Partners Real Estate Investment Trust has provided an update to the strategic review currently being undertaken by its board of trustees to improve the financial position of the company.
Partners' higher than anticipated general and administrative costs, expenses associated with the REIT's recent proxy battle, near-term cash requirements, and necessary capital expenditures have all combined to strain the REIT's financial flexibility.
This flexibility has been further constrained by the REIT's difficulty in accessing traditional sources of capital, as potential lenders or investors seek clarity on the resolution of the REIT's attempts to unwind its April 2014 purchase of three Ontario retail centres from Holyrood Holdings.
In an effort to improve Partners' liquidity and establish a more secure financial position, the REIT's board of trustees have elected to take the following steps:
• Effective as of the August 2014 distribution, Partners will reduce its monthly distribution to USD0.02083 per unit per month, or USD0.25 per unit per annum. This reduction will result in annual cash savings of approximately USD7.7 million, based on the REIT's unit count at the end of the second quarter.
• The sale of a small portfolio of properties in Ontario in exchange for net cash consideration of approximately USD14.0 million.
Partners' board of trustees continues to work with both management and its advisor, National Bank Financial, to identify longer-term strategic alternatives, which could include potential strategic investments or a sale of the REIT. The board anticipates that this process will accelerate in early September 2014, once greater clarity is available regarding the REIT's attempts to unwind the Holyrood transaction.
The board is also continuing its search for a new permanent chief executive officer.