Crombie REIT Announces Closing of $991.3 Million Acquisition

"NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES"

STELLARTON, NS, Nov. 4, 2013 /CNW/ - Crombie Real Estate Investment Trust (TSX: CRR.UN) announced today that it has closed its previously announced acquisition of a portfolio of seventy (70) retail properties representing approximately 3.0 million square feet of 100% occupied gross leasable area.  The properties were acquired from a wholly-owned subsidiary of Sobeys Inc. for an aggregate purchase price of $991.3 million, subject to certain customary adjustments, in accordance with the acquisition agreement announced on July 24, 2013, Unitholder approval received at a Special Meeting of Unitholders on September 19, 2013 and regulatory approval.

Pursuant to the acquisition agreement, two of the original proposed properties were excluded from the transaction and replaced by four other properties, resulting in the final acquisition being adjusted from 68 properties to 70 properties and from a $990 million purchase price to a $991.3 million purchase price.

"We are excited to have this important strategic acquisition completed," said Donald E. Clow, FCA, President and Chief Executive Officer of Crombie.  "Adding 70 high quality grocery-anchored retail properties, primarily located in large urban centres in Western Canada, further demonstrates Crombie's strategy of growth in Canada's top 36 markets and validates Crombie as a truly national landlord.  These assets provide us with a strong base in this important region of Canada and are a clear indication of the continued strategic advantage of our relationship with both Sobeys and Empire."

Crombie funded the acquisition purchase price through the application of proceeds from various sources:

  • Net proceeds of $213.9 million of Crombie Units issued via a public offering of Subscription Receipts completed in August, 2013;
  • $75 million from proceeds of Series E Extendible Convertible Unsecured Subordinated Debentures issued via a public offering completed in August, 2013;
  • $150 million issue of Class B limited partnership units of Crombie Limited Partnership via private placement to ECL Developments Limited, a wholly-owned subsidiary of Empire Company Limited completed contemporaneously with closing;
  • $547.8 million in bank credit facilities; and
  • $4.6 million in other customary adjustments.

The bank credit facilities are expected to receive immediate repayment of $478.6 million by way of:

  • Net proceeds of Crombie's issue of $175 million of 3.986% Series A Notes (Senior Unsecured) due October 31, 2018 issued with a provisional rating of BBB(low) stable trend from DBRS Limited; and
  • Fixed rate mortgage proceeds of $304.2 million on mortgages with an average term of 9.5 years, an average interest rate of 4.31% with 25 year amortizations.

Crombie has mortgage commitments to repay the residual balance on the bank credit facilities that are expected to close during the fourth quarter of 2013.

As a result of the completion of the property acquisition, each outstanding subscription receipt of Crombie has automatically been exchanged for one Unit of Crombie and a cash distribution-equivalent payment of CDN $0.14834 (being equal to the aggregate amount of distributions paid by Crombie per Unit for which record dates have occurred since the issuance of the subscription receipts), less any applicable withholding taxes.  Trading in the subscription receipts has been halted on the Toronto Stock Exchange and Crombie expects that the subscription receipts will be delisted from the Toronto Stock Exchange after the close of markets today and that the Units issued in exchange for the subscription receipts will immediately commence trading on the Toronto Stock Exchange. Crombie further expects that holders of subscription receipts will receive in the upcoming days the Units and the distribution equivalent payment to which they are entitled.

An additional $0.07417, representing the amount per Unit of the cash distribution declared by Crombie with a record date of October 31, 2013 and a payment date of November 15, 2013, will be paid on November 15, 2013 to holders of the subscription receipts as of November 4, 2013.  In addition, the maturity date of the Series E Extendible Convertible Unsecured Subordinated Debentures has been extended in accordance with their terms from March 12, 2014 to March 31, 2021.

Further information regarding the acquisition and the exchange of the subscription receipts is available under Crombie's issuer profile at www.sedar.com.

About Crombie

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 250 commercial properties in all ten provinces, comprising approximately 17.6 million square feet of gross leasable area. More information about Crombie REIT can be found at www.crombiereit.com.

This news release may contain 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 "continue", "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, and include, without limitation, statements regarding the expected completion of certain mortgage financing transactions which remain subject to closing conditions and market conditions, and the amount and timing of the repayment of credit facilities which remains subject to completion of certain mortgage transactions.

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. A number of factors, including those discussed in the Management Discussion and Analysis for the year ended December 31, 2012 under "Risk Management", 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.

Additional information relating to Crombie can be found on Crombie's web site at www.crombiereit.com or on the SEDAR web site for Canadian regulatory filings at www.sedar.com

SOURCE: Crombie REIT

For further information:

Mr. Glenn Hynes, FCA
Chief Financial Officer and Secretary
Crombie REIT
(902) 755-8100


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