REIT acquires another building
Winnipeg Free Press
Friday March 4 2005
By Geoff Kirbyson
HUNTINGDON Real Estate Investment Trust hasn't wasted any time gaining a foothold in Winnipeg's commercial and industrial real estate sector.
The city's newest REIT has announced its second acquisition in less than a week with the purchase of the Fort Garry Brewing Co. building at 130 Lowson Cres. in the Tuxedo Industrial Park.
Huntingdon has agreed to pay $1.65 million to a numbered company owned by Arni Thorsteinson, who is also Huntingdon's CEO, for the 25,500-square-foot building. The numbered company bought the building for the same price three months ago from a Winnipeg real estate developer. The brewery itself, which has never had an ownership stake in the six-year-old building, is not part of the deal.
Gino Romagnoli, manager of investor relations for Huntingdon, said it chose the property because it was familiar with the tenant and confident in its future viability.
"They have strong, committed backers (in ENSIS Growth Fund) and our research on them gave us comfort they'll be around for the long term," he said in an interview.
Thorsteinson was out of town and unavailable for comment. Romagnoli said he was not concerned about any conflict of interest, perceived or otherwise, with the non-arm's length transaction. He said the vendor wanted to sell the building prior to the end of December and Thorsteinson's company agreed to buy the property with the expectation it could be an attractive target for Huntingdon once it completed its major transaction.
That happened last Friday when Huntingdon, formerly a junior capital pool company known as WPVC Inc., bought the 113,800-square-foot building at 1935 Sargent Ave. adjacent to the Winnipeg airport, the home to Purolator Courier, for $8.1 million.
"(Fort Garry's building) sold for the same price (as in December) and Arni fully abstained from voting on the transaction. Only independent trustees voted on it," Romagnoli said.
Junior capital pools, which are shell companies that raise seed capital based on the strength of their management, have 18 months from their inception to make a qualifying transaction, according to stock exchange bylaws. The JCP model allows young firms to go public more quickly and economically than the traditional initial public offering route.
Kevin Hooke, vice-president of corporate finance at Wellington West Capital, which helped WPVC raise its seed capital last year, was equally unconcerned.
"Arni took the risk on the deal," he said. "The building was acquired on an arm's-length basis from the vendor (in December) and Huntingdon ends up acquiring it for that same price." The purchase price will be funded by the assumption of a first mortgage loan worth about $1.23 million with the balance coming in cash. The deal is expected to close later this month.
Huntingdon shares (HNT.UN) closed down 37 cents yesterday to $2.18 on volume of 1,200.
geoff.kirbyson@freepress.mb.ca