- What Lanesborough REIT has agreed to sell its remaining assets for $41.7m to a numbered company controlled by Arni Thorsteinson, a Lanesborough insider
- Why The REIT owes $159m to two Thorsteinson-related entities
- What’s next Once the sale is complete, Lanesborough will be terminated
Lanesborough REIT, bowed by the weight of its debt load, is selling all of its assets and will cease operations.
The Winnipeg-based company announced on Wednesday that it agreed to sell 11 rental properties and a vacant piece of land to a numbered company for $41.7m. The rental properties account for $41.3m of that, while the vacant land, near the corner of Grant Avenue and Kenaston Boulevard in Winnipeg, makes up the remaining $400,000.
Most of the rental properties are in Alberta. Several are in Fort McMurray, with one each in Peace River and Thompson. Only one is outside the province: Chateau St. Michael’s, a seniors residence in Moose Jaw, Sask.
The numbered company is controlled by Arni Thorsteinson, a founder of Lanesborough and president of Shelter Canadian Properties — Lanesborough’s management company. Once the sale is complete, Lanesborough will be terminated, as its debts are too high to continue operations.
“Even if LREIT could have secured a purchase price for the Properties equal to twice the aggregate consideration payable pursuant to the Sale Transaction, all such funds would still be required to repay indebtedness of LREIT,” Lanesborough said in the announcement.
The REIT had total liabilities of $201m as of the end of March, including a combined $159m owed to Shelter and 2668921 Manitoba Ltd. — another number company owned by Thorsteinson.
If the sale is approved, the purchaser will take on $33.8m of existing mortgage loan debt, secured by some of the properties included in the sale. It also will assume an estimated $7.9m of debt under a revolving loan facility.
Even with the sale, Lanesborough will continue to owe $140m to Shelter and 2668921 Manitoba Ltd., and $17m to the lender of a mortgage loan formerly secured by another property.
The sale is subject to the approval of unitholders. A special meeting is scheduled for June 27 to hold a vote where 66.7% of unitholders must agree to the sale.
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