TORONTO, ONTARIO--(Marketwired - May 14, 2015) -


  • CHC to acquire interests in 9 high quality student housing properties comprising 2,732 beds located in strategic markets throughout Ontario

  • The acquisitions will increase CHC's number of beds from 822 to 3,554 and establish one of the largest portfolios of student housing properties in Canada

  • CHC to provide mezzanine financing for 2 development properties, which will add to the Company's extensive identified acquisition pipeline

  • The Company will internalize the asset management function relating to certain of the properties, which will result in CHC having a fully integrated, well-aligned asset management structure

  • CHC intends to adopt a dividend policy whereby shareholders will receive cash dividends, on a quarterly basis, anticipated to be initially set at $0.483 per share per annum.

CHC Student Housing Corp. ("CHC" or the "Company") (TSX VENTURE:CHC) is pleased to announce $163.5 million of property acquisitions and the filing of a preliminary short form prospectus for a proposed public equity offering.

The Offering

CHC has filed and obtained a receipt for a preliminary short form prospectus (the "Prospectus") with the securities regulatory authority in each of the provinces of Canada for a proposed public offering of common shares (the "Offering"). The aggregate number of shares to be issued and the price per share will be determined in the context of the market. It is currently anticipated that $92.5 million of equity will be distributed under the Offering at a price (the "Offering Price") anticipated to be between $8.50 and $10.00 per share.

The Offering is being made on a fully marketed basis through a syndicate of underwriters co-led by Raymond James Ltd. and TD Securities Inc. and including RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc., GMP Securities L.P., National Bank Financial Inc., Scotia Capital Inc., Canaccord Genuity Corp. and Dundee Securities Ltd.

The Offering is subject to usual closing conditions, including regulatory approvals. CHC intends to use the net proceeds from the Offering to partially fund the acquisitions and other transactions described below, to repay existing indebtedness and for general corporate and working capital purposes. CHC intends to initiate a regular quarterly dividend of $0.483 per share per annum upon closing of the Offering.

Property Acquisitions

Subject to the completion of the Offering, CHC intends to purchase 5 student housing properties (the "Acquisition Properties") from 4 separate and unrelated arm's length vendors for an aggregate purchase price (excluding transaction costs) of approximately $76.1 million. CHC intends to satisfy the purchase price for the Acquisition Properties through new or assumed mortgage financing of approximately $45.0 million and the balance in cash using a portion of the net proceeds from the Offering.

In addition, CHC intends to acquire all of the limited partnership units of CHC Student Housing Limited Partnership ("CHC LP"), which owns a 50% co-ownership interest in 4 student housing properties (the "CHC LP Properties"), for an aggregate purchase price (excluding transaction costs) of approximately $38.3 million, satisfied through a combination of cash and common shares of CHC issued to the vendors at a price equal to the Offering Price. CHC LP's interest in the CHC LP Properties has a value of approximately $87.4 million, and there are approximately $49.1 million in mortgages on its interest in the CHC LP Properties.

The following table highlights information regarding the properties to be acquired by CHC:

City, Province # of Beds Commercial
(sq. ft.)
Year Built/ Renovated Occupancy (1)
Acquisition Properties
Kingston Property Kingston, ON 110 - 2012 100.0 %
Oshawa Property (Phase 1) Oshawa, ON 260 - 2014 100.0 %
Oshawa Property (Phase 2) Oshawa, ON 111 - 2015(2 ) n/a(2 )
Sudbury Property Sudbury, ON 70 4,421 1970/2013 100.0 %
Waterloo Property Waterloo, ON 190 - 1963/2014 86.3 %
741 4,421 95.9 %
CHC LP Properties(3)
Luxe I Waterloo, ON 536 - 2011 99.6 %
Luxe II Waterloo, ON 419 - 2013 99.0 %
Village Suites Oshawa, ON 587 4,160 2010 88.1 %
West Village Suites Hamilton, ON 449 12,340 2008 90.4 %
1,991 16,500 94.0 %
Total 2,732 20,921 94.5 %
(1) Occupancy as at March 31, 2015. The total percentages reflect occupancy on a weighted-average basis by number of beds.
(2) Oshawa Property (Phase 2) is currently under construction with an expected completion date of September 2015.
(3) Information presented is for the CHC LP Properties in their entirety, and is not limited to the 50% co-ownership interest of CHC LP in the CHC LP Properties.

Upon closing of these acquisitions, CHC will own an interest in 3,554 student housing beds in 13 high quality properties, making it one of the largest portfolios of its kind in Canada.

CHC's portfolio will consist of a diversified mix of student housing properties located in 7 cities in Ontario and 1 city in Québec. The properties are strategically situated in close proximity to fast growing post-secondary institutions with a weighted average distance to campus of approximately 0.8 kilometers.

