NexLiving Communities Announces an Agreement to Acquire a Newly-built 10 Property, 370 Unit Active-living Multi-family Portfolio in Moncton, NB and Associated Equity Financings
November 04 2021- Acquisition of 10 active-living properties comprising 370 units with an average age of approximately 4 years grows the overall number of suites in the Company's portfolio by almost 70%
- Doubles exposure to Moncton, NB, one of Canada's fastest growing rental markets with 8.7% year-over-year rent growth
- Attractive acquisition cap rate of approximately 5.0% expected to deliver FFO per share accretion in excess of 30%
- $24 million equity financing launched through a strong syndicate with a lead strategic order of $4 millon will help broaden the Company's shareholder base and improve trading liquidity
HALIFAX, NS, Nov. 4, 2021 /CNW Telbec/ - (TSXV: NXLV) – NexLiving Communities Inc. ("NexLiving" or the "Company") announced today that it has entered into agreements to acquire ten recently constructed apartment properties comprising, 370 units (collectively, the "Acquisition Portfolio") in Moncton and Riverview, New Brunswick, for an aggregate purchase price of $72.6 million, subject to customary adjustments. The Acquisition Portfolio is comprised of newer buildings with an average age of approximately four years. One of the buildings under agreement is currently in the initial lease-up stage, while one of them is still under construction with an expected completion date of March 31, 2022 (together, the "Mountain Road Properties").
NexLiving has structured the acquisition of the portfolio as four separate transactions, which will allow the Company to assume a CMHC mortgage on one of the buildings with an interest rate of 1.76%, and also allow for the Mountain Road Properties to stabilize and meet the Company's lease-up and income thresholds prior to completing their purchase. Upon full construction and lease-up of the Mountain Road Properties (anticipated to occur in the second quarter of 2022), the Acquisition Portfolio is expected to generate approximately $3.6 million of net operating income ("NOI"), which implies an overall Acquisition Portfolio capitalization rate of approximately 5.0%. All four transactions are subject to due diligence, financing and, in the case of the Mountain Road Properties, certain performance conditions. The transaction is expected to be immediately accretive, and once fully stabilized, in excess of 30% accretive to FFO per share.
NexLiving's CEO, Mike Anaka, commented "We are proud to announce these transformative acquisitions that provide both operational and financial scale to the Company. Over the past three years, NexLiving has grown from one building and 31 units to 18 buildings and 549 units. The acquisitions allow us to nearly double the portfolio to 919 units, while providing significant FFO accretion to shareholders."
Financing Overview
The Company also announced today that it has entered into an engagement agreement with Echelon Capital Markets and CIBC Capital Markets as co-lead agents and co-bookrunners, on behalf of a syndicate of agents (collectively the "Agents"), and has filed a preliminary short form prospectus (the "Prospectus") with the securities regulatory authorities in the provinces of Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and Prince Edward Island, pursuant to which the Company has agreed to issue, and the Agents have agreed to sell, on a commercially reasonable "best efforts" basis (the "Offering"), up to 100,000,000 common shares at an offering price of $0.20 per common share for gross proceeds of $20,000,000. The syndicate of Agents includes Scotia Capital Inc., Desjardins Securities Inc., Cormark Securities Inc., Canaccord Genuity Corp., iA Private Wealth Inc., and Richardson Wealth Ltd.
The Company has also agreed to grant the Agents an option, exercisable in whole or in part at the sole discretion of the Agents, any time not later than the 30th day following the Closing Date (as defined below), to offer up to an additional 15,000,000 common shares at the offering price for additional gross proceeds of up to $3,000,000, for the purpose of covering over-allotments made in connection with the Offering and for market stabilization purposes.
The closing of the Offering is anticipated to occur on November 24, 2021 or such other date as the Company and the Agents may agree (the "Closing Date").
Concurrent with, or shortly following, the closing of the Offering, the Company also announced plans to complete a non-brokered private placement with a strategic party of approximately 20,000,000 common shares at an offering price of $0.20 per common share for gross proceeds of approximately $4,000,000, to be completed in one or more tranches (the "Private Placement"). The common shares sold pursuant to the Private Placement will not be qualified under the Prospectus. Closing of the Private Placement is subject to a number of conditions, including the approval of the TSX Venture Exchange. The closing of the Offering is not conditional on the closing of the Private Placement, or vice versa.
The Company intends to use a portion of the gross proceeds of the Offering and Private Placement to finance, in part, the purchase of the Acquisition Portfolio, to provide additional working capital for the Company, to pay down existing debt and/or to use for future acquisitions.
The acquisition of the Acquisition Portfolio and the completion Offering will be subject to certain customary conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange, and the applicable securities regulatory authorities. A copy of the Prospectus is available on SEDAR under the Company's profile at www.sedar.com.
Overview of Acquisition Portfolio
The Acquisition Portfolio consists of ten, newly built multi-residential buildings, comprised of 370 units, in Moncton and Riverview, New Brunswick.
2251 Mountain Road
The 2251 Mountain Road property is a 75 unit, five-storey building with two elevators. The property features spacious well-appointed luxury units with stone countertops, stainless steel appliances, balconies and two levels of heated underground parking, including charging stations for electric vehicles. The property was constructed in the fourth quarter of 2021 and is currently in lease up stage. The Company's agreement to acquire the 2251 Mountain Road property is subject to the property being occupied and 90% leased to tenants that meet the Company's stated profile and rented at a rate which meets or exceeds the pro forma rent roll. Management expects to close the transaction and waive all conditions in the first quarter of 2022.
