Le Lézard
Classified in: Business
Subject: FINANCING AGREEMENTS

AIP Realty Trust Announces Agreements to Aquire Up to Five Light Industrial Flex Properties in Texas and Provide Mezzanine Construction and Development Financing


VANCOUVER, British Columbia, May 24, 2022 (GLOBE NEWSWIRE) -- AIP Realty Trust ("AIP") (TSXV: AIPV.U) is pleased to announce that its wholly-owned subsidiary AIP Realty Management, LLC has entered into membership purchase agreements (the "Agreements") with AllTrades Five Properties, LLC ("AT5P"), to acquire up to five additional companies, each of which owns a light industrial flex property in the Dallas-Fort Worth ("DFW") area of Texas. Each of the Agreements provide AIP with the exclusive option, subject to certain conditions, to acquire (i) AIP Mesquite, LLC, (ii) AIP Lewisville Main, LLC, (iii) AIP Carrollton Briercroft, LLC, (iv) AIP Frisco, LLC, and (v) AIP Plano, LLC (collectively, the "Texas LLCs") , each of which owns a light industrial flex property in Mesquite, Lewisville, Carrollton, Frisco and Plano, Texas, respectively (collectively, the "Properties").

The Agreements align with AIP's strategy and business objectives discussed in AIP's filing statement dated March 31, 2022. Upon completion of construction, each of the Properties will address the underserved needs for new generation, high quality light industrial flex space of the large, diverse and growing market of trades and services businesses in the US.

As previously disclosed, AIP has the exclusive right to finance a portion of the development costs of and to purchase the newly constructed and leased properties built by AllTrades Industrial Properties, Inc. ("AllTrades"). This structure provides AIP unitholders with the benefits of development upside while minimizing risk.

The Properties represent an aggregate approximate 376,000 square feet of gross leasable area, comprised of 108 WorkSpace ShopsTM and 44 WorkSpace StudiosTM as well as 209 WorkSpace Secured ParkingTM spaces, and are targeted at the trades and services sectors and small businesses which are often underserved and relegated to older buildings with outdated amenities. The AllTrades facilities offer modern, appealing spaces that can be readily adapted to multiple uses. The Properties were developed with equity capital from AllTrades and Trinity Investors (a $4 billion Dallas-based real estate private equity fund) ("Trinity").

"AIP has taken a significant step forward in securing additional high quality light industrial flex properties in Texas towards the planned national rollout," said Leslie Wulf, Executive Chairman of AIP. "The acquisition of some or all of the five properties, will provide AIP with a substantially increased quality, size and diversity of cash flow for the portfolio."

The Mesquite Property

The facility owned by AIP Mesquite, LLC (the "Mesquite Property") is located in an attractive market in southern eastern part of the Dallas Fort Worth market. Construction of the Mesquite Property is expected to be completed in July of 2022. The Mesquite Property will be comprised of 49,713 rentable square feet across 12 WorkSpace Shopstm, 10 WorkSpace Studiostm and 32 WorkSpace Secured Parkingtm spaces. The Mesquite property is currently in the pre-leasing phase.

The membership purchase agreement pertaining to the acquisition of AIP Mesquite, LLC provides for the purchase of all of the membership interests of AIP Mesquite, LLC, for a purchase price of up to US$12 million, excluding closing costs (the "Mesquite Purchase Price"). The acquisition of AIP Mesquite, LLC by AIP Realty Management, LLC is subject to certain conditions, including but not limited to completion of the construction of the facility, receipt of audited financial statements of AIP Mesquite, LLC, receipt of a satisfactory third-party appraisal supporting the Mesquite Purchase Price, receipt of regulatory approvals, including the approval of the TSX Venture Exchange ("TSXV"), approval of the independent trustees of AIP and customary closing date and post-closing adjustments. The purchase price is expected to be satisfied by a combination of the assumption of a mortgage of approximately US$5.95 million and cash.

The Lewisville Property

The facility owned by AIP Lewisville Main, LLC (the "Lewisville Property") is located in the northern area of the DFW market. Construction of the Lewisville Property is expected to be completed in October of 2022. The Lewisville Property will be comprised of approximately 69,000 rentable square feet across 22 WorkSpace Shopstm, 6 WorkSpace Studiostm and 27 WorkSpace Secured Parkingtm spaces.

The membership purchase agreement pertaining to the acquisition of AIP Lewisville, LLC provides for the purchase of all of the membership interests of AIP Lewisville, LLC, for a purchase price of up to US$15 million, excluding closing costs (the "Lewisville Purchase Price"). The acquisition of AIP Lewisville, LLC by AIP Realty Management, LLC is subject to certain conditions, including but not limited to completion of the construction of the facility, receipt of audited financial statements of AIP Lewisville, LLC, receipt of a satisfactory third-party appraisal supporting the Lewisville Purchase Price, receipt of regulatory approvals, including the approval of the TSXV, approval of the independent trustees of AIP and customary closing date and post-closing adjustments. The purchase price is expected to be satisfied by a combination of the assumption of a mortgage of approximately US$7.50 million and cash.

