Artis REIT (AX.UN-T) management says it has concluded a 17-month strategic review of the trust after $1.1 billion of property dispositions - which has made a significant dent in its debt - and securing $520 million of new senior debt facilities.

The result, according to CEO Samir Manji, leaves the Winnipeg-based trust in a much better position to move forward, and provide stronger returns for its investors.

It should also benefit from recent Bank of Canada moves to lower interest rates, which will reduce future carrying costs on floating rate debt.

"With the tide turning on interest rates and a healthy level of liquidity, we can now turn our attention to growth opportunities that we believe will produce above average risk-adjusted returns and will grow net asset value per unit for Artis's unitholders," Manji said in the announcement on Thursday. "We remain committed to our strategy and confident about the road ahead. 

“We want to thank the members of the Special Committee for their hard work, time and effort over the past 16 months and the Board for their continued guidance and support. The Artis Board and management team is excited to shift this attention now to pursuing growth opportunities and remain grateful to our loyal unitholders for their continued confidence and trust."

Artis' actions during the strategic review

Artis has been steadily disposing of properties since the announcement of the review in August of 2023. Thursday’s announcement did not contain any additional asset sales, but the $520 million in credit facilities is a new development for the trust.

Artis used proceeds from the dispositions primarily to reduce debt. As a result, the trust’s debt-to-gross-book-value ratio decreased to 39.8 per cent as of Sept. 30, compared to 47.2 per cent at June 30, 2023.

"Since announcing the strategic review in August 2023 , we have been navigating a very challenging interest rate environment," Manji said. "Despite the significant headwinds we faced, the quality and resilience of Artis's portfolio enabled us to monetize $1.1 billion of real estate and, through this active disposition exercise, we have been able to materially reduce leverage and de-risk Artis's balance sheet."

The trust had faced significant near-term debt expiries, but has dealt with those obligations via the new credit facilities.

The new three-year senior secured credit facilities include a $350-million revolving credit facility and a $170-million non-revolving credit facility. BMO Capital Markets and Canadian Imperial Bank of Commerce acted as co-lead arrangers for these arrangements. At closing, the facilities will bear interest at a rate of Canadian prime rate plus 110 basis points, and thereafter the REIT has the option to convert to a rate of adjusted CORRA (Canadian overnight repo rate average) plus 210 basis points. 

The facilities will replace Artis’ existing senior unsecured revolving and non-revolving credit facilities. They can be utilized for general corporate purposes, including the acquisition or development of additional income producing properties and can be drawn in Canadian or U.S. dollars, Artis states.

Some of Artis’ major dispositions

Among the property dispositions Artis has made during the past 17 months are:

• Nine U.S. industrial assets in Minnesota and Arizona, comprising approximately 1.15 million square feet, for $272.6 million;
• The newly developed 1.8-million-square-foot Park 8Ninety industrial complex in Houston for $320 million;
• Eight retail properties in Calgary and Winnipeg for $222 million.

As of Sept. 30, the Artis portfolio comprised 89 commercial properties of approximately 10.1 million square feet of GLA in Canada and the U.S. It also holds interests in one other commercial/residential property, development land and other investment properties, its Q3 2024 financial statement reports.

It’s investment properties were valued at $2.3 billion.

Artis REIT’s stock opened at $7.35 on the TSX Friday morning. Its 12-month high and low range is $8.38 to $5.51.