Mr. Jonathan Li reports

MINTO APARTMENT REIT ANNOUNCES THE SALE OF TWO PROPERTIES TO OTTAWA COMMUNITY HOUSING CORPORATION FOR $86 MILLION

Minto Apartment Real Estate Investment Trust has sold two properties comprising 311 suites located in Ottawa, Ont., to Ottawa Community Housing Corp. (OCH). The total sale price of $86-million for the Tanglewood and Chesterton/Bowhill properties is in line with the REIT's IFRS (international financial reporting standards) values for the assets. Upon closing, the proceeds of approximately $69-million, net of mortgages and commissions, will be used to repay a portion of the REIT's variable-rate revolving credit facility.

Transaction highlights:

• The agreement between OCH and the REIT marks a significant milestone in increasing and protecting Ottawa's affordable housing supply, as the demand for housing solutions for low- to moderate-income levels has never been more pressing.
• ARRIV Properties, the banner for OCH's affordable housing rentals, will oversee the management of both properties following the transaction and ensure a seamless transition, minimizing any disruptions to current tenants.
• The transaction results in a reduction in the average age of the REIT's portfolio, and will also reduce future capital requirements.
• The sale price of $86-million is in line with the REIT's IFRS values for the assets and is supported by an appraisal commissioned by OCH.
• The transaction strengthens the REIT's balance sheet, providing increased flexibility with respect to its refinancing, operating and investment strategies. As a result of the transaction, pro forma net debt/GBV (gross book value) as at Sept. 30, 2023, is reduced by 187 bps (basis points) to 40.9 per cent.
• The transaction is immediately accretive to FFO (funds from operations) and AFFO (adjusted funds from operations) per unit on an annualized basis.
• Geographic exposure to Ottawa is reduced to approximately 37 per cent from 39 per cent, based on IFRS value as at Sept. 30, 2023.

"We are pleased to be playing a role in addressing the affordable housing issue in Canada by conveying these assets to OCH, who can maintain their affordability indefinitely," said Jonathan Li, president and chief executive officer of the REIT. "We are also very pleased to generate cash from internal sources to reduce leverage in a transaction that is accretive to FFO and AFFO per unit. This is truly a win-win transaction that helps alleviate some of the housing affordability challenges facing our country."

"OCH's acquisition of these 311 homes signifies a strategic milestone in preserving affordable housing solutions for low- and moderate-income families," said Stephane Giguere, chief executive officer of OCH. "This transaction is a demonstration of our commitment to addressing the critical issue of housing affordability in Ottawa, and also stands as a testament to our dedication to innovation and community-focused development partnerships."

Eddie Fu, chief financial officer of the REIT, added: "Since the beginning of 2023, we will have reduced our expensive variable-rate debt exposure by approximately $215-million from its peak of approximately $290-million in early 2023. Our improved pro forma balance sheet will help us deliver cash flow per unit growth. It also provides us with increased financial flexibility and a strong foundation to optimize the REIT's refinancing strategies, operating strategies and investment strategies for 2024 and beyond."

Transaction details

The two properties, Tanglewood and Chesterton/Bowhill, are located in close proximity to each other in the Nepean area of Ottawa, just southwest of the inner core. The Minto Group developed both properties approximately 50 years ago, and it owned and operated them continuously until the initial public offering (IPO) of the REIT in 2018. The Tanglewood property was built in 1975 and comprises 122 low-rise, wood-framed single-family rental homes on approximately eight acres of land. The Chesterton/Bowhill property was built in 1969 and comprises 189 low-rise, wood-framed single-family rental homes on approximately 12 acres of land.

The sale price for the Tanglewood property is $32.2-million and all conditions were waived by OCH on Dec. 14, 2023. The sale price for the Chesterton/Bowhill property is $53.8-million and all conditions were waived by OCH on Jan. 8, 2024. Closing of the transaction is expected to occur in February, 2024. Any impact on the REIT's taxable income and potential payment of a special distribution resulting from asset sales will be assessed and communicated later in fiscal 2024.

Strengthening the balance sheet

Under its capital recycling strategy, upon closing of the transaction, the REIT will have completed the sale of five non-core properties (three in Edmonton, Alta., and two in Ottawa, Ont.) generating a total of $128-million of gross proceeds and approximately $78-million of net proceeds. In addition, as previously disclosed, the REIT is currently evaluating upward refinancing opportunities that may generate incremental net financing proceeds of $55-million to $65-million. Lastly, on Jan. 31, 2024, the REIT expects to receive $30-million for the repayment of the convertible development loan related to the Fifth + Bank property located in Ottawa, Ont. All the net proceeds generated from the above transactions will be used to repay portions of the REIT's revolving credit facility, following which it is estimated that the REIT's variable-rate debt outstanding as a percentage of total debt outstanding will be in the low-single digits, furthering the REIT's ability to take advantage of future investment opportunities, subject to appropriate market conditions and cost of capital.

About Minto Apartment Real Estate Investment Trust

Minto Apartment Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario to own income-producing multiresidential properties located in urban markets in Canada. The REIT owns a portfolio of high-quality income-producing multiresidential rental properties located in Toronto, Montreal, Ottawa and Calgary.