In a release Wednesday morning, Wilmington (WCM-B-T) announced the transaction, which includes the facilities, as well as an interest in a redevelopment property in Kitchener, Ont. The self-storage operations are in British Columbia, Alberta, Manitoba and Ontario.
“The transaction reflects a compelling valuation for Wilmington’s interest in the private trust and is in keeping with Wilmington’s strategy of seeking undervalued investment opportunities and optimizing the timing of value realization,” said Christopher Killi, CEO of Real Storage Private Trust and Wilmington’s Managing Partner of real estate, in the release.
The private trust has been one of the largest owner, operator and developers of self-storage facilities in Canada. Included among the 38 facilities is a 33 per cent indirect interest in a self-storage facility in Toronto and a 24 per cent indirect interest in the Kitchener redevelopment property.
Real Storage operates 25 stores in Ontario, 11 in Alberta, one in British Columbia and one in Manitoba.
StorageVault currently owns and operates 160 storage locations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, and Nova Scotia. StorageVault owns 106 of the locations, plus more than 4,600 portable storage units, representing more than six million rentable square feet.
Wilmington to retain non-storage assets
Wilmington will be retaining its assets that do not form part of the self-storage business.
Real Storage Private Trust, Woodfield Limited Partnership, SNS Storage (Ontario) Limited Partnership, Real Storage GP Inc. and 2242907 Ontario Inc., are the vendor partners.
StorageVault says it intends to pay for the acquisition via with funds on hand, debt assumption and mortgage financing. The vendors can also take back up to $50 million in common shares of StorageVault, with the amount and price to be mutually agreed upon at a future date.
Wilmington plans to repay approximately $106 million in debt out of the proceeds on closing. The portion of the net purchase price expected to be payable to Wilmington is approximately $53 million.
Its remaining assets will comprise $50 million cash and other current assets, after accounting for income taxes; 45 per cent ownership interest in Northbridge Capital Partners Ltd.; 33 per cent ownership interest in Marina Asset Management Inc.; and an 18 per cent ownership interest in Maple Leaf Marinas Holdings Limited Partnership and Bay Moorings Marina Holdings Limited Partnership.
The transaction requires the approval of two-thirds of Wilmington shareholders at a special meeting to be called for March 28. A group of Wilmington shareholders, including directors and senior officers of Wilmington who collectively own approximately 32 per cent of its shares, have entered into voting support agreements with StorageVault.
Wilmington’s board (with Joseph F. Killi and Ian Cockwell abstaining) has reviewed and approves of the terms of the transaction.
It is expected to close during Q2 2019 subject to customary conditions and regulatory approvals, including the TSX Venture Exchange and Competition Act (Canada).
The self-storage business has represented one of Wilmington’s three core operations and comprised approximately 59 per cent of the net book value of its assets as of Sept. 30, 2018.
“Post-closing, the corporation will have the financial flexibility to continue to add value to its remaining operating platforms and to actively seek out additional investment opportunities where it can add value,” Wilmington said in the release.
Wilmington is a Canadian investment and asset management company whose principal objective is to seek out longer-term investment opportunities in the real estate and energy sectors. Wilmington invests its own capital, alongside partners and co-investors, in hard assets and private equity funds and manages these assets through operating platforms.