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Pure Multi-Family REIT to internalize management after equity offering


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Pure Multi-Family REIT to internalize management after equity offering

PureMulti-Family REIT LP plans to internalize its management aftercompleting a roughly C$33.9 million equity offering.

The company said it entered into an agreement with a syndicateof underwriters to sell, on a bought-deal basis, 4,440,000 class A units forC$7.64 per unit. The company also granted its underwriters an overallotmentoption to purchase up to an additional 444,000 units, representing 10% of thesize of the financing, for up to 30 days after the closing.

In U.S. dollars, the per-unit offering price is $5.86 perunit, and the aggregate offering size is US$26.0 million, the company said. Theunderwriting syndicate is co-led by CIBC Capital Markets and Canaccord GenuityCorp., with CIBC Capital Markets acting as book runner.

The financing is expected to close on or about July 29.

After the close, the company's management anticipates thetriggering of a "determination event" pursuant to the company'slimited partnership agreement, because the company's total marketcapitalization is expected to exceed US$300 million for 10 consecutive tradingdays. Consequently, the company intends to terminate its asset managementagreement at no cost to itself.

Upon internalization, the company's current seniormanagement team, comprised of CEO Stephen Evans, CFO Scott Shillington and vicepresident Samantha Adams, will all retain their roles. Management said itanticipates maintaining among the lowest general and administrative expensepercentages versus total revenue of the company's peer group.

The triggering of a determination event is dependent on thecompany's trading price in the market after the closing of the financing, andis not assured, management cautioned.

Also after the determination event is triggered, theexchange ratio for the conversion of the company's class B units to class Aunits will automatically be fixed at the equivalent of roughly 5% of the proforma ownership, which represents roughly 2.7 million class A units.

The company intends to use the net proceeds of the equityoffering to partially fund the acquisition of a 368-unit luxury apartmentcommunity in the Oak Lawn submarket of Dallas, which is currently under aconditional purchase agreement; to partially fund the potential acquisition ofhigh-quality, well-maintained garden-style apartment properties in major U.S.Sun Belt markets with strong population and growth trends; and to fund workingcapital and general partnership purposes.

In caseone or more of the acquisitions do not close, the company will use the netproceeds for general partnership purposes.

The company said it is targeting accretive acquisitions inthe Dallas-Fort Worth and Austin, Texas, submarkets. After the acquisitions,its pro forma leverage and payout ratios are expected to remain within thecompany's target range.