FIRM CAPITAL AMERICAN REALTY PARTNERS TRUST ANNOUNCES SHORT TERM INVESTMENT STRATEGY
April 07 2020 - 4:01PM
Firm Capital American Realty Partners Trust (the
“
Trust”), (TSXV: FCA.UN), (TSXV: FCA.U) is issuing
this press release to announce that as a result of the COVID-19
global pandemic, senior management and the board of trustees have
made an investment strategy decision to deploy its cash resources
into Canadian and possibly US denominated short term bridge
mortgages (“
Bridge Mortgages”).
The COVID-19 pandemic has particularly impacted
the United States of America (“US”). One of the
results of the pandemic is the inability to travel to and within
the US to tour potential investment opportunities and complete
appropriate due diligence. Further, senior management wants to
reassess the US market over the next six months as the epidemic
might present an opportunity for better priced investments. While
there are many investment opportunities and capital available to
complete such investment opportunities, senior management and the
board of trustees believe it is inappropriate at this time to
complete further due diligence until the COVID-19 pandemic has all
but been eliminated and travel to and within the US resumes.
Therefore, the Trust has made the temporary decision to invest in
Bridge Mortgages where it can complete the appropriate level of due
diligence and make appropriate investment decisions, with such
investments being completed in partnership with other Firm Capital
managed lending entities who have strict operating and investment
risk management guidelines. To date, the Trust has co-invested
alongside other Firm Capital managed lending entities including
Firm Capital Mortgage Investment Corporation (TSX : FC).
In terms of investing parameters, the Trust will
invest approximately CAD$16 million in Bridge Mortgages consistent
with its current guidelines for US bridge mortgage investments,
which are investment opportunities yielding at or in excess of 8%.
The Bridge Mortgage annualized returns will be more than sufficient
to cover the Trust’s distribution yield of approximately 3% (based
on the Trust’s most recent equity offering of $8.20 per trust
unit). This investment strategy provides the Trust the ability to
invest its capital relatively quickly to earn a return on its
capital alongside a strong strategic lending partner.
Senior management and the board of trustees
continue to monitor the impact of the COVID-19 pandemic and will
regularly reassess this short term investment strategy until such
time as its able to appropriately complete due diligence on US
investment opportunities. Completing these Bridge Mortgages allows
the Trust to benefit from Firm Capital’s 30-year plus experience as
a leader in the mortgage lending industry.
ABOUT FIRM CAPITAL AMERICAN REALTY
PARTNERS TRUSTFirm Capital American Realty Partners Trust
is a U.S. focused real estate investment entity that pursues income
producing real estate and mortgage debt investments through the
following platforms:
- Income Producing Real
Estate Investments:
-
- Core Markets Wholly Owned
Investments: The Trust is focused on growing its wholly
owned multi-residential property portfolio in large core markets
with attention to cities located in Texas, Florida, New Jersey,
North and South Carolina, Colorado, Georgia and New York.
- Core and Non-Core Markets:
Joint Venture Investments: The Trust will also purchase in
both core and non-core markets where it lacks knowledge or
experience, partial ownership interests in multi-residential
properties with industry leaders as partners. These partners bring
both expertise in operations and knowledge, especially in non-core
markets. The Trust strives to have a minimum 50% ownership interest
and will fund the equity in a combined preferred/common equity
investment structure. The preferred equity provides a fixed rate of
return for investors in the Trust, resulting in a secured structure
ahead of the partners ownership interest, while the common equity
provides investors an upside return for investors as the investment
meets its targeted objectives.
- Mortgage Debt
Investments: The Trust, using Firm Capital’s 30-year plus
experience as a leader in the mortgage lending industry, provides
bridge lending of mortgage and preferred capital secured by
residential/multi-residential properties.
FORWARD LOOKING INFORMATION
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as “may”, “should”, “anticipate”,
“expect”, “intend” and similar expressions. Forward-looking
statements in this press release include statements relating to the
timing of trading of the Trust's securities. Forward-looking
statements necessarily involve known and unknown risks, including,
without limitation, risks associated with general economic
conditions; adverse factors affecting the U.S. real estate market
generally or those specific markets in which the Trust holds
properties; volatility of real estate prices; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms;
industry and government regulation; changes in legislation, income
tax and regulatory matters; the ability of the Trust to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks, including those described in the
Trust’s public disclosure documents on SEDAR at
www.sedar.com. Readers are
cautioned that the foregoing list is not exhaustive. Readers are
further cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions
or expectations upon which they are placed will occur. Such
information, although considered reasonable by management at the
time of preparation, may prove to be incorrect and actual results
may differ materially from those anticipated. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement.
Neither the TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Additional information about the Trust is available at
www.firmcapital.com or www.sedar.com.
For further information, please contact:
Eli DadouchPresident & Chief Executive Officer(416)
635-0221
Sandy PoklarChief Financial Officer(416)
635-0221
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