Mr. K. Rai Sahi of Morguard reports
MORGUARD CORPORATION AND MORGUARD REAL ESTATE INVESTMENT TRUST ACKNOWLEDGE PROCEEDS FROM TARGET SETTLEMENT
Morguard Corp. and Morguard Real Estate Investment Trust have acknowledged total proceeds in the amount of $39.3-million (inclusive of sales tax) from a settlement with Target Canada, currently under the Companies' Creditors Arrangement Act protection, and its parent, Target Corp., related to lease guarantee claims at eight retail properties in Canada.
The settlement proceeds include $12.6-million to Morguard Corp., $12.4-million to Morguard REIT, and $14.3-million to Morguard's co-owners and investor clients at impacted properties.
In 2011, Morguard negotiated lease assignments and amending agreements with Target Canada that had lease guarantees and recourse back to Target Corp. Management's ability to negotiate lease guarantees resulted in a more favourable outcome compared with landlords that did not have guarantees.
Target leases included in settlement
For clarity, Target Canada leases at the following eight properties in the Morguard owned and managed retail portfolio were part of the settlement with Target Corp.:
Cottonwood Mall: Chilliwack, B.C.
Bonnie Doon Centre: Edmonton, Alta.
Prairie Mall: Grande Prairie, Alta.
Shoppers Mall: Brandon, Man.
Lawson Heights: Saskatoon, Sask.
Cambridge Centre: Cambridge, Ont.
Bramalea City Centre: Brampton, Ont.
East York Town Centre: Toronto, Ont.
Target leases acquired by retailers
In 2015, Target Canada leases in a further six properties in the Morguard owned and managed portfolio were acquired by retailers.
TARGET LEASES ACQUIRED BY RETAILERS
Coquitlam Centre Coquitlam, B.C. Walmart Opened February, 2016
Pine Centre Mall Prince George, B.C. Lowe's Opens August, 2016
Southdale Centre Winnipeg, Man. Walmart Opened January, 2016
Intercity Shopping Centre Thunder Bay, Ont. Lowe's Opens fall 2016
Aurora Centre Aurora, Ont. Canadian Tire Opened May, 2016
Centerpoint Mall Toronto, Ont. Lowe's Opens fall 2016
Target lease acquired by Morguard REIT
One further Target Canada lease was acquired by Morguard REIT to realize the long-term leasing opportunity:
The Centre: Saskatoon, Sask.
Use of proceeds
The proceeds from Target Corp. will be used for active redevelopment and remerchandising programs to create long-term value at retail centres. The management teams are actively executing on programs to enhance the tenant mix, increase rental rates, and draw new traffic from primary and secondary markets. A full leasing and redevelopment update will be provided with the second quarter financial results for both Morguard Corp. and Morguard REIT.
Disposition of office property -- Morguard Real Estate Investment Trust
During second quarter, Morguard REIT also disposed of a non-strategic asset, Centre de la Cite in Point-Claire, Que., for $22.4-million (net of closing costs). The 127,500-square-foot Class A suburban office complex was sold unencumbered. Proceeds from the sale were used to pay out an operating line and pay out non-strategic mortgages.
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