Choice Properties Real Estate Investment Trust Completes Acquisition of Retail Portfolio from Loblaw Companies Limited

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

BRAMPTON, ON, May 6, 2014 /CNW/ - Choice Properties Real Estate Investment Trust ("Choice Properties" or the "Trust") (TSX: CHP.UN) today completed an acquisition of a portfolio of 20 retail properties from certain subsidiaries of Loblaw Companies Limited (collectively, "Loblaw"). The aggregate purchase price for the portfolio was approximately $200 million, excluding transaction costs.

Highlights of Acquired Portfolio:

  • Expands portfolio by more than 1.2 million square feet ("sq. ft.") of Gross Leasable Area ("GLA"), with an occupancy rate of 97.9%;
  • Located across Canada and consists of 14 Loblaw bannered stand-alone supermarkets and 6 Loblaw-anchored retail sites with other ancillary tenants;
  • Offers potential for intensification and future re-development, including the potential to develop 20,000 to 40,000 sq. ft. of incremental GLA within five years; and
  • Immediately accretive with an estimated stabilized net operating income ("NOI") of approximately $13 million, representing an overall year-one capitalization rate of 6.50%.

"We are pleased to announce the accretive acquisition of a portfolio of high-quality, retail properties that are located across Canada and provide the potential for future site intensification and rental growth. The acquisition of these properties represents a key component of our growth strategy and is a strong fit with our existing portfolio," said John Morrison, President and Chief Executive Officer, Choice Properties. "We remain focused on driving growth and creating value through development, acquisitions and active management."

With the completion of this acquisition, Choice Properties' portfolio consists of 456 properties comprising 444 retail properties, nine warehouse properties, one office complex, one industrial property and one parcel of land, totaling approximately 37.6 million square feet across Canada.

The acquisition was funded through the issuance of 11,259,208 Class B LP Units of Choice Properties Limited Partnership, which has a total dollar value of $119.6 million and the balance was settled in cash. Class B LP Units of Choice Properties Limited Partnership are exchangeable into, and economically equivalent to, units of the Trust. With the completion of this transaction Loblaw's and George Weston Limited's effective ownership interests in the Trust are 82.6% and 5.4%, respectively.

Portfolio Summary:

The portfolio comprises 1.2 million sq. ft. of GLA across Canada with an average building age of 16 years, in line with the average age of the Trust's existing portfolio.  As principal tenant, Loblaw represents 89.3% of total GLA with a lease term of 15 years for all Loblaw food stores.  The remaining GLA of ancillary space is 80.8% occupied.

Property Summary:

Address Property
Class
Banner Year
Built
Loblaw GLA Ancillary
GLA
% Occupied
62 Prince Rupert St.,
Stephenville, NF
Retail Dominion 2000 39,310 6,363 100%
1160 Boul Louis-XIV,
Charlesbourg, QC
Retail Maxi 1990 36,422 - 100%
10455 Boul. Saint-Laurent,
Montreal, QC
Retail Provigo 1986 17,841 - 100%
227 Main St.,
Delhi, ON
Retail Your Independent Grocer 2006 18,344 - 100%
177 Highway #108 N.,
Elliot Lake, ON
Retail no frills 2008 32,644 - 100%
160 Main St.,
Hagersville, ON
Retail no frills 2004 12,213 - 100%
1521 Highway 11 W.,
Hearst, ON
Retail Your Independent Grocer 2007 50,369 - 100%
960 Hamilton Rd.,
London, ON
Retail no frills 1980 20,260 - 100%
55 Scott St.,
New Liskeard, ON
Retail Your Independent Grocer 1993 49,642 7,000 100%
230 George St. N.,
Peterborough, ON
Retail no frills 2001 35,325 - 100%
780 Queen St. E.,
St. Mary's, ON
Retail Your Independent Grocer 2007 38,759 - 100%
10 Lower Jarvis St.,
Toronto, ON
Retail Loblaws and Joe Fresh 1998 78,425 - 100%
5335 - 55th St.,
Cold Lake, AB
Retail no frills 1999 28,561 - 100%
6904 - 99th St.,
Edmonton, AB
Retail Real Canadian Wholesale
Club
1994 55,660 56,718 100%
1502 Columbia Ave.,
Castlegar, BC
Retail no frills 1997 26,187 30,849 75%
1401 Alaska Ave.,
Dawson Creek, BC
Retail no frills 2002 29,711 10,212 74%
2155 Ferry Ave.,
Prince George, BC
Retail Real Canadian Superstore 1995 139,265 - 100%
14650 - 104th Ave.,
Surrey, BC
Retail Real Canadian Superstore 2002 147,420 - 100%
1578 Regent Ave. W.,
Winnipeg, MB
Retail Real Canadian Superstore 2000 139,695 - 100%
1725 Ellice Ave.,
Winnipeg, MB
Retail Real Canadian Wholesale
Club
1995 58,600 15,411 100%
  1,054,653 126,553  

About Choice Properties Real Estate Investment Trust

Choice Properties Real Estate Investment Trust is an owner, manager and developer of well-located commercial real estate across Canada. Choice Properties' initial portfolio spans approximately 37.6 million square feet of gross leasable area and consists of 456 properties primarily focused on supermarket-anchored shopping centres, stand-alone supermarkets and other retail properties. Choice Properties' strategy is to create value by enhancing and optimizing its property portfolio, which was built over thirty years by Loblaw, the REIT's principal tenant, and largest Unitholder and lender. Choice Properties' strong alliance with Loblaw positions it well for future growth. For more information, visit Choice Properties' website at www.choicereit.ca and Choice Properties' issuer profile at www.sedar.com.

Forward-Looking Statements
This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects Choice Properties' current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Choice Properties' control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed in Section 12 "Enterprise Risks and Risk Management" in the MD&A section of Choice Properties' First Quarter 2014 Report to Unitholders. Choice Properties does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

"NOI" is not a measure recognized under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and does not have any standardized meaning prescribed by IFRS. NOI is a supplemental measure of an issuer's performance and management believes that NOI is useful in the assessment of the REIT's operating performance for valuation purposes, and is also a relevant measure of the ability of the REIT to earn and declare distributions to Unitholders. NOI, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to NOI reported by such organizations. NOI should not be construed as an alternative to comprehensive income determined in accordance with IFRS as indicators of the REIT's performance. For additional information regarding this non-IFRS measure, including the definition thereof, please refer to the REIT's most recent management's discussion and analysis of results of operations and financial condition, a copy of which is available at www.sedar.com

SOURCE: Choice Properties Real Estate Investment Trust

For further information:

Kim Lee
Vice President, Investor Relations and
Financial Planning & Analysis
Choice Properties Real Estate Investment Trust
(905) 861-2256
kim.lee@choicereit.ca


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