KEYreit acquires $16.1 million property portfolio and announces $37 million refinancing
Three retail properties acquired from Dundee REIT; Firm Capital Mortgages to be repaid
TORONTO, Aug. 7, 2012 /CNW/ - KEYreit (TSX: KRE.UN) ("KEYreit" or "the REIT") today announced the following:
Acquisition of Property Portfolio
KEYreit announced that it has waived due diligence conditions in an agreement with companies affiliated with Dundee Real Estate Investment Trust ("Dundee REIT") to acquire three investment properties for a purchase price of $16.1 million. The acquisitions, comprising of three retail investment properties totalling approximately 101,473 square feet of gross leasable area ("GLA") will increase KEYreit's investment property base by approximately 5.4% and total GLA by 9.2%.
The total purchase price will be satisfied by the assumption of existing mortgage debt of approximately $7.0 million, proceeds to be received from KEYreit's previously announced equity offering expected to close on August 8, 2012 and cash on hand. The mortgages to be assumed bear a weighted average interest rate of 5.43% and have maturities occurring between 2015 and 2016.
One property is located in Halifax, Nova Scotia, complementing KEYreit's existing properties in that market. The remaining two properties are located in Charlottetown, Prince Edward Island, a new market for KEYreit. The portfolio is 100% leased with an overall average remaining lease term of approximately 4 years. Approximately 84.5% of the GLA features national or major regional tenants.
Halifax, Nova Scotia
|33,857||100%||Lawton Drugs, Little Caesar's|
193 Malpeque Road
Bed, Bath & Beyond,
PEI Liquor, CAA
655 University Ave.
"This acquisition executes KEYreit's strategy to grow and to continue to diversify its tenant base with strong national and regional brands like Staples and Bed Bath & Beyond," said John Bitove, Chief Executive Officer of KEYreit. "This portfolio of properties fits well with KEYreit's "small box" strategy and delivers long-term accretive returns to our unitholders."
The acquisition is expected to close by end of August 2012 and is subject to customary closing conditions.
$37 Million Refinancing
Further, KEYreit announced that it has entered into a commitment for a first mortgage with First National Financial LP in the amount of $37 million. The mortgage will be secured by 70 properties located in Ontario ("Ontario IPO portfolio") that are being refinanced. The mortgage will have a term of five years, amortized over a 20-year period, and will bear an interest rate of 4.60 per cent. The mortgage is expected to close in the third quarter of 2012 and is subject to customary closing conditions. The proceeds from the mortgage will primarily be used to repay fully the $34 million first and second mortgages outstanding with Firm Capital Corporation, which currently bear an interest rate of 7.0 per cent and are set to mature on September 7, 2013.
"The refinancing of the Ontario IPO portfolio will be immediately accretive to KEYreit," said Teresa Neto, Chief Financial Officer of KEYreit. "By refinancing the Firm Capital mortgages significantly ahead of their maturity date, the REIT estimates it will realize interest expense savings in excess of $600,000 and it will have succeeded in extending out its mortgage maturity profile - a key goal of the REIT."
KEYreit (TSX: KRE.UN) (formerly Scott's Real Estate Investment Trust) is Canada's premier small-box retail property owner with 229 properties in eight provinces across Canada. KEYreit's properties are well located and geographically diverse across Canada with the majority of all properties containing long-term quadruple net leases. To find out more about KEYreit (TSX: KRE.UN), visit our website at www.keyreit.com.
This document contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding future growth opportunities and potential and expected cash distributions or cash distribution levels. In particular, information regarding the REIT's monthly cash distributions and information relating to the impact of the REIT's recent acquisitions on annual revenues, interest expense and net income is forward-looking. Forward looking-information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what is currently expected. Such factors include risks relating to the REIT's reliance on key tenants, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, distributions, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in the REIT's Annual Information Form for the year ended December 31, 2011. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Other than as required by applicable Canadian securities law, the REIT does not undertake to update this information at any particular time. Additional information identifying risks and uncertainties is contained in the REIT's REIT filings with the Canadian securities regulators, available at www.sedar.com.
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