Mr. David Luu reports
PINE TRAIL CAPITAL TRUST TO ACQUIRE PICTON MEDICAL BUILDING AS ITS QUALIFYING TRANSACTION
Pine Trail Capital Trust has agreed to acquire a medical office building located in Picton, Ont., as its qualifying transaction, pursuant to a purchase-and-sale agreement dated May 8, 2018, between the trust and Picton Clinic Corp. Pursuant to the PSA, the trust will also acquire the leases associated with the property. The trust intends to complete the acquisition of the purchased assets on or about July 17, 2018. Following completion of the acquisition, in accordance with Pine Trail's declaration of trust, Pine Trail will become an open-ended real estate investment trust. Subject to the approval of the TSX Venture Exchange, the resulting issuer is expected to list as a Tier 2 real estate issuer.
The vendor is a corporation that is unrelated to the trust or any of its trustees or officers. As such, the acquisition will not be a non-arm's-length qualifying transaction (as such term is defined in the CPC policy) and is not subject to the receipt of approval of the holders of the trust's units. The acquisition of the property will be subject to receipt of all necessary approvals, including the approval of the TSX Venture Exchange and certain other closing conditions set forth in the PSA, including the completion of satisfactory due diligence by the trust and the closing of a financing to be completed by the trust. A subsequent news release will be issued providing details of such financing and any applicable agent's compensation.
Additional information about the property
The property is a medical office building located at 389 Main St., Picton, Ont., Canada, in close proximity to Kingston, Ont. The property is situated on approximately 2.5 acres of land and contains approximately 12,000 square feet of leasable space. As of the date of this press release, the property is primarily occupied by medical tenants and produces average annual rent in the amount of $16 per square foot and has a net operating income of approximately $240,000. The property is 100 per cent leased, and its tenants have a weighted-average lease term of approximately three years.
and senior officers of the
Following completion of the acquisition, the current trustees and management team of Pine Trail are expected to remain and it is currently anticipated that the trust may add an additional trustee and additional officers following or in connection with the closing of the qualifying transaction. The current trustees and management are Sean Nakamoto (chief executive officer and a trustee), David Luu (chief financial officer and corporate secretary), Andrew Shapack (trustee), Mohammed Atiq Nakrawala (trustee) and Jonathan Wolch (trustee).
Background of each of the current trustees and senior officers of the trust
Sean Nakamoto -- trustee
and chief executive officer
Mr. Nakamoto is currently a trustee and chief executive officer of Pine Trail. Formerly, Mr. Nakamoto was a trustee and the co-president of Mohawk Medical Properties Real Estate Investment Trust, a private medical office building REIT since the formation of the REIT on May 1, 2015, until the sale of the REIT in on May 1, 2018. Mr. Nakamoto is also a trustee and chairman of governance of Maplewood International REIT, a position he has held since October, 2012. Mr. Nakamoto served as the chief financial officer of GT Canada Medical Properties Real Estate Investment Trust from March 12, 2010, to June 30, 2011, and its senior vice-president of acquisitions, where he was involved in its formation from a capital pool company through its qualifying transaction and subsequent conversion to a TSX Venture Exchange-listed REIT. While at GT, he acquired and financed a portfolio of 12 medical office buildings across Ontario.
David Luu -- chief financial officer and corporate secretary
Mr. Luu is currently the chief financial officer and corporate secretary of Pine Trail. Mr. Luu is the director of finance and accounting and the corporate accounting manager of Mohawk Medical Management. Mr. Luu graduated from the University of Toronto with a degree in economics.
Andrew Shapack -- trustee
Mr. Shapack serves as a trustee of Pine Trail. Formerly, Mr. Shapack was a trustee and co-president of Mohawk REIT since the formation of Mohawk on May 1, 2015, until the sale of the REIT on May 1, 2018. Mr. Shapack was the founder and chief executive officer of GT Canada Medical Properties REIT and is a former associate attorney with Paul Hastings in New York.
Mohammed Atiq Nakrawala -- trustee
Mr. Nakrawala is currently the president and CEO of Scene 7 Advisors, a private investment company. Prior to this role, Mr. Nakrawala was a senior associate at ICD (Islamic Corp. for the development of the private sector). His educational background is a bachelor of science in business administration from Wayne State University and a master of business administration (MBA) from IE Business School in Madrid, Spain.
Jonathan Wolch -- trustee
Mr. Wolch has been corporate secretary of Newstrike Resources Ltd. since 2017. Mr. Wolch served as corporate secretary of Hemosol Inc. He has served as an officer and senior executive for Toronto Stock Exchange, TSX Venture Exchange and Nasdaq-listed companies in the telecommunications, technology, environmental engineering, real estate and health care sectors with a career that spans over 20 years. From 2006 to 2010, he divided his time between his business activity in Canada and Eastern Europe, where he founded and built a successful telecommunications business with mobile-carrier clients in Russia, Ukraine, Belarus and Kyrgyzstan. He holds a BA-specialist degree in political philosophy from the University of Toronto and an LLB from Osgoode Hall Law School.
Additional details of the acquisition
The trust will purchase 100 per cent of the interest in the purchased assets from the vendor, at a purchase price of $3-million to be paid in cash, subject to customary adjustments of real estate taxes and other items of income and expense with respect to the purchased assets. The trust intends to pay a deposit in the amount of $25,000 to the vendor within five business days of the execution of the PSA, and is obligated to deliver a second deposit in the amount of $25,000, subject to prior TSX-V approval, upon the waiver of the trust's conditions under the PSA and within certain timelines as stipulated in the PSA.
The attached table highlights selected unaudited financial information about the property as at and for the year ended Dec. 31, 2017.
Dec. 31, 2017
Revenue from property operations $396,603
Property operating costs $166,460
Income from operations $230,143
The vendor is a corporation incorporated under the laws of Ontario, and is controlled by a number of residents of Picton, Ont., who are not related to the trust or any of its directors and officers.
Sponsorship of a qualifying transaction is required by the TSX-V unless exempt in accordance with TSX-V policies. The trust intends to seek a waiver from the TSX-V of the sponsorship requirement but if such waiver is not obtained, the trust will then retain a qualified sponsor. In support of its waiver application, an independent appraisal of the fair market value of the property will be relied upon and a summary thereof will be set out in the filing statement.
The trust's units are currently halted and the trust anticipates that they will remain halted until the documentation required by the TSX-V for the proposed transaction is provided to the TSX-V.
Pine Trail Capital Trust
The principal business of the trust is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction. The trust has not commenced commercial operations and has no assets other than cash.
We seek Safe Harbor.
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