Minto Apartment REIT Announces Agreement to Terminate the Fifth + Bank Option to Purchase

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[{"type":"text","content":"\n \n \n \n Minto Apartment REIT Announces Agreement to Terminate the Fifth + Bank Option to Purchase\n \n \n /* Style Definitions */\nspan.prnews_span\n{\nfont-size:8pt;\nfont-family:\"Arial\";\ncolor:black;\n}\na.prnews_a\n{\ncolor:blue;\n}\nli.prnews_li\n{\nfont-size:8pt;\nfont-family:\"Arial\";\ncolor:black;\n}\np.prnews_p\n{\nfont-size:0.62em;\nfont-family:\"Arial\";\ncolor:black;\nmargin:0in;\n}\n.prntac{\nTEXT-ALIGN: CENTER\n}\n \n \n \n \n \n \n Canada NewsWire\n \n \n \n \n \n — Proceeds from the repayment of the\n \n $30 million\n \n Convertible Development Loan to be used to repay its revolving credit facility —\n \n \n \n \n \n OTTAWA, ON\n \n \n ,\n \n \n June 7, 2023\n \n \n /CNW/ - Minto Apartment Real Estate Investment Trust (the \"REIT\") (TSX: MI.UN) today announced an agreement with Minto Properties Inc. (\"MPI\", a subsidiary of the Minto Group), to terminate the REIT's option to purchase Fifth + Bank (\"Option to Purchase\") effective immediately. The REIT's cost of capital in the current high interest rate environment is too high relative to the anticipated purchase capitalization rate of the asset. The future prospect that interest rates move materially lower prior to the expiry of the Option to Purchase is unlikely and, acting in good faith, the REIT wants to provide MPI with advanced notice so it may evaluate its alternatives with respect to the asset.\n \n \n \n \n \n \n \n \n \n The\n \n $30 million\n \n convertible development loan related to Fifth + Bank (the \"CDL\") matures on\n \n January 31, 2024\n \n , and the REIT will work to negotiate an option for MPI to prepay earlier, should circumstances permit. The REIT will use the proceeds from the repayment of the CDL to repay a portion of its revolving credit facility. As previously announced, the coupon payable under the CDL commencing\n \n July 1, 2023\n \n will be equal to the all-in interest rate the REIT pays from time to time on its revolving credit facility (subject to a collar of between 5% and 7% per annum), which is approximately 6.75%.\n \n \n The REIT's rationale for not exercising the Option to Purchase includes the following:\n \n \n \n The REIT is focused on maximizing FFO per unit, and given the REIT's current cost of capital, exercising the Option to Purchase does not represent an attractive allocation of capital, despi...

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