Minto Apartment REIT filing opens door to up to $800M in new financing

Minto Meadowlands property
Minto Meadowlands property

Fresh off a deal that expanded its national footprint to the West Coast, Ottawa’s Minto Apartment REIT is taking steps to raise as much as $800 million in additional equity financing over the next two years.

Minto REIT (TSX: MI.UN) said this week it’s filed what’s known as a short-form base shelf prospectus with securities regulators in each Canadian province and territory. The prospectus is valid for 25 months.

In a nutshell, the move allows Minto to fast-track the process of issuing new units on the Toronto Stock Exchange as a means of raising capital to acquire more property. 

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Complex technical reports remain valid throughout the life of the prospectus. That means companies can submit much less detailed supplemental data for regulatory review when they wish to raise more funds, speeding up access to capital.

“It makes it just that much easier to issue equity,” said Julie Morin, Minto REIT’s chief financial officer, noting a short-form prospectus is a common fundraising tool for real estate investment trusts.

The move comes just a few weeks after the trust made its first foray into the B.C. real estate market

The REIT is providing $11.9 million in funding for a joint venture between its sister company, Minto Properties, and a subsidiary of B.C.-based Darwin Properties to build the first phase of Lonsdale Square, a master-planned community in North Vancouver.

The six-storey building will feature 116 rental suites as well as 7,800 square feet of ground-floor retail space. Once construction is complete, the REIT will have the option to purchase the building at five per cent less than its appraised market value.

Since it was formed in 2018, the investment trust has grown its portfolio from just over 4,000 suites at 22 properties to 7,200 units at 29 properties in Ottawa, Toronto, Montreal, Calgary and Edmonton.

Minto recently said its portfolio “continues to generate solid performance” despite the pandemic as rent collection rates were consistent with pre-COVID levels in the third quarter. 

The company reported its funds from operations – a key cash-flow metric for REITs – for the three-month period ending Sept. 30 increased 22 per cent year-over-year to $13.2 million.

Minto’s shares were trading at $19.85 on the TSX late Thursday afternoon, up 15 cents on the day.

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