Financially strapped Lanesborough REIT’s unitholders have rejected a proposal to sell all of its real estate assets.

The decision was reached Thursday at Winnipeg-based Lanesborough’s annual general and special meeting. As a result, the proposed sale of 11 multi-residential rental properties and vacant land will not proceed and asset purchase agreements will be terminated.

Based on that decision, a previously scheduled proposal to wind up the REIT’s business was not considered.

“In light of the results of the meeting, management of LREIT will be considering the options available to it and will provide an update in due course,” said Lanesborough in a news release.

A Manitoba numbered company known as 725 was the proposed buyer of the assets. The firm is owned by Arni Thorsteinson, a Lanesborough insider.

LREIT said in May that it had agreed to sell 11 rental properties in Alberta, Saskatchewan and Ontario for $41.7 million. The REIT also struck a deal to sell a vacant Winnipeg development land parcel for $400,000.

Even if the asset sale had gone through, the REIT would not have recouped sufficient funds to repay all of its outstanding debts, and unitholders would not have received any proceeds from the sale.

“Given the amount of indebtedness of LREIT, there is no possibility LREIT will have sufficient funds following the sale of the properties to repay all of its outstanding indebtedness,” Lanesborough said in a May news release. “Accordingly, there will be no funds available for distribution to the unitholders following the sale of the properties.” 

Even with the assets sale and assumption of a mortgage and $7.9 million of other debt, Lanesborough would still owe $139.9 million to a different Manitoba numbered company and $17 million to a lender that provided a mortgage formerly secured by one of the REIT’s properties, according to the May news release.

“These financial obligations and costs mean that LREIT has no ability to continue as a going concern,” Lanesborough said in May.

As of March 31, Lanesborough had $201 million in total debt liabilities.

Photo: Lanesborough REIT