Partners REIT announced that the Board of Trustees has entered into an arrangement intended to accelerate the REIT’s internalization to no later than February 15, 2014.
Following their appointment, the independent Trustees conducted a full review and assessment of the CCAA proceedings affecting League Asset Corp. and certain related entities and determined that action was required to ensure the orderly management of the REIT going forward, including strategic, advisory and asset management services.
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The independent Trustees received, and have consented to, a proposal from McCowan and Associates Ltd. pursuant to which McCowan will acquire League’s rights and duties under the existing management contract, and will then stabilize the REIT’s management and assist the Trustees with internalization planning.
Under the offer to League, which is subject to approval by the Supreme Court of British Columbia, McCowan will purchase and assume League’s interest in the management contract for US$1.5 million, arrange for the provision of all necessary management services to the REIT by competent employees, including, as needed, by seconding employees of League to an affiliate of McCowan, and develop, for the approval of the Trustees, a plan to internalize management no later than February 15, 2014.
Upon approval of the internalization plan by the Trustees, McCowan will agree to terminate the management agreement on reimbursement by the REIT of the US$1.5 million purchase price, waiving any entitlement to notice.
This amount is approximately US$1.9 million less than the termination fee that would otherwise have been payable by the REIT to League under the management agreement on voluntary internalization in 2014. McCowan advised the independent Trustees that the US$1.5 million price was vigorously negotiated by it with the Court-appointed Monitor for League.
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By GlobalDataMcCowan and Associates is a private company controlled by Ron McCowan, an entrepreneur who has over 40 years of extensive experience in real estate development, construction, ownership and management.
McCowan currently owns and manages properties comprising more than 4 million square feet. McCowan beneficially owns approximately 14.95% of the issued and outstanding units of Partners REIT.
