/Not for distribution to
Highlights
- The Joint Venture acquired a portfolio consisting of two facilities in
Nevada comprising a total of 98,500 square feet (the "Acquisition Properties ") for an aggregate purchase price of approximatelyUS$15.7 million . - The Joint Venture is structured as a limited partnership with Nova acting as the General Partner and receiving a 15% LP interest in the Joint Venture.
- The JV Partner will receive approximately
US$8.9 million of limited partnership units ("JV Partner Units") priced atUS$1.25 which are ultimately exchangeable for units of the REIT on a 1:1 basis. The JV Partner Units will receive a fixed 6% annual distribution, with any excess cash flow of the Joint Venture after debt service, Joint Venture expenses, and distributions to the JV Partner Units to be distributed to the REIT's US operating partnership. Cash flow to the REIT is expected to add approximatelyUS$0.03 of proforma AFFO per unit, inclusive of the currently outstanding Class B units in the REIT's US operating subsidiary. - The Joint Venture will have a 3-year term.
- Upon conversion of the JV Partner Units to REIT Units, the
Acquisition Properties would increase the size of the REIT from one property to three and proforma total assets from approximatelyUS$12 million to approximatelyUS$28 million . - The Joint Venture is expected to be immediately accretive on a proforma basis to the funds from operations ("FFO") and adjusted funds from operations ("AFFO") of the REIT.
- The tenant of the
Acquisition Properties ,Deep Roots Harvest, Inc. ("Deep Roots"), is a leading vertically integrated cannabis operator which has served theNevada market since 2015.The JV Partners own a majority of the equity interest in Deep Roots.
Location | Facility Size (Sq Ft) | Year Built | Current Use |
88,500 | 2015 | Headquarters, Cultivation, Manufacturing & Dispensary Operations | |
10,000 | 2020 | Dispensary Operations |
Following the Acquisition, the REIT's portfolio including the
The total acquisition cost of approximately
The Joint Venture is structured as a limited partnership with the JV Partner receiving an 85% interest and Nova receiving a 15% interest and acting as the General Partner. The JV Partner Units will receive a 6% annual fixed distribution, equal to
Due to the structure of the transaction, Nova will account for the Joint Venture under the equity accounting method. On a proforma basis, assuming full conversion of all JV Partner units, Nova would have approximately
"We are delighted to bring on Deep Roots as a tenant and their investors as partners as we look to build scale and momentum for Nova," said
The addition of the Deep Roots portfolio adds to the initial asset contributed to the Nova platform, a 70,000 square ft vertically integrated operation in
"We have been operating in a challenging capital markets environment, which has increased the difficulty among all market participants to effectively raise capital," said
This press release contains statements that include forward-looking information within the meaning of Canadian securities laws. These forward-looking statements reflect the current expectations of the REIT regarding future events, including statements concerning the ability of the REIT to achieve its stated investment objectives, the success of the Joint Venture, expected future cash flow from it, any actions undertaken in connection with the termination of the Joint Venture, any future acquisitions and the future success of the platform. In some cases, forward-looking statements can be identified by terms such as "may", "will", "could", "occur", "expect", "anticipate", "believe", "intend", "estimate", "target", "project", "predict", "forecast", "continue", or the negative thereof or other similar expressions concerning matters that are not historical facts.
These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any result expressed or implied by such forward-looking statements, including the risk factors set forth in the REIT's final Prospectus dated
Although forward-looking statements contained in this press release are based upon what management of NOVA believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. NOVA undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
FFO and AFFO are not measures defined under IFRS as prescribed by the
FFO assumes that the value of real estate investments does not decrease on a systematic basis over time and it adjusts for items included in net income and comprehensive income that do not necessarily provide the best indicator of operating performance, such as gains or losses on the sale of assets, provisions for impairment (and impairment reversals) of assets as well as changes in the fair value of certain equity-based financial instruments classified as financial liabilities. FFO is used by industry analysts and investors in the determination of the REIT's valuation, its ability to fund distributions and investors' investment return requirements. As a result, management believes FFO is a useful supplemental measure of its operating performance for investors.
AFFO is calculated as FFO subject to certain adjustments. AFFO is an important measure for management as a guideline through which operating and financial decisions are made and is an integral part of the investment decision for investors and potential investors.
For a reconciliation of FFO and AFFO to the most directly comparable measures calculated in accordance with IFRS, see the REIT's management's discussion and analysis for the three months ended
SOURCE
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