Canadian student housing firm CHC Student Housing Corp said this week that it has entered into a binding agreement on the sale of its London property for total gross proceeds of $55 mln (€50 mln).
The company has also entered into a binding agreement with a separate arm's length party for the sale of its Trois-Rivieres property in Québec, Canada, for total gross proceeds of $3.15 mln.
The London and Trois-Rivieres properties are the sole operating assets of the firm, which will cease to have active operations following closing of the deals.
'Given the financial position of the company, the terms of the mortgages on the properties and the lack of alternatives available to the company after a lengthy strategic review process, the company has determined that it is necessary to sell the properties and cease the student housing business conducted by the company,' CHC said in a statement.
CHC will use the net proceeds from the sale of the properties to settle its debts and return capital to its shareholders.
The sale follows the start of a strategic review process initiated in April 2017 after a proposal to merge the business with Dundee Acquisition collapsed. The company looked at various alternatives including a recapitalization, a merger or other business combination, a sale of all or a portion of its assets.
Under this process, the company sold its properties in Windsor and Kingston in Ontario and was able to refinance mortgage debt which was due on its London and Trois-Rivieres properties with near term debt. The London property's debt was refinanced in July 2018 with an assumption of the existing $33.0 mln first mortgage on the property, now maturing on June 30, 2021, and a new second mortgage for $14.0 mln maturing on June 30, 2021.
Under the terms of the second mortgage, the company deferred interest payments on $6.0 mln until December 31, 2019, which it is currently seeking to extend further pending the sale of the property. CHC said that it has been unable to secure longer term financing for the properties or source additional equity financing or strategic partners on acceptable terms and conditions to stabilize and grow its student housing business.