InStorage REIT announces $111.6 million in new self-storage investments and $105 million bought deal equity financing



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/

    TORONTO, March 16 /CNW/ - (TSXV: IS.UN) InStorage Real Estate Investment
Trust (the "REIT") announced today that, together with InScotia
Developments LP ("InScotia Developments"), it has agreed to purchase the
"Apple Self Storage" portfolio of 11 high quality self-storage properties
located in Ontario and Quebec. The REIT will acquire 10 of the properties (the
"REIT Properties") for an aggregate purchase price of approximately
$111,550,000 (subject to customary adjustments). The REIT Properties account
for total gross rentable area of approximately 725,000 square feet and house
approximately 5,760 storage units. The REIT's development partner, InScotia
Developments, has conditionally agreed to acquire the remaining property (the
"Development Property") for a purchase price of approximately $1,150,000
(subject to customary adjustments). Subject to applicable conditions and
approvals, the acquisitions are expected to close on or about April 30, 2007.
    "The acquisition announced today, combined with the recently announced
StorageNOW portfolio acquisition, clearly represents an important strategic
opportunity for InStorage REIT to become the dominant player in the Canadian
self-storage market. Upon completion of these transactions, we will be the
largest owner/operator of self-storage facilities in Canada", says T. James
Tadeson, the Chief Executive Officer of the REIT. He adds, "These two
important transactions strengthen our position in multiple key markets,
establish a new presence in Quebec, and are expected to be accretive to the
REIT's funds from operations ("FFO", see "Non-GAAP Measures" below). We will
continue to pursue our strategy of acquiring facilities that are accretive to
the REIT's FFO in our quest to increase distributions and unitholder value."
    With the Apple Self Storage and StorageNOW acquisitions, the REIT will
have purchased portfolios of high quality assets, the majority of which are
located in important urban centres. These properties have a weighted average
occupancy level of 72%, with several newly constructed facilities which are
currently in lease-up. As the occupancy at these properties increases to
stabilized levels, the REIT expects the Apple Self Storage and StorageNOW
properties to generate an annual net operating income (see "Non-GAAP Measures"
below) of approximately 7.25% of the purchase price. This expectation is based
on the following assumptions: the occupancy of the Apple Self Storage and
StorageNOW properties will increase to stabilized levels, rental rates will be
successfully increased and maintained, and the REIT will achieve its expected
operational improvements and efficiencies of scale with the addition of these
two portfolios.
    Including the investments announced today and the acquisition of the
11-property StorageNOW portfolio announced on February 19, 2007, the gross
book value of the REIT's consolidated real estate assets and mezzanine loans
will have grown to approximately $402 million, from approximately $8 million
upon its debut as a publicly traded real estate investment trust on August 4,
2006. Upon completion of the Apple Self Storage and StorageNOW portfolio
acquisitions, the REIT's portfolio will be comprised of 46 self-storage
facilities with a total gross rentable area of 2.6 million square feet and
approximately 22,900 storage units.
    The REIT also announced today that it has entered into a bought deal
financing agreement with a syndicate of underwriters led by Canaccord Adams
and including RBC Dominion Securities Inc., Scotia Capital Inc., TD Securities
Inc., National Bank Financial Inc., Blackmont Capital Inc. (the
"Underwriters") for a $105 million offering (the "Offering") of trust units
("Units") by way of short form prospectus in each of the provinces of Canada.
The offering price for the Units will be $1.45 per Unit and the Offering is
expected to close on or about April 3, 2007. The Underwriters have been
granted an over-allotment option to acquire Units representing up to an
additional 10% of the Offering for a period of 30 days following the closing
of the Offering. The proceeds of the Offering are intended to be used to
satisfy the cash portion of the purchase price for the Apple Self Storage and
the StorageNOW portfolio investments and to provide cash for future
acquisitions and for the REIT's mezzanine lending activities.

    Details Concerning the Apple Self Storage Investments

    The REIT Properties will be acquired pursuant to acquisition agreements
(the "Acquisition Agreements") between the REIT's operating subsidiary,
InStorage Limited Partnership ("InStorage LP"), and the vendors of the Apple
Self Storage portfolio (the "Vendors"). The REIT Properties consist of the
following:

    
    Province and Address                City            Operating Name
    ---------------------------------- --------------- ----------------------

    Ontario
    -------
    140 Armstrong Avenue                Georgetown      Apple Self Storage
    2032 Commerce Park Drive            Innisfil        Apple Self Storage
    10345 Keele Street                  Maple           Apple Self Storage
    81 Arrow Road                       Toronto         Apple Self Storage
    25 Crouse Road                      Toronto         Apple Self Storage
    875 Don Mills Road                  Toronto         Apple Self Storage
    555 Trethewey Drive                 Toronto         Apple Self Storage

    Quebec
    ------
    745 St. Martin Ouest Blvd.          Laval           Forteresse
    9265 Pascal Gagnon Blvd.            Montreal        Forteresse
    2249 Leon-Harmel Street             Quebec City     SecureMax
    

