Crombie REIT announces $73.3 million of property acquisitions and $92.6 million debt refinancing transaction
STELLARTON, NS, Oct. 22, 2012 /CNW/ - Crombie Real Estate Investment Trust ("Crombie REIT") (TSX: CRR.UN) today announces the acquisition of four properties for total consideration of $73.3 million (before transaction and related costs) as well as a separate refinancing of mortgages on 23 properties totalling $92.6 million.
"We are very pleased with the recent acquisitions as they are consistent with our strategy of accretive growth diversified across Canada" noted Donald E. Clow, FCA, President and Chief Executive Officer. "The two acquisitions from Sobeys underscore the sustainable competitive advantage we enjoy in acquiring new, fully occupied and long term leased properties from their development pipeline. The mortgage refinancing on 23 properties was a unique opportunity and provides us with significant interest savings."
Details of the acquired properties are as follows:
- In August, a 100% occupied, 41,000 sq. ft. Sobeys anchored retail plaza in Regina, Saskatchewan was acquired from a third party.
- In August, a 92% occupied, 135,000 sq. ft. mixed retail and office property in St. John's, Newfoundland and Labrador was acquired from a third party. This property is adjacent to Crombie's approximately 600,000 sq. ft. Avalon Mall complex.
- In October, a 100% occupied, 80,000 sq. ft. Sobeys anchored retail plaza in Stittsville (Ottawa), Ontario was acquired from a subsidiary of Sobeys Inc ("Sobeys").
- In October, a 100% occupied, 72,000 sq. ft. retail plaza in Moncton, New Brunswick was acquired from Sobeys. This property is anchored by a Sobeys grocery store and Lawtons drug store.
The properties were initially acquired using Crombie's revolving credit facility with Crombie assuming a $5.1 million mortgage upon closing of the Regina property. Crombie has commitments from lenders to place an additional $32.3 million in new mortgages on certain of the properties.
Details of the 23 property mortgage refinancing are as follows:
- On September 21, 2012 Crombie successfully arranged the purchase by Scotiabank of a portfolio of 23 mortgages granted by Crombie to a mortgage lender in 2008.
- The mortgages, which total $92.6 million in current principal amount, were scheduled to mature from 2013 to 2017 and carried a weighted average interest rate of 5.91%.
- Concurrent with the purchase of the mortgages by Scotiabank, Crombie renegotiated the terms of the mortgage debt to a 30 month floating rate term facility with the interest rate based on 30 day Bankers Acceptance rates plus a spread.
- This term facility is expected to be repaid from the proceeds of new mortgage financings anticipated to be completed on some of the 23 properties.
- In its third quarter (Q3) of 2012, Crombie will expense approximately $3.0 million of costs associated with this transaction ($1.5 million in cash costs relating to legal fees, term facility set up costs and a repayment fee paid to the mortgage lender and the incurring of approximately $1.5 million representing the unamortized portion of deferred financing and other costs previously paid in respect of the 2008 mortgage financing). This Q3 cost impact on FFO and AFFO will approximate 2 to 3 cents per Unit.
- These incremental cash costs are anticipated to be recovered in full through interest savings in the first year, assuming interest rates remain at current levels.
About Crombie Real Estate Investment Trust
Crombie Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established under, and governed by, the laws of the Province of Ontario. The trust invests in income-producing retail, office and mixed-use properties in Canada, with a future growth strategy focused primarily on the acquisition of retail properties. Crombie REIT currently owns a portfolio of 170 commercial properties in nine provinces, comprising approximately 14.0 million square feet of gross leasable area. More information about Crombie REIT can be found at www.crombiereit.com.
This news release contains forward-looking statements that reflect the current expectations of management of Crombie about Crombie's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "may", "will", "estimate", "anticipate", "believe", "expect", "intend" and similar expressions have been used to identify these forward-looking statements. These statements reflect current beliefs and are based on information currently available to management of Crombie. Forward-looking statements necessarily involve known and unknown risks and uncertainties. A number of factors, including those discussed under "Risk Management" in Crombie's Management Discussion and Analysis for the year ended December 31, 2011, could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward-looking statements. There can be no assurance that the expectations of management of Crombie will prove to be correct.
In particular, certain statements in this document discuss Crombie's anticipated outlook of future events, including the announced acquisition of properties, the anticipated funding of those acquisitions and the anticipated extent of interest savings, which could be impacted by a number of factors including changes in interest rates and the availability of new mortgage financing on acceptable terms. Readers are cautioned that such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Crombie can give no assurance that actual results will be consistent with these forward-looking statements.
SOURCE: CROMBIE REITFor further information:
Glenn Hynes, FCA
Chief Financial Officer and Secretary