this time was improving the REIT's balance sheet and enhancing liquidity. Since the initiation of the Strategic Review, Artis sold $1.1 billion of assets at sale prices in line with the REIT's IFRS values and used the proceeds from these dispositions primarily to reduce debt. As a result, Artis has significantly improved its balance sheet, reporting that total debt to gross book value had decreased to 39.8% at September 30, 2024, compared to 47.2% at June 30, 2023.
Further, as part of the Strategic Review, the Special Committee considered Artis's upcoming debt obligations. To refinance debt and improve the REIT's risk profile, Artis finalized terms on new three-year senior secured credit facilities in an aggregate amount of $520 million Canadian dollars (the "Facilities"), which include a $350 million revolving credit facility and a $170 million non-revolving credit facility. BMO Capital Markets and Canadian Imperial Bank of Commerce acted as Co-Lead Arrangers. At closing, the Facilities will bear interest at a rate of Canadian prime rate plus 110 basis points, and thereafter the REIT has the option to convert to a rate of adjusted CORRA plus 210 basis points. The Facilities will replace the existing senior unsecured revolving and non-revolving credit facilities. The Facilities can be utilized for general corporate purposes, including the acquisition or development of additional income producing properties and can be drawn in Canadian or US dollars.
Since the announcement of the Strategic Review, Artis has made substantial progress with its disposition strategy, strengthening its balance sheet and improving its risk profile related to upcoming debt obligations. At a macro level, the interest rate environment has improved significantly in recent months. In light of these factors, the Board believes it is in the best interest of Artis and its unitholders to continue to pursue the REIT's existing business strategy. With the REIT's near-term debt maturities satisfied, Artis is well positioned to pursue opportunities that are aligned with the REIT's long-term goal of growing net asset value per unit.
"With the tide turning on interest rates and a healthy level of liquidity, we can now turn our attention to growth opportunities that we believe will produce above average risk-adjusted returns and will grow net asset value per unit for Artis's unitholders," added Samir Manji. "We remain committed to our strategy and confident about the road ahead. We want to thank the members of the Special Committee for their hard work, time and effort over the past 16 months and the Board for their continued guidance and support. The Artis Board and management team is excited to shift this attention now to pursuing growth opportunities and remain grateful to our loyal unitholders for their continued confidence and trust."
Artis is a diversified Canadian real estate investment trust with a portfolio of industrial, office and retail properties in Canada and the United States. Artis's vision is to become a best-in-class real estate asset management and investment platform focused on value investing.
Cautionary Statements
This press release contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "expects", "anticipates", "intends", "estimates", "projects", "seeks", and similar expressions or variations of such words and phrases or state that certain actions, events or results ''may'', ''would'' or ''will'' occur or be achieved are intended to identify forward-looking statements. Particularly, statements regarding building Artis into a best-in-class asset management and investment platform focused on value investing, the REIT's ability to strengthen its balance sheet, enhance its liquidity and grow net asset value are forward-looking statements. Forward-looking statements are based on a number of factors and assumptions which have been used to develop such statements, but which may prove to be incorrect. Artis cannot assure investors that actual results will be consistent with any forward-looking statements and Artis assumes no obligation to update or revise such forward-looking statements to reflect actual events or new circumstances. All forward-looking statements contained in this press release are qualified by this cautionary statement.