Management believes that CHC's properties are among the most appealing in their respective markets, with 11 of 13 the properties having been constructed or substantially renovated within the past 7 years. The weighted average age of the properties is approximately 7 years compared to a weighted average age of approximately 44 years for traditional multi-residential properties in Canada.

Investment in Development Properties

In addition to purchasing the Acquisition Properties and the CHC LP units, CHC intends to use a portion of the net proceeds from the Offering to invest in two student housing projects being developed by an arm's length developer in Kingston and Oshawa, Ontario. Under these investments, CHC would provide $6.9 million in mezzanine financing to affiliates of the developer, in return for which it would earn interest at a rate of 10% per annum and be entitled to 80% of the borrowers' profits from the development of the properties, as well as receive options to purchase and rights of first refusal in respect of the properties.

CHC LP Management Internalization

CHC also intends to use a portion of the net proceeds from the Offering to internalize the asset management function for the CHC LP Properties, which are currently externally managed by affiliates of CHC Realty Investments Inc. ("CHC Realty"). The aggregate price for the internalization would be $2.4 million, of which $0.7 million would be satisfied by way of the assumption of debt owed by CHC Realty to CHC LP, $0.6 million would be paid in cash and $1.1 million would be satisfied through the issuance of common shares of CHC at a price equal to the Offering Price.

Related Party Transactions

The acquisition of the CHC LP units and the management internalization for the CHC LP Properties both involve related party transactions as defined under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Mark Hansen, the President and CEO of CHC, and Craig Smith, a director of CHC, both beneficially own units of CHC LP which they have agreed to sell to the Company under the acquisition of the CHC LP units in return for common shares of the Company. In addition, the CHC LP Properties management internalization will be completed with affiliates of CHC Realty, which is owned by Messrs. Hansen and Smith. In addition, Robert Waxman, the CFO of the Company, is also CFO of CHC Realty.

In completing these transactions, the Company intends to rely on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the subject matter of the transactions, nor the consideration to be paid for the transactions, will exceed 25% of CHC's market capitalization. The decision to proceed with the management internalization and the terms for doing so were determined by negotiation between Messrs. Hansen and Smith on behalf of CHC Realty and the independent members of the Board of Directors of the Company, being all of the members of the Board other than Mr. Smith. In connection with this process, the Board received a fairness opinion from an independent financial advisor which concluded that the terms for the internalization are fair, from a financial point of view, to the Company's shareholders.

The Company and its Strategy

CHC Student Housing Corp. is an owner and operator of student housing properties which is focused on acquiring high quality properties in close proximity to universities across Canada. CHC is the first pure-play publicly-listed student housing company in Canada.

The student housing sector benefits from compelling market fundamentals, including high revenue per unit, limited purpose-built supply, strong enrollment growth fueling demand, high occupancy rates and increased focus on quality, which serves as a competitive advantage for owners of newer and purpose-built properties, such as CHC.

CHC expects to be well positioned to capitalize on internal and external growth opportunities, including: (i) annual rental rate increases; (ii) value-enhancing initiatives focused on increasing revenues; (iii) operating improvements and preventative maintenance programs; (iv) accretive purpose-built student housing acquisitions; (v) repositioning of acquired multi-residential properties; and (vi) development opportunities.

Additional Information

Additional information regarding the proposed acquisition of the Acquisition Properties and units of CHC LP, the investment in the development properties and the management internalization for the CHC LP Properties described above (collectively, the "Transactions") is set out in the Prospectus, which is available under CHC's profile on SEDAR at The Prospectus contains important information relating to the securities and the Transactions and is still subject to completion or amendment. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final short form prospectus has been issued. The Transactions are subject to various and customary closing conditions, including with respect to financing and regulatory approvals, including acceptance by the TSX Venture Exchange.

The TSXV has in no way passed upon the merits of the proposed acquisition of the Acquisition Properties and units of CHC LP, the investment in the development properties and the management internalization for the CHC LP Properties described above (collectively, the "Transactions") and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

This press release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding the completion of the Transactions. Although CHC believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. CHC cautions investors that any forward-looking information provided by the Company is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: the Company's ability to complete the Transactions; the state of the real estate sector in the event the Transactions are completed; the Company's ability to secure the necessary financing or to be fully able to implement its business strategies and other risks and factors that the Company is unaware of at this time. The reader is referred to the Prospectus for a more complete discussion of risk factors relating to the Company and their potential effects, available under CHC's profile on SEDAR at

The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any U.S. State securities laws and may not be offered, sold, or delivered directly or indirectly, within the United States or its territories or possessions or to or for the account of any U.S. person (as defined in Regulation S under the U.S. Securities Act) other than pursuant to an available exemption from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any such securities within the United States, or its territories or possessions, or to or for the account of any U.S. person.

Contact Information:

CHC Student Housing Corp.
Mark Hansen
President and Chief Executive Officer
(647) 288-9355

CHC Student Housing Corp.
Robert Waxman
Chief Financial Officer
(647) 288-9375