CIBT Education Group Signs MOU To Build Education Super Center
|June 19, 2015: CIBT Education Group Inc. (TSX: MBA, OCTQX International: MBAIF) (“CIBT Group”) is pleased to announce that it has signed a non-binding Memorandum of Understanding (“MOU”) with a Vancouver developer to jointly develop North America’s first education super center (the “Super Center”). The developer owns 2.51 acres of waterfront property in Metro Vancouver with the potential to rezone and develop the property into one office tower and two hotels totaling approximately 327,000 buildable square feet based on a 3.0 FAR (Floor Area Ratio). CIBT Group and the developer will work together to raise $60 million cash equity for the limited partnership in which the Super Center will be held. Raising the $60 million in the limited partnership will avoid any dilution of CIBT Group shares at the corporate level. Total project size is $200 million with the remaining balance of $140 million to be financed through commercial lenders.
The MOU provides that CIBT Group will be paid a structuring fee of $12 million and will enter into a 20 year management contract. The MOU also provides for CIBT Group to acquire units in the limited partnership.
As the first education super center in North America, this education-centric real estate project has the capacity to house up to 800 international students in its hotels, while accommodating campus space for public and private educational institutions and office space for professional firms supporting international education. The concept is to create a single location for students, educators and education service firms to do business in an education-centric environment. Common areas such as the cafeteria, auditoriums and library are typically the most costly and under-utilized spaces for any educational institution. With the ability to aggregate many schools under one roof while sharing this underperforming floor space, school tenants will be able to reduce operating costs and increase financial viability.
The hotel component of the Super Center is expected to house CIBT Group’s subsidiary schools as well as provide student accommodation to other schools in Metro Vancouver. CIBT Group’s subsidiary schools, including Sprott Shaw College and Acsenda School of Management, and its Global Learning Network, are expected to utilize a portion of the campus space. The remaining campus space will be made available to other public and private educational institutions wishing to expand their international student enrollment by establishing a campus footprint in Metro Vancouver.
“With 22 years of operating experience in the global education market and innovative leadership in the education sector, CIBT Group has the in-depth knowledge of the needs and concerns of international students and their parents,” commented Toby Chu, President, CEO and Vice Chairman of CIBT Group. “On January 15th, 2014, Federal government announced plans to increase the number of international students that come to Canada by 100% in the next 8 years. The Super Center is designed to complement the objective of global education expansion by the Canadian education industry. Our goal is to provide a one-stop solution to international students studying in Metro Vancouver by offering a safe, secure, and convenient environment in which to study, relax and enjoy their stay in Canada. The Super Center will also allow us to fulfill our investment mandate of achieving emerging market growth while mitigating the emerging market risk by attracting international income to Canada, instead of spending substantial capital investments overseas.”
With the signing of the MOU, the parties are entering into the due diligence phase of the project. The planned Super Center is subject to the satisfaction of certain conditions including completion of the re-zoning application process and obtaining other relevant municipal approvals, as well as the execution of a binding agreement.
About the Super Center:
The proposed Super Center is a first of its kind in North America, employing the concept of combining a number of multidiscipline public and private institutions at one centralized location, supplemented by professional support services and student housing under one roof. The two major components of the Super Center are 1) Campus/Office Tower to house a variety of schools, immigration consultants and professional services for the education industry, and 2) a student-centric hotel for domestic and international students.
To support the theme of global education with a large number of tenants expected from the international market, a hotel is an integral part of the Super Center. According to market statistics, rental rates for Vancouver condominiums have increased by over 14% in the past 5 years while the vacancy rate has declined to 0.3% according to BCHMC, and demand is expected to continue to grow as more international students enter Canada, encouraged and supported by the initiatives and policies of the Province of British Columbia and the Government of Canada. Based upon data from government sources, approximately 112,800 foreign students are living in Metro Vancouver contributing over $10 billion in tuition revenue to the Canadian economy. In addition, total housing revenue generated by these foreign students is estimated to be over $1 billion per year in British Columbia alone, an average of $10,000 per student per year and is growing at a rate of 20% per year in B.C.
One of the biggest challenges for international students and out-of-town domestic students studying in Metro Vancouver is the cost of accommodation. We believe that the Super Center’s hotel accommodation for students will be the solution to this major challenge. It will also allow the majority of students to take an elevator to class, saving them time and transportation costs.
CIBT Group anticipates that domestic educational institutions will become the anchor tenants of the Super Center, including a variety of public and private business schools, career colleges, language schools, arts schools, children art centers and universities. In addition, CIBT Group believes that the Super Center will also attract post-secondary schools from out-of-province and around the world wishing to establish a representative office or satellite campus in Metro Vancouver. The Super Center will be an ideal place to locate their campus due to its proximity to the Vancouver International Airport and a Sky Train station, and the short travel time to shopping and other amenities of downtown Vancouver via Sky Train.
Professional Services Tenants:
In addition to schools, the office tower will also be leased or sold to education industry consultants (commonly known as agents) and professionals such as immigration lawyers and accountants. Education agents contribute a significant volume of business to BC’s education sector. Agents will be highly motivated to be located within the Super Center to increase their business with schools focused on international education, and exposure to international students.
About CIBT Education Group:
CIBT Education Group Inc. is an education management company focused on the global education market since 1994. Listed in Canada on the Toronto Stock Exchange and in the U.S on the OTCQX International, CIBT owns and operates a network of business, technical and language colleges in North America and Asia. CIBT offers cooperative joint programs in 12 countries with campuses, recruitment offices and training centers enrolling over 7,000 students annually. Its education business is operated through Sprott Shaw College (established in 1903), Acsenda School of Management, CIBT School of Business China, and Global Education Alliance Recruitment Centers in China and other overseas countries. Through these subsidiaries, CIBT offers recognized and approved business and management degrees, programs in college preparation, healthcare, hotel management and tourism, English language training, English Teacher Certifications, junior and high school preparation programs for overseas study, and other career/vocational training. CIBT also owns Irix Design Group, a leading design and advertising company based in Vancouver, Canada, Global Education Alliance (“GEA”) and Global Education City Holdings Inc. (“GEC”). GEA recruits international students for many elite kindergarten, primary, secondary schools and universities in North America. GEC is an investment holding and management company with a special focus on education related real estate projects in Canada. Visit us online at http://www.cibt.net.
For more information contact:
Vice-Chairman, President & CEO
CIBT Education Group Inc.
Investor Relations Contact:1-604-871-9909 extension 318 | Email: email@example.com
|FORWARD LOOKING STATEMENTS:
Some statements in this news release contain forward-looking information (the “forward-looking statements”) about CIBT Group and its future plans. Forward-looking statements are statements that are not historical facts. The forward-looking statements in this news release are subject to various risks, uncertainties and other factors (collectively, “Risks”) that could cause the company’s actual results or achievements to differ materially from those expressed in or implied by forward-looking statements. With respect to the statement in this news release as to the expected number of job openings in B.C. by 2022 in the areas of skilled trades and technical occupations, the Risks include uncertainties as to the actual development of the B.C. economy. Forward-looking statements are based on the beliefs, opinions and expectations of CIBT Group’s management at the time they are made, and CIBT Group does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances should change, except as may be required by law.