Margaux Real Estate Investment Trust has closed the purchase of a self-storage property in Saint-Basile-le-Grand, Quebec, for $12.5 million paid at closing. The buyer was a wholly owned subsidiary of the REIT, and the vendor is described as an arm's-length third party.
Part of the price was settled in equity rather than cash. The vendor accepted 384,616 Margaux units priced at $1.30 each, worth $500,000, leaving $12 million to be paid in cash. The release does not disclose the REIT's total units outstanding, so the dilutive effect of the issuance cannot be calculated from the material provided.
The asset consists of a 76,000-square-foot, two-storey building on roughly 145,000 square feet of land. It offers climate-controlled indoor units alongside outdoor parking for cars, recreational vehicles, trailers and equipment.
On the property's economics, Margaux is relaying numbers it did not generate itself. Based on information supplied by the vendor, the site produces annualized revenue of $1,050,000 and net operating income of $750,000 — net operating income being rental income after operating costs but before financing and taxes. Against the $12.5 million purchase price, that implies a yield of about 6 percent. Investors should note these figures are unaudited vendor disclosures rather than results reported by the REIT.
The acquisition was debt-financed by a Canadian chartered bank together with a second lender the release does not name. IA Capital Markets acted as agent for the REIT on that second facility and will be compensated on terms agreed between the parties. No interest rates, loan amounts or maturities were disclosed, which leaves the cost of the leverage unknown.
President and Chief Operating Officer Luc Poirier said an independent professional appraisal valued the property at $14 million, implying a discount to the price paid. The appraiser was not identified and the appraisal was not published.
Chief Executive Michel Lassonde said the facility, situated on Highway 116, is currently fully occupied and that Margaux now operates more than 1,000 storage units across the Montérégie-Estrie region.
The transaction involved a related party on the brokerage side. KW Urbain acted as the REIT's real estate intermediary, with lead broker Wassim Labateya — a chartered real estate broker who is also an executive of Margaux — receiving part of the commission. The release states the commission is paid entirely by the vendor.
The purchase brings Margaux to five properties, adding to holdings in Cowansville-Bromont, Roxton Pond-Granby, Drummondville and Saint-Hyacinthe. The REIT trades on the TSX Venture Exchange and describes itself as the only Canadian listed REIT focused solely on self-storage.
Source: Newsfile
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