Whiterock REIT Completes $218 Million of Accretive Acquisitions of Class A Office Properties in Ontario
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TORONTO, July 21, 2011 /CNW/ - Whiterock Real Estate Investment Trust (TSX: WRK.UN), a growth-oriented REIT with a significant presence in major Canadian markets, announced today that it has completed the previously announced purchase of Sussex Centre, a Class A two-tower office complex in Mississauga, Ontario for approximately $157 million (before closing costs) and London City Centre, a Class A two-tower office complex in London, Ontario for approximately $61 million (before closing costs). These properties consist of a total rentable area of approximately 1.2 million square feet, in prime downtown locations. Management expects the impact from these acquisitions to add approximately $0.04 to annualized on-going AFFO per unit. The first full quarter impact of this increase to AFFO per unit will be realized commencing in the fourth quarter of 2011.
"The acquisition of these two prominent Ontario office complexes further establishes Whiterock as a leading owner and manager of high-quality office buildings in major Canadian markets," said Jason Underwood, Chief Executive Officer. "We continue to successfully execute on our disciplined and accretive growth strategy, building long-term value for our unitholders."
The assets were purchased in co-ownership with Return on Innovation Capital Ltd. ("ROI Capital Ltd."), with Whiterock providing exclusive property management services. The average capitalization rate on the assets is approximately 7.6% and the average interest rate on the first mortgages is approximately 4.6%.
Sussex Centre - Mississauga, Ontario
Sussex Centre is a two-tower Class A multi-tenant office complex, with ancillary retail, consisting of 657,503 square feet of rentable area, located in the heart of downtown Mississauga, Ontario. Situated on 3 acres and including over 1,500 underground parking stalls, the site is in immediate proximity to Square One Shopping Centre, one of Canada's largest retail centres, and to Mississauga City Hall. In addition, the property benefits from its proximity to downtown Toronto, the 400-series highways, and the QEW. The property is approximately 93% leased, with an average remaining lease term of approximately 6 years. The property is leased to numerous institutional grade tenants, including the Canadian head office for Edward D. Jones & Co., which is the largest tenant at 12% of the rentable area, with an average remaining lease term of approximately 8 years. This property was acquired in co-ownership with ROI Capital Ltd., with Whiterock owning 49.9% and being the exclusive property manager. The purchase price of approximately $157 million (before closing costs), representing a capitalization rate of approximately 7.3%, was financed with the proceeds from the recently completed $75 million equity offering and from the proceeds of a new $95 million committed 6-year first mortgage at a fixed rate of approximately 4.2%.
London City Centre - London, Ontario
London City Centre is a two-tower Class A multi-tenant office complex, with ancillary retail, consisting of 539,472 square feet of rentable area, located in the heart of downtown London, Ontario. Situated on 2.7 acres, the site is in immediate proximity to Citi Place and to the London Convention Centre, and forms an integral part of London's business landscape. The property is approximately 94% leased, with an average remaining lease term of approximately 6 years. The complex is 64% occupied by TD Bank, which is the largest tenant, and has an average remaining lease term of approximately 6 years. This property was acquired in co-ownership with ROI Capital Ltd., with Whiterock owning 40% and being the exclusive property manager. The purchase price of approximately $61 million (before closing costs), representing a capitalization rate of approximately 8.2%, was financed with the proceeds from the recently completed $75 million equity offering, net of an assumed 7-year first mortgage of approximately $40 million at a fixed rate of approximately 5.7%.
Whiterock's co-owner in the Sussex Centre and London City Centre acquisitions is ROI Capital Ltd., an established investment firm based in Toronto, Ontario with over $1.3 billion in assets under management that specializes in private placement investments, including a focus on high-quality properties with growing cash-flow streams.
With these new acquisitions, Whiterock's wholly-owned, co-owned and managed aggregate real estate portfolio now totals approximately 9.3 million square feet across 78 properties and across 8 provinces.
This news release contains "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect" "estimate", "anticipate", "intend", "believe" or "continue", the negative forms thereof and similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future events or performance and, by their nature, are based on Whiterock's estimates and assumptions, which are subject to known and unknown risks, uncertainties and other factors that may cause the actual events, results or prospects to be materially different from those expressed or implied herein. Readers are cautioned that a number of factors, including those discussed in the section entitled "Risk Factors" in Whiterock's Annual Information Form, which can be obtained at www.sedar.com, could cause actual events, results or prospects to differ materially from those stated or implied. These factors should be considered carefully, and a reader should not place undue reliance on forward-looking statements, as there can be no assurance that actual events, results or prospects will be consistent with such statements. In particular, but without limitation, there can be no assurance that Whiterock will be able to increase its AFFO or achieve the expected capitalization rate on the assets to be acquired or the expected average interest rate on the first mortgages. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a relatively stable leasing environment, the maintenance of current occupancy levels, stable interest costs, limited dilution from conversion of convertible debentures; stable acquisition capitalization rates and available access to equity and debt capital markets to fund, at acceptable costs, Whiterock's future growth plans, and to enable Whiterock to refinance its debt as it matures. In addition, historic performance is not necessarily indicative of future results. Except as required by law, Whiterock does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Jason Underwood, CEO, (416) 907-4861
Kursat Kacira, CFO, (416) 572-0427