Milestone Apartments REIT Announces Closing of US$502 Million Landmark Property Portfolio Acquisition and the Issuance of 9,591,000 REIT Units in Exchange for Subscription Receipts

- Transaction Adds 4,172 Apartment Units to REIT Portfolio and Establishes Strategic Relationship with Starwood Capital Group, Increasing Property Management Platform to Over 50,000 Units - 

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

TORONTO and DALLAS, Jan. 27, 2016 /CNW/ - Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) ("Milestone" or the "REIT") today announced that it has completed the acquisition of a 15-property portfolio from Landmark Apartment Trust, Inc. ("Landmark") for approximately US$502 million, including working capital estimates (the "Acquisition"). The Acquisition, as previously announced on October 22, 2015, was part of the acquisition, by way of merger, of Landmark and its property portfolio of 78 properties by the REIT and Starwood Capital Group ("Starwood"). Starwood acquired Landmark's interest in the 63 other properties, comprising 19,615 apartment units, all of which are now property managed by the REIT.

The Offering
In connection with the Acquisition and as previously announced on October 30, 2015, Milestone completed an offering of subscription receipts (the "Subscription Receipts") with a syndicate of underwriters on a bought deal basis. A total of 9,591,000 Subscription Receipts (including Subscription Receipts issued pursuant to the exercise in full of the over-allotment option granted to the underwriters by the REIT) were issued at a price of C$15.00 per Subscription Receipt for total gross proceeds of C$143,865,000 (the "Offering").

As a result of the completion of the Acquisition, each outstanding Subscription Receipt has been exchanged for one trust unit of the REIT (a "REIT Unit"), resulting in the issuance of 9,591,000 new REIT Units. Trading in the Subscription Receipts has been halted on the Toronto Stock Exchange and the newly issued REIT Units will commence trading on the Toronto Stock Exchange today. Holders of Subscription Receipts are entitled to receive a subscription receipt adjustment payment of C$0.16251 per Subscription Receipt (being equal to the aggregate amount of cash distributions per REIT Unit for which record dates have occurred since the issuance of the Subscription Receipts), less any applicable withholding taxes. Milestone expects the subscription receipt adjustment payment to be processed within the next three business days. Effective today, the REIT has 70,039,063 REIT Units and 5,779,424 Class B Units outstanding.  

Acquisition Funding Update
As previously announced on October 22, 2015, the REIT primarily funded the Acquisition with the assumption of US$263.6 million in existing mortgages on 12 Landmark properties and net proceeds of US$95.1 million from the Offering. The remainder of the purchase price was funded in part using: cash on hand of US$39.0 million generated from the refinancing of the REIT's mortgage debt facility (the "Facility"), completed on September 10, 2015; net proceeds of US$21.0 million from the sale of the REIT's Brookfield and Ivy Commons properties completed in January 2016; and US$28.6 million in refinancing proceeds related to the substitution of three Landmark assets into the Facility. In addition, the REIT is using US$65.7 million from its revolving line of credit for interim financing until the closing of the previously announced sale of Parks at Treepoint and Post Oak Place, which are currently under contract with a non-refundable deposit of US$1.0 million. These assets are expected to close on February 15, 2016, sales proceeds of which will be used to reduce the balance on the revolving line of credit.

Debt Profile
Following the sale of Parks at Treepoint and Post Oak Place in the coming weeks, the REIT's mortgage note obligations will be approximately US$1.216 billion with a weighted average interest rate of approximately 3.63% down from 3.68% as at September 30, 2015, with a weighted average maturity of approximately seven years. The REIT's debt to gross book value ratio will be approximately 51.2%. Approximately 86.0% of the REIT's indebtedness is issued at fixed rates. Given the increase in the REIT's property portfolio, Milestone exercised a portion of its accordion option thus increasing the REIT's revolving line of credit to US$100 million from US$85 million, with total borrowing capacity on the line up to US$125 million.

The REIT Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any REIT Units in the United States or to, or for the account or benefit of, U.S. persons.

About Milestone
Milestone is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT's portfolio consists of 74 multifamily garden-style residential properties, comprising 23,486 units that are located in 14 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 approximately 1,500 employees across the United States. Based in Dallas, TX, 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 approximately US$10 billion in multifamily transactions. For more information, please visit www.milestonegp.com.   

Forward-looking Information
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", "project", "expect", "intend", "plan", "will", "may" "estimate", "pro-forma" and other similar expressions. These statements are based on the REIT's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the Offering (including the subscription receipt adjustment payment), the timing of and expected proceeds from the proposed dispositions of Parks at Treepoint and Post Oak Place and the REIT's future debt profile. The forward-looking statements in this news release are based on certain assumptions, including that REIT will complete the planned property dispositions and refinancings on the terms anticipated. 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 prospectus supplement dated October 26, 2015 and in the REIT's annual information form, each available at www.sedar.com. 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 or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE Milestone Apartments REIT

Image with caption: "MST Logo (CNW Group/Milestone Apartments REIT)". Image available at: http://photos.newswire.ca/images/download/20160127_C8708_PHOTO_EN_607226.jpg

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

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www.milestonereit.com

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