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Charter Realty Holdings Ltd. (TSX-V: CRH) Announces Agreement to Acquire Mega Centre Cote-Vertu, and Acquisition Facilities From KingSett Capital and C.A. Bancorp


TORONTO, ONTARIO -- Charter Realty Holdings Ltd. (TSX VENTURE: CRH) (the “Company”) is pleased to announce that is has unconditionally agreed to acquire (the “Acquisition”) Mega Centre Cote-Vertu (“Mega Centre”), a shopping centre in St. Laurent, Quebec from RRVP Cote-Vertu Inc. (the “Vendor”). The Company also announces that KingSett Capital (“KingSett”) and C.A. Bancorp Inc. (“CA Bancorp”) have agreed to provide the Company with acquisition facilities totaling $20 million (the “Acquisition Facilities”).

Mega Centre Acquisition

On February 28, 2007, the Company was assigned (the “Assignment”) the non-binding right to acquire Mega Centre by CA Bancorp, which CA Bancorp held pursuant to a non-binding purchase and sale agreement between CA Bancorp and the Vendor on January 26, 2007 (the “Agreement”). Pursuant to the Assignment, the Company agreed to pay to CA Bancorp on the Closing Date (as defined below) a fee in the amount of 0.5% of the Mega Centre purchase price (approximately $183,500) for identifying, negotiating and carrying out due diligence with respect to the Acquisition. CA Bancorp is the Company’s principal shareholder and control person, and currently owns 57.14% of the issued and outstanding common shares of the Company. The Vendor is at arm’s length to the Company and to CA Bancorp.

On March 9, 2007, the Company waived all purchase conditions in its favour under the Agreement. The Company will acquire Mega Centre, which is located at the intersection of Cote-Vertu Boulevard and Rue Begin in St. Laurent, Quebec for an aggregate cash purchase price (the “Purchase Price”) of $36.7 million (subject to customary adjustments). The acquisition of Mega Centre is expected to close on March 30, 2007 (the “Closing Date”).

CA Bancorp paid a $250,000 refundable deposit (the “Initial Deposit”) upon entering into the Agreement. Upon the Assignment, the Company reimbursed CA Bancorp for the amount of the Initial Deposit. A further deposit, in the amount of $1,250,000 (the “Additional Deposit”), has been paid by the Company. The Additional Deposit was financed through the CA Bancorp Facility (as defined below). Both the Initial Deposit and Additional Deposit became non-refundable upon the waiving of the conditions.

The Company signed a term sheet with a Canadian chartered bank to obtain a standard first mortgage loan in the amount of $27.525 million, secured by the property. The loan is for a 10- year term and is interest-only for the first two years. Thereafter, the loan will be amortized over a 30-year term. The loan will bear interest at a rate of 118 basis points over the 10-year Government of Canada bond rate, which would fix the interest rate at approximately 5.16% as of March 8, 2007.

The remainder of the Purchase Price will be financed through advances under the Acquisition Facilities, with approximately $6 million being drawn on the KingSett Facility (as defined below) and $5 million being drawn on the CA Bancorp Facility (as defined below). Please see the discussion under “Acquisition Facilities” for further details. Subsequent to the completion of the Acquisition, the Company intends to raise additional equity which will be used both for the repayment of the outstanding amounts under the Acquisition Facilities and for the identification and acquisition of further commercial real estate properties.

The total size of the Mega Centre property is approximately 19.0 acres, including 313,597 square feet of rentable retail space, warehouse space and surrounding lands. Mega Centre was built in 1973 and was substantially renovated in 1993, 1999, 2000 and 2004. Currently, the retail space in the Mega Centre is 100% leased to a total of 16 tenants. Approximately 85% of the current rent is received from national and regional tenants, including Brault & Martineau (77,000 square feet), Winners (34,000 square feet), Business Depot (25,000 square feet), Future Shop (30,000 square feet), L’Oreal (23,500 square feet) and L’Aubainerie (30,000 square feet). Approximately 35,000 square feet of basement warehouse space remains vacant. A 110,000 square-foot Rona-owned home improvement store is located adjacent to the property and acts as a secondary anchor, drawing customers to Mega Centre.

