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Artis REIT confirms sale discussions with ‘potential suitors’

Winnipeg-based Artis Real Estate Investment Trust (AX-UN-T) confirmed late Monday it is “in discu...

IMAGE: Artis REIT is in discussions with a number of potential buyers.

Artis REIT is in discussions with a number of potential buyers.

Winnipeg-based Artis Real Estate Investment Trust (AX-UN-T) confirmed late Monday it is “in discussion with potential suitors with respect to a potential transaction involving the REIT.”

The discussions were first revealed Friday in a BNN Bloomberg News story. Artis declined to comment directly on details of the story.

“Artis’ policy is not to comment on market speculation or rumours,” the release states.

The Bloomberg story says there are multiple suitors for the REIT, which owns a portfolio of more than 200 properties and 24.8 million square feet of office, retail and industrial space. Among the suitors named in the article, which quotes unnamed sources, are Canadian entities Morguard Corp., Slate Asset Management LP, and San Francisco/Fort Worth-based investor TPG.

Artis is invested in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and several U.S. markets.

Strategic review started in 2019

The REIT struck a special committee in mid-2019 to conduct a strategic review of its operations, including a possible sale of the trust’s assets. The committee retained Citigroup Global Markets Inc. and Scotiabank to provide financial advisory services, and Goodmans LLP to act as legal counsel.

“The special committee has not made any decisions related to any strategic alternatives at this time. There can be no assurance that the special committee’s discussions with potential suitors will result in a transaction,” Monday’s press release states.

“The REIT does not currently intend to disclose further developments with respect to its strategic review process unless and until the board of trustees approves a specific transaction or otherwise concludes the review of strategic alternatives.”

Artis has been pursuing a policy of geographical diversification outside of Alberta for the past several years.

In 2018, the REIT announced its intention to sell up to $1 billion in non-core assets to recycle capital.

Since the announcement, it has divested 30 properties and four parcels of development land for $842 million, the company said in its 2019 annual report. This includes property sales through early 2020.

It still has three office properties and a retail site on the sale block. The IFRS value for the remaining sale properties is approximately $104 million, according to the annual report.

Artis REIT Calgary divestments

Artis’ portfolio, once focused mainly on Alberta, has been significantly repositioned through the divestments, as well as a series of purchases in other markets. Artis has sold 10 Calgary office properties and one development land site.

One of the office properties remaining for sale is also in Calgary.

On the development side, Artis added 1.5 million square feet to its portfolio during 2019, completing five new industrial properties in the U.S.

It has three ongoing developments in Winnipeg (including the 600,000-square-foot 300 & 330 Main mixed-use property) , and the fourth phase of an industrial development in the Houston area.

By asset class, the REIT’s NOI is comprised of 17.9 per cent retail properties, 33.5 per cent industrial and 48.6 per cent office.

Artis’ stock was trading at $12.51 on the TSX as of market open on Tuesday morning. It had traded above $15 during 2015, but had tumbled to a low of $8.75 in mid-2018.

The 52-week high and low are $12.83 and $10.36.


* Artis REIT sells two Ontario office buildings for $161M

* Artis continues divestments, eyes U.S. industrial growth

* Artis REIT sells four more Western Canada office buildings