Boardwalk Real Estate Investment Trust announced that it has entered into an agreement with a private REIT to sell its Windsor portfolio for a total price of $136.2 million. The agreement is now unconditional and the transaction is expected to close on September 10, 2015.
The portfolio includes 1,685 high-rise, low-rise and townhouse units for an individual unit price of $80,806.
The Trust is continuing the process of reviewing select non-core properties with the intent of high-grading its portfolio by re-deploying the equity from these assets towards value enhancing transactions for the Trust’s Stakeholders, including acquisitions, development, and capital improvements. Consistent with the Trust’s balanced approach, some of the net proceeds may be returned to unit-holders though the payment of special distributions and may also be used towards other value enhancing transactions such as the repurchase and cancellation of Trust units under the Trust’s Normal Course Issuer Bid. To that end, on June 30, 2015, the Trust received regulatory approval to renew its Normal Course Issuer Bid allowing the Trust to purchase and cancel up to 3,855,766 Trust units, representing 10 per cent of its public float at the time.
Between mid-2007 and the second quarter of 2014, the Trust exercised a similar strategy of high-grading its portfolio through the sale of 2,335 apartment units, comprised of non-core assets, for total gross proceeds of $326.2 million. The Trust re-deployed a significant portion of this equity into the purchase and cancellation of Trust units under similar Normal Course Issuer Bids, and, re-purchased and cancelled 5,014,847 Trust Units, representing a total investment of $202.1 million, or an average cost of $40.31 per Trust Unit.
With respect to the tax implications on the sale of the Trust’s Windsor portfolio, the resulting taxable income and non-taxable portion of capital gains generated by this transaction may be distributed to the Trust’s unit-holders in the form of a special distribution. Taxable income generated must be declared no later than December 31st of the calendar year to ensure that the Trust has distributed all of its taxable income in any given year. The Trust paid a special distribution of $73 million, or $1.40 per unit, to unitholders of record on December 31, 2014 relating to the taxable income and non-taxable portion of capital gains generated by the Trust’s BC Property Portfolio Disposition in 2014.
The Trust estimates that the taxable income and non-taxable portion of capital gains to be in the range of $0.90 to $1.00 per unit generated from this transaction; however, the final amount of any distribution to unit-holders will be announced prior to the end of 2015.
