Scott's Real Estate Investment Trust announces financing and leasing update

TORONTO, Feb. 1, 2012 /CNW/ -  Scott's Real Estate Investment Trust (TSX: SRQ.UN) ("Scott's REIT") today announced the following:

  • Extends $32 million original IPO mortgage one year to February 1, 2013
  • Enters an agreement for a new first mortgage in Atlantic Canada for $8.5 million
  • Re-leases an additional four previously disclaimed properties
  • Extends six leases in New Brunswick

Extension of $32 Million IPO Mortgage

Scott's REIT received a further one-year extension for its $32 million IPO mortgage to February 1, 2013 from February 1, 2012. The extension has been granted using the same terms as the original loan; 4.9 per cent interest only, payable monthly, and the mortgage is open for payment at any time during the one-year extension period.

New $8.5 Million Atlantic Canada Mortgage

Scott's REIT entered into an agreement for a first mortgage with First National Financial LP in the amount of $8.5 million, with a further $1 million available if certain leasing targets are met. The mortgage will be secured by 24 properties located in New Brunswick and Nova Scotia, the primary tenant of which is FMI Atlantic Inc. The mortgage will have a term of five years, amortized over a 25-year period, and will bear an interest rate of 4.95 per cent. The mortgage is expected to close during the month of February 2012 and is subject to customary closing conditions. The proceeds from the mortgage will be used to pay down a portion of the $32 million IPO mortgage.

"The extension and partial pay-down of the IPO loan will provide the REIT with much needed stability over this transitional period and will provide the necessary time for Scott's REIT to re-lease its portfolio as we return occupancy to historical levels," said Teresa Neto, CFO of Scott's REIT. "In addition, the extension also provides Scott's REIT the flexibility to seek alternative refinancing for the remaining outstanding balance of the IPO mortgage, once Priszm announces and executes sales of its Quebec, Manitoba and Alberta KFC operations."

Leasing Update

Scott's REIT has completed four new leases for sites disclaimed and previously leased by Priszm, including three sites in Quebec which were disclaimed effective January 27, 2012. The fourth site is located in London, Ontario and has been leased to Starbucks. Each of the four leases were signed at rents higher than the rent under the previous Priszm lease. Including these four new leases, Scott's REIT has now leased 18 of the total 43 sites disclaimed, or 40.4% of the total disclaimed GLA.

"We are seeing strong interest in many of our vacant sites as evidenced by how quickly we have been able to re-lease a notable portion of the properties," said Kevin Salsberg, Chief Operating Officer of Scott's REIT. "Some of these sites were vacant less than a month before we re-leased them and we believe most of the remaining vacant sites will be re-leased over the next twelve months."

In addition, Scott's REIT has also successfully extended six leases in New Brunswick with FMI Atlantic Inc. as KFC restaurants, extending the terms by five years to the year 2023. FMI Atlantic is also the dominant Pizza Hut operator in Atlantic Canada.

"We will be working with our tenants to secure extensions where possible, in particular with the operators seeking to invest in their businesses for the long term", said Mr. Salsberg." Extended lease terms with capital invested in the real estate is a win for our tenants and Scott's REIT".

About Scott's Real Estate Investment Trust
Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property owner with 229 properties in eight provinces across Canada. Scott's REIT'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 Scott's Real Estate Investment Trust (TSX: SRQ.UN), visit our website at www.scottsreit.com.

Forward-Looking Statements

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 and interest expense is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, occupancy rates, property expense and capital expenditures. While the REIT considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. 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 Priszm LP, the REIT's second largest tenant, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, 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, 2010. 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 Scott's REIT filings with the Canadian securities regulators, available at www.sedar.com.

SOURCE Scott's Real Estate Investment Trust

For further information:

For investor information, please contact:   For media information, please 
Teresa Neto   contact:
Chief Financial Officer   Trevor Boudreau
416-361-9953   604-564-8209
teresa.neto@scottsreit.com   trevor.boudreau@scottsreit.com

 

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Scott's Real Estate Investment Trust

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