Smart Real Estate Investment Trust (SmartREIT) has announced that it has entered into a conditional settlement agreement with Target Canada (Target) and US parent Target Corporation (Target Corp.), along with all of Target’s former landlords whose leases were disclaimed.
SmartREIT has agreed to release Target Corp. and Target from their financial obligation relating to the subject leases. Target Corp. entered into limited guaranty agreements with SmartREIT wherein Target Corp. guaranteed SmartREIT for, among other matters, responsibilities of Target pursuant to the subject leases.
SmartREIT’s settlement agreement is conditional upon Target’s creditors voting in favour of an amended plan being sanctioned by the court. Such a motion is currently scheduled to take place during the first week of June, 2016.
SmartREIT is scheduled to receive payment in full of the settlement amount within seven days from the date on which the sanction and vesting order becomes a final. Accordingly, the financial impact of the proposed settlement will not be recognized in SmartREIT’s financial statements until such final settlement is received.
At the time of Target’s announcement that it would exit from Canada, SmartREIT had two locations totaling about 226,000 square feet that were under lease to Target. These spots were located in South Oakville Centre in Oakville Ont. and Laurentian Power Centre in Kitchener, Ont.
SmartREIT is still working to find appropriate tenants for these locations, with the objective to improve the two shopping centres where the former Target stores stood.