KEYreit sells redevelopment property to the Rockport Group for $3.29 million

TORONTO – KEYreit (TSX:KRE.UN) said Wednesday that it has signed a deal to sell a Toronto property to the Rockport Group for redevelopment.

Rockport has agreed to pay $3.29 million and give KEYreit the option of buying the retail component of the project at a discount to its future market value.

The payment for the property will be in the form of a promissory note that together with the accrued interest may be used towards the purchase price if KEYreit exercises its option.

The KEYreit property, which has a book value of $1.45 million, is approximately 11,000 square feet in size and includes a KFC restaurant.

Rockport has purchased the two adjacent properties and intends to develop a condominium complex that will include retail locations at street-level.

The deal comes as KEYreit works to fight off a hostile takeover offer by Huntingdon Capital Corp.

On Monday, Huntingdon (TSX:HNT) increased its takeover offer for the retail property trust by 50 cents to $7.50 per unit.

Vancouver-based Huntingdon already owns about 5.4 per cent of KEYreit so the new offer would cost it $106 million to buy out all the units it doesn’t already own. The bid values KEYreit at $111.6 million.

The KEYreit board has been urging unitholders to reject Huntingdon’s bid, saying its units were worth more than $8 each.

KEYreit, run by chief executive John Bitove, owns a portfolio of more than 200 small-box retail properties across Canada, with major tenants like Pharma Plus, Staples and East Side Mario’s.

Note to readers: This is a corrected story. An earlier version said the KEYreit board believed the units were worth between $7.50 and $8 each.