TransGlobe Apartment Real Estate Investment Trust (REIT) announced that it has entered into agreements to indirectly acquire a portfolio of 20 residential properties comprising 48 buildings and one townhouse complex that contain approximately 3,100 residential suites, principally located in urban centres and in the Provinces of Ontario and Quebec. The properties are currently operated and owned or co-owned by affiliates of TransGlobe Investment Management Ltd. (TGIM).
The purchase price for the properties of approximately $277 million implies a capitalization rate of approximately 6.4 per cent and will be satisfied by a combination of approximately $89.4 million in cash, the assumption of approximately $169.6 million aggregate principal amount of mortgage debt, and the issuance to TGIM of approximately $18 million of Class B units of new limited partnerships (New LPs).
The acquisition is expected to close in late January 2011. Upon completion of the acquisition, TGIM will be responsible for the day-to-day administration and operation of the properties held through the New LPs and for providing strategic advisory services to the New LPs, as required by the REIT’s current external management structure established as part of the initial public offering of the REIT.