2261 Mountain Road
The 2251 Mountain Road property is currently in the construction stage, with expected completion by the first quarter of 2022. It's expected to be a replica of the 2251 Mountain Road property. The Company's agreement to acquire the 2261 Mountain Road property is subject to the property being occupied and 90% leased to tenants that meet the Company's stated profile and rented at a rate which meets or exceeds the pro forma rent roll. Management expects to close the transaction and waive all conditions in the second quarter of 2022.
1009 Cleveland Avenue
The 1009 Cleveland property is a 64 unit, four-storey building. The property has one level of heated underground parking and storage, and each unit has stone countertops, stainless steel appliances and a balcony. The property was constructed between 2018 and 2019 and is fully-occupied. NexLiving shall satisfy part of the purchase price with the assumption of an associated ten-year CMHC mortgage with an attractive interest rate of 1.76% annually. Management expects to close the transaction and waive all conditions in the fourth quarter of 2021.
Cleveland & Whitepine Properties
The Cleveland & Whitepine properties are a complex of seven buildings, for a total of 156 units. The units have in-floor heating,balconies and modern finishes. The properties were constructed during the period from 2011 to 2016 and are currently 99% occupied. The properties are in close proximity to select amenities, such as grocery stores, pharmacies, restaurants, a fitness centre and public transit. Management expects to close the transaction and waive all conditions in the fourth quarter of 2021.
2019 Convertible Debenture Amendment
NexLiving provides the following update to the previously announced amendment of the conversion price to $0.20 for its convertible debentures due September 30, 2021. The Company has issued 2,312,500 common shares to debenture holders representing $462,500 of principal, who elected to convert their debentures into common shares and the remaining $275,000 of principal has been repaid in cash.
The common shares subject to the Offering have not been and will not be registered under the U.S. Securities Act and may not be offered or sold in the United States absent registration under or an applicable exemption from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell or the solicitation of an offer to buy the shares herein described, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
For more information about NexLiving, please refer to our website at www.nexliving.ca and our public disclosure at www.sedar.com.
About the Company
NexLiving continues to execute its plans to acquire recently built or refurbished, highly leased multi-residential properties in bedroom communities across Canada. The Company aims to satisfy the needs of the newly emerging 55+ resident. The demographic that has changed the world is now changing the way residential rental apartments cater to their requirements. Their desire for community, along with service, quality and convenience has led to the emergence of the 55+ active living segment. Apartments are their next "home", after years of owning they look forward to the carefree lifestyle provided through renting in a community of their peers. NexLiving intends to consolidate this emerging market niche. The Company currently owns 549 units in New Brunswick and Ontario. NexLiving has also developed a robust pipeline of qualified properties for potential acquisition. By screening the properties identified to match the criteria set out by the Company (proximity to healthcare, amenities, services and recreation), management has assembled a significant pipeline of potential acquisitions for consideration by the Company's Board of Directors.
Forward-Looking Statements
This news release forward-looking information within the meaning of applicable Canadian securities laws ("forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "projects", "estimates", "forecasts", "intends", "continues", "anticipates", or "does not anticipate" or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements contained in this news release include, but are not limited to: the Company's intention to complete the Offering and the anticipated timing thereof; the Company's intention to complete the Private Placement and the anticipated timing thereof; the Company's intention to complete the acquisition of Acquisition Portfolio and the anticipated timing thereof; the expected benefits of the acquisition of the Acquisition Portfolio to Company shareholders, including that the acquisition is anticipated to be accretive to the Company's FFO per share; that the acquisition of the Acquisition Portfolio will further enhance the Company's overall growth profile; that the acquisition of the Acquisition Portfolio will generate the expected NOI growth; that the Acquisition Portfolio, once acquired and stabilized, will generate the expected capitalization rate of 5.0%; the Company's intended use of proceeds of the Offering and the Private Placement; the completion of the acquisitions of the Acquisition Portfolio on the terms contemplated; the anticipated timing of the completion of construction of the Mountain Road Properties. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed. These forward-looking statements reflect the current expectations of the Company's management regarding future events and operating performance, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual events could differ materially from those projected herein and depend on a number of factors, including, without limitation, the failure by the Company to complete the acquisitions of the Acquisition Portfolio on the terms contemplated or on the anticipated timeline; material shifts in demographic trends or actual future market conditions being different than anticipated by NexLiving's management; material changes to government or environmental policy or regulations affecting NexLiving's operations; and the risks described under "Risk Factors" in the Prospectus and the Company's Annual Information Form. Certain information in this press release may be considered as "financial outlook" within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide readers with disclosure regarding the Company's reasonable expectations with respect to the acquisition of the Acquisition Portfolio. Readers are cautioned that the financial outlook may not be appropriate for other purposes. Although forward-looking statements contained in this new release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. These material assumptions are more fully described in regulatory filings, including in the Prospectus and the Company's MD&A released on November 2, 2021. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this new release speak only as of the date of this news release. Except as required by applicable securities laws, the Company does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
Neither the TSX Venture 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 press release.
SOURCE NexLiving Communities Inc.
For further information:
Michael Anaka
Chief Executive Officer
902-440-7579;
Stavro Stathonikos
President
416-876-6617