Parkit Announces Joint Venture
Vancouver, B.C., April 22, 2015 - Parkit Enterprise Inc. (“Parkit,” or “the Company”) [TSX-V: PKT, OTCQX: PKTEF] is pleased to announce the formation of a joint venture investment vehicle (“the joint venture”) that will seek to acquire and aggregate up to approximately $500 million in income-producing parking assets.
Parkit’s equity partner in the joint venture is an affiliate of Och-Ziff Real Estate, a real estate private equity firm based in the United States (the “equity partner”).
Parkit, along with PRE LLC., an entity whose members are senior officers of Propark America (“Propark”), will be both an asset manager and an investor alongside the equity partner. As such, management will, in accordance with the governing documents of the joint venture, source and assess potential investment opportunities and otherwise administer the joint venture’s operations, including underwriting, acquisitions and property management of the joint venture’s portfolio.
The joint venture will seek to deploy its capital resources within a three to five year period, and optimize cash flows through the implementation of leading technology and industry best practices. Ultimately, Parkit will realize premium value through the aggregation and opportunistic sale of the portfolio and could subsequently have the opportunity to reinvest proceeds in future acquisitions.
The joint venture has acquired six assets for a total of $82.6 million, assuming the full payment of all associated conditional earn-outs. These assets generated a total of approximately $6.5 million in net operating income during 2014. The initial property portfolio includes two assets in which Parkit held equity; Canopy Airport Parking Facility (“Canopy”), which services Denver International Airport, and Expresso Airport Parking (“Expresso”), which services Oakland International Airport. Subject to a conditional partial earn-out over two years and at disposition, Canopy will be acquired for total consideration of $38.0 million, while Expresso has been acquired for $19.2 million.
The other parking facilities within the initial transaction property portfolio include:
- ‘Chapel Square,’ located in New Haven, Connecticut (Commercial/business district)
- ‘Terra Park,’ located in Jacksonville, Florida (Commercial/business district)
- ‘Riccio Lot,’ located in New Haven, Connecticut (University and medical facility)
- ‘Z Parking,’ located in East Granby, Connecticut (Bradley International Airport)
Parkit now holds an equity position in the joint venture of approximately 22% with $6.2 million invested. The conditional earn-outs, if paid, would result in an additional pro-rata investment of $1.8 million over two years increasing the total amount invested from the portfolio equity to $8.0 million.
Additionally, Parkit received $6.7 million in cash proceeds and, to the extent actually paid, would receive a further estimated $1.6 million from the conditional earn-outs, as well as an estimated $1.2 million conditional cash earn-out at disposition of the assets. A portion of the foregoing amounts will be used to repay in full the $5.0 million bridge loan due in August 2015.
Parkit will provide 5% of the equity component of future acquisitions, and as such has minimal cash commitments to fulfill obligations of the joint venture’s growth. Asset-based, non-recourse leverage in the initial transaction portfolio is approximately 54%, assuming full payment of the conditional earn-outs, and is expected to average approximately 70% in subsequent acquisitions.
In addition to receiving earnings from equity contributions, Parkit will also generate income from asset management fees and, to the extent earned, acquisition fees, which will be split equally between the two managing entities which includes Propark. Parking Real Estate Investors, LLC, a related entity whose members are senior officers in Propark, is also an investor in the joint venture.
The joint venture also provides for performance-based incentives once the joint venture has achieved certain IRR hurdles.
The joint venture intends to employ Propark to oversee the day-to-day operations of its facilities. Currently, property management of all six initial properties is conducted by affiliates of Propark.
“Today’s announcement represents a transformative transaction for Parkit, validating our strategic evolution into a specialized asset manager,” stated Rick Baxter, the Company’s Chief Executive Officer. “This joint venture not only crystalizes the value of Parkit’s existing investments, but also establishes a profitable foundation for our long-term development. Furthermore, the exploration for quality acquisitions in the US will increase our exposure to direct investment opportunities for Parkit, and significantly enhance our potential for growth.”
(Note: all currencies are in USD)
Parkit Enterprise Inc. is an alternative real estate investment firm focused on income-producing parking facilities in the United States. www.parkitenterprise.com
Tel. (604) 424-8707
Parkit Enterprise Inc.
Suite 1088 – 999 West Hastings Street
Vancouver, British Columbia
Canada V6C 2W2
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. In particular, there is no assurance the joint venture will acquire aggregate assets of $500 million; that the Company will realize any or all of the earn-outs from its existing parking assets; or that the joint venture will be profitable.