The Carrollton Property

The facility owned by AIP Carrollton Briercroft, LLC (the "Carrollton Property") is located in the north central area of the DFW market. Construction of the Carrollton Property is expected to be completed in December of 2022. The Carrollton Property will be comprised of approximately 100,000 rentable square feet across 22 WorkSpace Shopstm, 22 WorkSpace Studiostm and 54 WorkSpace Secured Parkingtm spaces.

The membership purchase agreement pertaining to the acquisition of AIP Carrollton, LLC provides for the purchase of all of the membership interests of AIP Carrollton, LLC, for a purchase price of up to US$24 million, excluding closing costs (the "Carrollton Purchase Price"). The acquisition of AIP Carrollton, LLC by AIP Realty Management, LLC is subject to certain conditions, including but not limited to completion of the construction of the facility, receipt of audited financial statements of AIP Carrollton, LLC, receipt of a satisfactory third-party appraisal supporting the Carrollton Purchase Price, receipt of regulatory approvals, including the approval of the TSXV, approval of the independent trustees of AIP and customary closing date and post-closing adjustments. The purchase price is expected to be satisfied by a combination of the assumption of a mortgage of approximately US$11.25 million and cash.

The Frisco Property

The facility owned by AIP Frisco, LLC (the "Frisco Property") is located in the north central area of the DFW market. Construction of the Frisco Property is expected to be completed in December of 2022. The Frisco Property will be comprised of approximately 75,000 rentable square feet across 22 WorkSpace Shopstm, 6 WorkSpace Studiostm and 45 WorkSpace Secured Parkingtm spaces.

The membership purchase agreement pertaining to the acquisition of AIP Frisco, LLC provides for the purchase of all of the membership interests of AIP Frisco, LLC, for a purchase price of up to US$20.5 million, excluding closing costs (the "Frisco Purchase Price"). The acquisition of AIP Frisco, LLC by AIP Realty Management, LLC is subject to certain conditions, including but not limited to completion of the construction of the facility, receipt of audited financial statements of AIP Frisco, LLC, receipt of a satisfactory third-party appraisal supporting the Frisco Purchase Price, receipt of regulatory approvals, including the approval of the TSXV, approval of the independent trustees of AIP and customary closing date and post-closing adjustments. The purchase price is expected to be satisfied by a combination of the assumption of a mortgage of approximately US$9.22 million and cash.

The Plano Property

The facility owned by AIP Plano, LLC (the "Plano Property") is located in the east central area of the DFW market. Construction of the Plano Property is expected to be completed in September of 2022. The Plano Property will be comprised of approximately 82,000 rentable square feet across 30 WorkSpace Shopstm and 51 WorkSpace Secured Parkingtm spaces.

The membership purchase agreement pertaining to the acquisition of AIP Plano, LLC provides for the purchase of all of the membership interests of AIP Plano, LLC, for a purchase price of up to US$20 million, excluding closing costs (the "Plano Purchase Price"). The acquisition of AIP Plano, LLC by AIP Realty Management, LLC is subject to certain conditions, including but not limited to completion of the construction of the facility, receipt of audited financial statements of AIP Plano, LLC, receipt of a satisfactory third-party appraisal supporting the Plano Purchase Price, receipt of regulatory approvals, including the approval of the TSXV, approval of the independent trustees of AIP and customary closing date and post-closing adjustments. The purchase price is expected to be satisfied by a combination of the assumption of a mortgage of approximately US$9 million and cash.

Mezzanine Financing

Pursuant to a commitment, AIP Realty Management LLC, a wholly-owned subsidiary of AIP, has agreed to lend mezzanine financing (the "Credit Facility) of up to US$12 million to AllTrades Industrial Development LLC, ("AID") a wholly owned subsidiary of AllTrades, which will be used in conjunction with additional equity funding provided by Trinity along with construction loans to fund special purpose LLCs to build and develop up to 12 further facilities in the DFW area by a subsidiary of AID. The credit facilities will be granted for facilities that AIP has underwritten and provide a forward purchase commitment to acquire upon completion after all required conditions being met. The Credit Facility will bear current pay interest of 10% on the drawn down portion and AIP will also receive up to 50% of the sales profit generated from the prorated portion of the mezzanine to the overall equity in the project. The Credit Facility will be secured by the assets of AID.

After an extensive review and analysis of the transactions contemplated by the Agreements and the Credit Facility and consideration of, among other things, the unanimous recommendation of AIP's governance committee (comprised of three independent trustees of AIP) (the "Governance Committee"), the board of trustees of AIP, with Leslie Wulf, Bruce Hall and Greg Vorwaller recused, unanimously approved the Agreements and the Credit Facility. Leslie Wulf, Bruce Hall and Greg Vorwaller were not party to any discussions or deliberation relating to the approval of Agreements and the Credit Facility.