    Under the Acquisition Agreements, InStorage LP initially agreed to
purchase the REIT Properties and the Development Property from the Vendors for
an aggregate purchase price of $112,700,000 (subject to customary
adjustments). In a separate assumption agreement between InStorage LP and
InScotia Developments, InScotia Developments has conditionally agreed to
assume the obligation of InStorage LP under the Acquisition Agreements to pay
the purchase price with respect to the Development Property, being a parcel of
land for development located on Walkley Road in Ottawa, Ontario. As a result,
InScotia Developments will, in effect, purchase the Development Property
directly from the Vendors for a purchase price of approximately $1,150,000
(subject to customary adjustments).
    In connection with InScotia Developments' acquisition of the Development
Property, the REIT has agreed to fund InScotia Developments at closing with
mezzanine loan financing in the principal amount of $980,000 (the "Mezzanine
Loan"). InScotia Developments will use the proceeds of the Mezzanine Loan,
together with its own equity, to acquire the Development Property. Additional
mezzanine financing in the amount of $693,000 will be advanced in the future
to fund development costs associated with the Development Property. The
Mezzanine Loan will be made pursuant to the terms of the amended and restated
development agreement (the "Development Agreement") between InStorage LP and
InScotia Developments and will bear interest at the rate of 10% per annum.
Pursuant to the terms of the Development Agreement, the REIT will have a first
right and a first option to purchase the Development Property following
stabilization. The terms of the Development Agreement will be summarized in
the short form prospectus (including documents incorporated by reference
therein) to be filed in connection with the Offering.
    The investments in the Apple Self Storage portfolio remain subject to
customary closing conditions under the Acquisition Agreements and to
TSX Venture Exchange approval. There can be no assurance that the closing
conditions will be satisfied, that exchange approval will be granted or that
the investments will be completed. If the conditions under the acquisition
agreement are fulfilled, the acquisition is scheduled to close on or about
April 30, 2007.

    InStorage Real Estate Investment Trust

    The REIT is an unincorporated open-ended real estate investment trust
that invests primarily in self-storage properties and ancillary businesses
throughout Canada. The REIT indirectly owns 24 self-storage properties located
in Ontario and Alberta, and is presently the second largest owner/operator of
self-storage facilities in Canada. The completion of the acquisitions
described above would make the REIT the largest owner/operator of self-storage
facilities in Canada and would firmly establish the REIT's position as
Canada's leading self-storage industry consolidator.

    Additional information concerning the REIT and a copy of the Development
Agreement may be obtained on the REIT's website, www.instoragereit.ca, or on
the SEDAR website at www.sedar.com, under the REIT's profile.

    Non-GAAP Measures

    FFO and net operating income ("NOI") are not recognized measures under
Canadian generally accepted accounting principles ("GAAP"). They are non-GAAP
measures often used by Canadian real estate investment trusts as indicators of
financial performance. The REIT calculates FFO as net income (computed in
accordance with GAAP), excluding gains (or losses) from sales of depreciated
real estate and extraordinary items, plus depreciation and amortization, plus
future income taxes and after adjustments for equity-accounted-for entities
and non-controlling interests. The REIT calculates NOI as net income (computed
in accordance with GAAP), excluding gain (or losses) from sale of depreciated
real estate and extraordinary items and including income guarantees on three
of the StorageNOW properties, plus depreciation and amortization, plus asset
management fees paid to Carttera Management Inc., plus interest expense net of
interest income, plus future income taxes if any and after adjustments for
equity-accounted-for entities and non-controlling interest. NOI and FFO are
not intended to represent operating profits for a period or from the
Apple Self Storage and StorageNOW properties nor should they be viewed as an
alternative to net income, cash flow from operating activities or other
measures of financial performance calculated in accordance with GAAP.

    Forward-Looking Information

    This press release contains forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the REIT to
be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Examples of such
statements include: the intention or ability of the REIT to complete the Apple
Self Storage and StorageNOW portfolio transactions mentioned above and the
Offering, in each case as disclosed or at all; the accretive nature of the
transactions to the REIT's FFO; the estimated NOI of the Apple Self Storage
and StorageNOW properties; and the estimated growth in consolidated real
estate assets and mezzanine loans of the REIT mentioned above. Actual results
and developments are likely to differ, and may differ materially, from those
expressed or implied by the forward-looking statements contained in this press
release. Such forward-looking statements are based on a number of assumptions
which may prove to be incorrect, including, but not limited to: the ability of
the REIT and the Underwriters to complete the Offering; the ability and desire
of the REIT and its subsidiaries to obtain other necessary financing, satisfy
conditions under the transaction agreements and complete the Apple Self
Storage and StorageNOW portfolio transactions; the ability and desire of the
parties to the transactions to comply with the terms of the transaction
agreements; the accuracy of the financial information reviewed and
expectations of the REIT with respect to the acquisitions; the ability of the
REIT to increase the occupancy of the Apple Self Storage and StorageNOW
properties to stabilized levels; the ability of the REIT to successfully
increase and maintain rental rates at these properties; the ability of the
REIT to achieve its expected operational improvements and efficiencies of
scale with the addition of the Apple Self Storage and StorageNOW portfolios;
the level of activity in the underlying self-storage business of the REIT, the
self-storage industry and in the economy generally; consumer interest in the
services and products of the REIT's subsidiaries; competition; and anticipated
and unanticipated costs. While the REIT anticipates that subsequent events and
developments may cause its views to change, it specifically disclaims any
obligation to update these forward-looking statements. These forward-looking
statements should not be relied upon as representing the REIT's views as of
any date subsequent to the date of this press release. Although the REIT has
attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no assurance
that forward-looking statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. The factors identified above are not intended to
represent a complete list of the factors that could affect the REIT.
Additional factors are noted under "Risks and Uncertainties" in the
Management's Discussion and Analysis of the REIT for the quarter and year to
date period ended September 30, 2006, a copy of which may be obtained on the
SEDAR website at www.sedar.com.

    The securities being offered have not, nor will they be registered under
    the United States Securities Act of 1933, as amended, and may not be
    offered or sold within the United States or to, or for the account or
    benefit of, U.S. persons absent U.S. registration or an applicable
    exemption from the U.S. registration requirements. This release does not
    constitute an offer for sale of securities in the United States.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.





For further information:

For further information: InStorage Real Estate Investment Trust, T.
James Tadeson, Chief Executive Officer, Tel: (416) 867-9705

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INSTORAGE REAL ESTATE INVESTMENT TRUST

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