Artis REIT has concluded a strategic review process that lasted more than a year and resulted in $1.1 billion in divestments for debt-reduction purposes.

To further address upcoming debt obligations, Artis also finalized terms for new three-year senior secured credit facilities totalling $520 million, said the REIT.

Launched in August 2023, the review was conducted by a special board committee that worked alongside external advisors and aimed to evaluate strategic options to unlock and maximize value for unitholders. During the process, Winnipeg-based Artis considered the sale of the REIT’s entire business but decided that option would not be feasible.

“Since announcing the strategic review in August 2023, we have been navigating a very challenging interest rate environment,” said Samir Manji, president and CEOof Artis. “Despite the significant headwinds we faced, the quality and resilience of Artis’s portfolio enabled us to monetize $1.1 billion of real estate and, through this active disposition exercise, we have been able to materially reduce leverage and de-risk Artis’s balance sheet. We are very pleased with what we have achieved during this time on behalf of our owners with the guidance and efforts of the special committee and board.”

The review process addressed both external macroeconomic pressures, including rising interest rates, and Artis’s near-term debt obligations. As part of its strategy, Artis sold the $1.1 billion in assets at sale prices aligning with the REIT’s values based on International Financial Reporting Standards, according to a news release.

The proceeds were primarily used to reduce debt, resulting in a significant improvement to the REIT’s balance sheet. Total debt to gross book value dropped to 39.8% as of September 30, 2024, compared to 47.2% on June 30, 2023.

The facilities consist of a $350 million revolving credit facility and a $170 million non-revolving credit facility. BMO Capital Markets and Canadian Imperial Bank of Commerce acted as Co-Lead Arrangers. The facilities will bear interest at the Canadian prime rate plus 110 basis points at closing, with the option to convert to an adjusted Canadian overnight repo rate plus 210 basis points.

The new financing vehicles will replace the REIT’s existing senior unsecured credit facilities and will be available for general corporate purposes, including property acquisitions or developments. The facilities can be drawn in either Canadian or U.S. dollars.

“With the tide turning on interest rates and a healthy level of liquidity, we can now turn our attention to growth opportunities that we believe will produce above-average risk-adjusted returns and will grow net asset value per unit for Artis’s unitholders,” added Manji. “We remain committed to our strategy and confident about the road ahead.”

With an improved balance sheet and stronger liquidity, Artis is positioned to pursue its long-term strategy of growing net asset value per unit, said the REIT. The REIT’s leadership team believes that with near-term debt maturities addressed and an improving interest rate environment, the focus can now shift to strategic growth opportunities.

Artis is a diversified Canadian REIT with a portfolio of industrial, office, and retail properties across Canada and the U.S.

Pictured: Calgary office building

Photo: Artis REIT