TORONTO and DALLAS, Sept. 15, 2014 /CNW/ - Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) ("Milestone" or the "REIT") today announced that it has entered into an agreement to purchase Villas at Shadow Creek ("Shadow Creek" or the "Property"), a 560-unit multifamily apartment community located in the Pearland submarket of Houston, Texas, for a purchase price of US$74.0 million, representing an estimated year one capitalization rate of 6.52%. The acquisition is expected to be accretive to the REIT.
"We look forward to adding this property to our existing portfolio of multifamily apartment communities in the greater Houston area. There is potential to further enhance the value of this asset through the implementation of Milestone's operating efficiencies and unit enhancement program," said Robert Landin, CEO of Milestone. "Shadow Creek is being acquired through a direct negotiation with the seller. Our strong networks of industry relationships continue to provide us with attractive off-market investment opportunities."
The Property is located within the Shadow Creek Ranch Master Planned Community in Pearland, Texas, one of Houston's fastest growing submarkets. Shadow Creek was built in two phases in 2006 (296 units) and 2007 (264 units) and is currently approximately 95% occupied, with average monthly rents of approximately US$1,200 per unit. Shadow Creek features extensive amenities consistent with the REIT's established portfolio and residents have a wide variety of shopping, dining and entertainment options nearby. Pearland and Shadow Creek Ranch Town Centers, located minutes from Shadow Creek, offer more than one million square feet of combined retail space. The Property is in close proximity to downtown Houston and the Texas Medical Center, one of the world's largest medical complexes.
Acquisition Funding and Closing
As part of the purchase consideration for Shadow Creek, the REIT is negotiating a new fixed-term mortgage of approximately US$41.2 million, with the remaining US$32.8 million of the purchase price expected to be funded by drawing on the REIT's revolving line of credit. The acquisition, which is subject to customary closing conditions, is expected to close by October 30, 2014. The REIT will disclose the final financing terms of the purchase following closing of this acquisition.
Milestone is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT's portfolio consists of 57 multifamily garden-style residential properties, comprising 18,772 units that are located in 12 major metropolitan markets throughout the Southeast and Southwest United States. Milestone is the largest real estate investment trust listed on the TSX focused solely on the United States multifamily sector. The REIT operates its portfolio through its internal property management company, Milestone Management, LLC, which has more than 900 employees across the United States. Based in Dallas, Texas, TMG Partners, L.P., an affiliate of The Milestone Group, LLC, is the external asset manager of the REIT. For more information, please visit www.milestonereit.com.
About The Milestone Group, LLC
The Milestone Group is a privately-held real estate investment management company with expertise and presence in major metropolitan markets throughout the United States. The firm has corporate offices in Dallas, Texas and New York, New York with regional acquisition and management offices across the United States. Founded in 2004, The Milestone Group has a strong track record of investing in the U.S. multifamily sector, including completion of more than US$4.5 billion in multifamily transactions. For more information, please visit www.milestonegp.com.
Forward-looking information and non-IFRS measures
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the REIT and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on the REIT's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the anticipated closing date of the proposed acquisition, the year one capitalization rate of the proposed acquisition, the effect of the proposed acquisition on the financial performance of the REIT (including the degree to which the acquisition will be accretive), the proposed financing of the acquisition, and the ability to enhance the value of Shadow Creek through the implementation of Milestone's operating efficiencies and unit enhancement programs. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risk Factors" in the REIT's annual information form available at www.sedar.com. The forward-looking statements in this news release are based on certain assumptions, including that the economy remains stable, rental rates at Shadow Creek will continue to grow, interest rates remain stable, and the REIT will continue to have access to capital. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update any such statement, whether as a result of new information, future events or otherwise.
"Year one capitalization rate" is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. Year one capitalization rate is presented in this news release because management of the REIT believes that this measure is relevant in interpreting the purchase price of the Property. Capitalization rate, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to capitalization rate reported by such other organizations.
SOURCE: Milestone Apartments REIT
For further information: Robert Debs, Investor Relations, Milestone Apartments REIT, Tel: 214.561.1215; Bruce Wigle, Investor Relations, Bay Street Communications, Tel: 647.496.7856