TORONTO, May 12, 2014 /CNW/ - Firm Capital Property Trust ("FCPT" or the "Trust"), (TSXV: FCD.UN) is pleased to announce it has entered into a binding agreement to acquire a 70% interest in a 27 property retail portfolio with the balance being acquired by an entity related to the Trust. The purchase price for the entire portfolio is approximately $32.7 million (excluding closing costs and one-time adjustments), of which the Trust will pay approximately $22.9 million (excluding closing costs and one-time adjustments) for its 70% participation. The acquisition is expected to close during Q2/2014.
The Portfolio is comprised of 234,768 square feet of gross leasable area across Canada with the majority of the portfolio being located in Ontario. The Portfolio has a weighted average lease term of 3.4 years and a total of 50 tenants with the largest being PPG Industries Inc.(PPG:NYSE) an investment grade rated entity accounting for 32% of Net Operating Income ("NOI"), operating predominantly under the Dulux Paints brand. The Portfolio is approximately 95% occupied with no significant short term lease maturities.
The funding required by the Trust for its 70% interest in the Portfolio will be sourced from a combination of existing cash, the revolving credit facility, the assumption of existing mortgage debt and the arrangement of new first mortgage financing. The assumption of existing mortgage debt and the arrangement of new first mortgage financing represents a 58% loan-to-purchase price. Pro forma closing the Trust expects the acquisition to reduce the AFFO payout ratio to approximately 75% on an annualized basis, well below the Trust's targeted AFFO payout ratio of 85%, while increasing our Debt/Gross Book Value ("GBV") ratio nominally to 56%, which continues to be below the Trust's 60% debt/GBV target. Going forward PPG Industries would be the Trust's largest tenant at 9% of NOI; however lease maturities would be spread over 12 locations.
Pro forma the acquisition, the Trust's investment portfolio will be well diversified across geographies and asset classes. 54% of NOI will come from Ontario, followed by Quebec (31%), Nova Scotia (10%) and British Columbia, Alberta, Manitoba and New Brunswick (collectively 5%). 60% of NOI will come from our Net Lease Convenience Retail, followed by Industrial (31%) and Core Service Provider Office (9%).
For additional information, please visit the Trust's website at www.firmcapital.com
ABOUT FIRM CAPITAL PROPERTY TRUST
Firm Capital Property Trust is focused on creating long-term value for Unitholders, through capital preservation and disciplined investing to achieve stable distributable income. In partnership with management and industry leaders, The Trust's plan is to co-own a diversified property portfolio of multi-residential, flex industrial, net lease convenience retail, and core service provider professional space. In addition to stand alone accretive acquisitions, the Trust will make joint acquisitions with strong financial partners and acquisitions of partial interests from existing ownership groups, in a manner that provides liquidity to those selling owners and professional management for those remaining as partners. Firm Capital Realty Partners Inc., through a structure focused on an alignment of interests with the Trust, will source, syndicate and participate in investments.
FORWARD LOOKING INFORMATION
This press release may contain forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", and by discussions of strategies that involve risks and uncertainties. The forward-looking statements are based on certain key expectations and assumptions made by the Trust regarding, among other things, the use of the net proceeds from the Offering, the closing of the Offering, and the closing of the Acquisition. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Although management of the Trust believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance or achievements will occur as anticipated. Neither the Trust nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements, and no one has any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or such other factors which affect this information, except as required by law.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of a prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under securities laws of any such state, province or other jurisdiction. The Units of the Firm Capital Property Trust have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered in the United States absent registration or an application for exemption from the registration requirements of U.S. securities laws.
SOURCE: Firm Capital Property Trust
For further information: Robert McKee, President & Chief Executive Officer, (416) 635-0221; Sandy Poklar, Chief Financial Officer, (416) 635-0221