The average term to maturity of existing leases is 6.2 years. In the next five years, leases representing the percentage of total leasable square feet set out below will expire:

Year % of square feet
------------ ---------------------
2007 0.00%
2008 0.00%
2009 10.87%
2010 2.23%
2011 1.47%

Mega Centre generated annual revenue of $3,931,580 (unaudited) and incurred total operating expenses of $1,130,470 (unaudited), resulting in earnings from operations of $2,801,110 (unaudited) for the year ended December 31, 2006.
To the best knowledge of the Company, there are no legal proceedings of which the Mega Centre is the subject matter.

Upon the closing of the Acquisition, the material contracts relating to Mega Centre which will be assigned to, or entered into by the Company include (i) the lease agreements with current Mega Centre tenants, and (ii) mortgage and loan documentation related to the financing of the Mega Centre.

Pursuant to the policies of the TSX Venture Exchange (the “TSX-V”), the Acquisition represents a fundamental acquisition by the Company and is subject to review by and approval of the TSX-V.

Acquisition facilities

KingSett and CA Bancorp have each agreed to provide the Company with a $10 million acquisition facility. Approximately $10.5 million of the combined $20 million will be used to fund the Acquisition as described above.

The KingSett acquisition facility (the “KingSett Facility”) bears interest at an annual rate of 12% and has a 12-month term. Any principal amount drawn on the KingSett Facility is repayable without penalty, subject to a minimum four month interest payment. The KingSett Facility will be secured by a second mortgage on the Mega Centre, a first mortgage on the Company’s commercial real estate properties located in Exeter, Seaforth and Zurich, Ontario, and a general security agreement with the Company.

The CA Bancorp acquisition facility (the “CA Bancorp Facility”) bears interest at an annual rate of 12% and has a two year term. Any principal amount drawn CA Bancorp Facility is repayable at any time without penalty. The CA Bancorp Facility will be secured by a general security agreement with the Company, which is subordinate to the security held by other lenders. The Company has determined that the CA Bancorp Facility is on reasonable commercial terms and confirms that neither the principal of the CA Bancorp Facility nor the interest payable thereon is convertible, directly or indirectly, into equity or voting securities of the Company.

Charter Realty Holdings Ltd.

Charter Realty Holdings Inc. is focused on acquiring a portfolio of retail and mixed-use real estate comprised of stable cash flow and value-add properties from both primary and secondary markets throughout Canada, with the principal goal of generating a reliable and growing yield for its investors. The Company owns three commercial real estate properties located in Exeter, Seaforth and Zurich, Ontario.

This press release contains forward-looking statements with respect to the Acquisition, the Acquisition Facilities, the financing and matters concerning the business, operations, strategy, and financial performance of the Mega Centre and the Company. These statements generally can be identified by use of forward looking word such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or "continue or the negative thereof or similar variations. The completion of the Acquisition, and the future business, operations and performance of the Mega Centre and the Company discussed herein could differ materially from those expressed or implied by such statements. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transaction contemplated herein is completed. Forward-looking statements are based on a number of assumptions which may prove to be incorrect. Important factors that could cause actual results to differ material from expectations include, among other things, general economic and market factors, local real estate conditions, including the development of properties in close proximity to the Mega Centre, competition, changes in government regulation, dependence on tenants’ financial conditions, interest rates, the availability of equity and debt financing, environmental and tax related matters, and reliance on key personnel. The cautionary statements qualify all forward-looking statements attributable to the Company and persons acting on its behalf. Unless otherwise stated, all forward looking statements speak only as of the date of this press release and the Company has no obligation to update such statements except as required by law.

The Exchange Tower
130 King Street West
Suite 2805, P.O. Box 104
Toronto, Ontario M5X 1A4
Telephone: (416) 861-8729
Fax: (416) 364-2398

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.


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