Acquires Maryland Hotel and Completes Private Placement
TORONTO, Aug. 25, 2014 /CNW/ - WestCap Investments Corp. (the "Company") (TSXV: WI.P), a capital pool company, announced today that it has effected its plan of arrangement transaction (the "Plan") pursuant to which, among other things, the shareholders of the Company have exchanged their shares for units (the "Units") of R&R Real Estate Investment Trust (the "REIT", and together with the Company, "R&R") on the basis of 1 Unit (or if a shareholder so elected, 1 special voting unit of R&R accompanying a limited partnership unit of R&R Limited Partnership, referred to as a "Class B LP Unit") for every one Unit, and has completed the US$8,500,000 acquisition (the "Acquisition") of a Red Roof Inn located at 827 Elkridge Landing Road, Linthicum Heights, Anne Arundel County, Maryland 21090 (the "Property"), as its "Qualifying Transaction" (as that term is defined in TSX Venture Exchange ("TSXV") Policy 2.4 – Capital Pool Companies) as consideration for the issuance by R&R (US) Limited Partnership of 51,408,895 Class B limited partnership units ("US Class B LP Units") which are exchangeable for the equivalent number of Units.
As part of the Plan and Acquisition, the Company also completed a brokered private placement (sold on a commercially reasonable efforts basis, with Raymond James Ltd. acting as lead agent) of 11,111,111 common shares at $0.18 per share for gross proceeds of approximately C$2,000,000 (the "Financing"). As part of the Plan, all such shares were transferred to the REIT and exchanged for Units on a one-to-one basis.
It is expected that final approval of the transactions referred to above be granted by the TSX Venture Exchange (the "TSXV") shortly. The REIT will be listed as a Tier 1 real estate issuer on the TSXV. It is expected that the Units will commence trading on the TSXV on or around Thursday, August 28, 2014 under the symbol "RRR" concurrently with the delisting of the Company's shares from the TSXV.
Following completion of the transactions referred to above, R&R will have 21,011,111 Units issued and outstanding, of which 4,250,000 Units will be subject to escrow as noted below.
About the Transactions
The REIT indirectly acquired the Property for a purchase price of US$8,500,000, excluding closing costs and adjustments and a property improvement plan (the "Purchase Price"). The Purchase Price has been satisfied by the issuance of 51,408,895 US Class B LP Units to RRI BWI, LLC and R-Roof Assets, LLC, the "Vendors" of the Property.
The closing of the Acquisition occurred following the Plan becoming effective pursuant to which, among other things, the Company's shareholders exchanged their shares for Units on the basis of 1 share for every one Unit. The Plan was effected following receipt of both shareholder and court approvals to implement the Plan.
Subsequent to the Acquisition, an R&R subsidiary entered into a franchise agreement with Red Roof Franchising, LLC, which will allow the hotel property to carry on business as a "Red Roof Inn" branded hotel.
Tier 1 Issuer Status
As the REIT will be listed as a Tier 1 issuer, 25% of the escrowed securities will be eligible for release on the date the TSXV issues its final exchange bulletin, as well as 6 months, 12 months and 18 months thereafter.
In accordance with the policies of the TSXV, R&R confirms that the number of Units, Class B LP Units and US Class B LP Units to be subject to escrow will be 65,758,895 units, representing approximately 79.69% of the outstanding units, assuming conversion of all outstanding Class B LP Units and US Class B LP Units. The 51,408,895 US Class B LP Units issued to the Vendors are subject to a TSXV Form 5D Value Security Escrow Agreement. In addition 4,250,000 Units remain subject to the current CPC escrow agreement.
Additional information regarding the Transactions is available on R&R's issuer profile on SEDAR.
About the REIT
R&R REIT is an open-ended real estate investment trust focused on increasing unitholder value through the acquisition and ownership of hotel properties located in the United States.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE WestCap Investments Corp.