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Invesque to Pay US$142 Million for Mohawk

TSX-listed Company Expands Into Alberta and Adds 14 Properties to a Portfolio That Grows to 103 Buildings
March 2, 2018
TSX-listed Invesque Inc. is paying US$142 million for 545,000 square feet of medical office buildings located in seven markets throughout Canada and the United States.

The Carmel, IN-based company said it had agreed with Mohawk Medical Properties Real Estate Investment Trust and its subsidiary, Mohawk Medical Operating Partnership LP, to acquire all of the outstanding units of Mohawk Real Estate Investment Trust.

Mohawk Realty Advisors Ltd. and its affiliates will continue to provide asset and property management for the properties.

"The founders and principals of Mohawk, Sean Nakamoto and Andrew Shapack, are pioneers in the Canadian medical office space, and we are pleased to establish this partnership, expand the initial portfolio through future acquisitions, and continue to create shareholder value," said Adlai Chester, Invesque's chief investment officer, in a statement. "We believe the Mohawk team has the expertise to drive continued performance at the Properties as well as find and implement attractive opportunities going forward."

As part of the deal, Mohawk is required to provide Invesque with any opportunities to acquire similarly stabilized medical office buildings sourced by Mohawk.

The assets being acquired are in Alberta, Ontario, New York and Florida, and Invesque says it is one of the largest portfolios of medical office properties in Canada. Once completed, Invesque will own 103 properties.

Invesque says the partnership gives it an experienced team to manage the portfolio and to grow the platform in the medical sector, which will be a "pillar" for future growth.

The deal moves Invesque into Alberta, where it will now have three properties, and increases its presence in Ontario with eight properties. There are two properties in Florida and one in New York.

The acquisition will be funded through a combination of new debt, cash on hand and issuance of the company's common shares at a fixed issuance price of US$9.75 per share in exchange for Mohawk REIT's current unitholder equity of approximately US$37 million.

Troy MacLean, an analyst with BMO Capital Markets, said the acquisition adds a new platform for Invesque.

"It fits in with the long-term strategy of diversifying its portfolio (long-term target of approximately 30-40 percent seniors housing, approximately 30 percent skilled nursing, approximately 30 percent strategic healthcare (including MOBs), and up to approximately 10 percent development," said MacLean, in an investment note.

Garry Marr, Toronto Market Reporter  CoStar Group   

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