No securities of AIP will be issued, nor will any finders fees be paid by AllTrades or AIP in connection with the transactions contemplated in the Agreements. The transactions will not result in the creation of new insiders or a new control person of AIP.

Upon completion of construction of each of the facilities, the Governance Committee will obtain independent appraisals and audited financial statements pertaining to each of the Texas LLCs. In the event that each appraisal and set of audited financial statements support a purchase price that is within the range set out in the Agreements, the Governance Committee will make a recommendation to the board of trustees of AIP, with Leslie Wulf, Bruce Hall and Greg Vorwaller recused, and AIP will then seek regulatory approvals, including approval of the TSX Venture Exchange to proceed with the acquisition of each of the Texas LLCs, in turn.

The Governance Committee is responsible for supervising the process to be carried out by AIP and its professional advisors in connection with the Agreements and the Credit Facility, making recommendations to the board of trustees of AIP, with Leslie Wulf, Bruce Hall and Greg Vorwaller recusing, in respect of matters that it considered relevant with respect to the Agreements and the Credit Facility, and ensuring that AIP completes the acquisitions of the Texas LLCs and provides that the Credit Facility is being provided to AllTrades in compliance with the requirements of Multilateral Instrument 61-101 ? Protection of Minority Security Holders in Special Transactions ("MI 61-101"), AIP's declaration of trust and applicable policies of the TSXV.

The transactions contemplated in the Agreements and the Credit Facility may constitute a "related party transaction" under MI 61-101 as the Texas LLCs are currently owned by AllTrades Five Properties, LLC, which is owned by AIP DFW I, LLC ("AIPDFW") and AllTrades Group Two Properties, LP ("ATG2"). AIPDFW is majority owned by TPEG AllTrades DFW I Investors LLC with AllTrades holding 5.73% of the Class B shares and 22.5% of the Class C shares. The general partner of ATG2 is AllTrades Group Two Management, Inc., a corporation wholly owned by AllTrades. Three of the trustees and officers of AIP, namely Leslie Wulf, Bruce Hall and Greg Vorwaller, are directors and officers of AllTrades. Bruce Hall is also the manager of AT5P. Leslie Wulf, Greg Vorwaller and Bruce Hall collectively own approximately 3% of AIP. Pursuant to subsections 5.5(e) of and 5.7(1)(c) of MI 61-101, AIP was exempt from obtaining a formal valuation and approval of AIP's minority shareholders because AIP's units trade on the TSXV and, pursuant to subsection 5.5(e) of MI 61-101, the Agreements and the Credit Facility were supported by Alpha Carta Ltd., AIP's controlling unitholder.

About AIP Realty Trust

AIP Realty Trust is a real estate investment trust with a growing portfolio of light industrial flex facilities focused on small businesses and the trades and services sectors in the U.S. These properties appeal to a diverse range of small space users, such as contractors, skilled trades, suppliers, repair services, last-mile providers, small businesses and assembly and distribution firms. They typically offer attractive fundamentals including low tenant turnover, stable cash flow and low capex intensity, as well as significant growth opportunities. With an initial focus on the DFW market, AIP plans to roll-out this innovative property offering nationally. AIP holds the exclusive rights to finance the development of and to purchase all the completed and leased properties built across North America by its development and property management partner, AllTrades. For more information, please visit www.aiprealtytrust.com.

For further information from the Trust, contact:

Leslie Wulf
Executive Chairman
(214) 679-5263
[email protected]

or

Greg Vorwaller
Chief Executive Officer
(778) 918-8262
[email protected]

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements are based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond AIP's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements.

Forward-looking statements contained in this press release include, without limitation, statements pertaining to the expected timing and completion of the acquisition of the Texas LLCs; the effect of the acquisitions of the Texas LLCs on AIP's financial performance; the ability to secure the funding required to complete the acquisition of the Texas LLCs; the satisfaction of the conditions precedent to consummation of the acquisition of the Texas LLCs, including the ability to obtain required regulatory approvals; and the ability of AIP to execute its business and growth strategies. AIP's objectives and forward-looking statements are based on certain assumptions, including that (i) AIP will receive financing on favourable terms; (ii) the future level of indebtedness of AIP and its future growth potential will remain consistent with AIP's current expectations; (iii) there will be no changes to tax laws adversely affecting AIP's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on AIP's operations, including its financing capacity and asset value, will remain consistent with AIP's current expectations; (v) the performance of AIP's investments in Texas will proceed on a basis consistent with AIP's current expectations; and (vi) capital markets will provide AIP with readily available access to equity and/or debt.

The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. AIP does not undertake to update any such forward- looking information whether as a result of new information, future events or otherwise, except as required by law.

Additional information about these assumptions and risks and uncertainties is contained under "Risk Factors" in AIP's filing statement dated March 31, 2022, which is available on SEDAR at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

NOT FOR DISSEMINATION IN THE UNITED STATES OR DISTRIBUTION THROUGH UNITED STATES NEWS OR WIRE SERVICES.



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News published on 24 may 2022 at 07:00 and distributed by: