TORONTO, Dec. 2 /CNW/ - Whiterock Real Estate Investment Trust (TSX:WRK.UN) announced today the acquisition of two high quality, primary market assets with long term leases to industry leaders Molson and Technicolor. In keeping with its active acquisition program, Whiterock has entered into two binding contracts to acquire an interest in a 225,000 square foot distribution centre in Montreal and an 87,105 square foot office building in downtown Toronto for $45.3 million. On acquisition the in place AFFO from the properties will add approximately $0.07 per unit to Whiterock's annualized AFFO.
Whiterock's partner on these acquisitions is Return on Investment Capital Inc. ("ROI Capital"), an investment firm based in Toronto that specializes in private placement investments, including a focus on high quality properties with visible growing cash flow streams backed by solid covenants and longer term leases. With close to $600 million in assets, ROI Capital is one of the fastest growing investment firms in Canada.
Montreal Distribution Centre
The Molson Distribution Centre, located at 1900 Dickson Street on the island of Montreal, is a first class recently constructed 225,000 square foot built to suit distribution centre. Molson, which has investment grade credit, occupies 100% of the property and is one of Canada's oldest consumer brand names and North America's oldest beer brand. The distribution centre has 13 years remaining on a lease to Molson, periodic rent increases, further options to renew and is ideally located due its close proximity to downtown Montreal and Molson's brewery and headquarters which have been located in Montreal since 1786.
Downtown Toronto Office Building
49 Ontario Street is a 7-storey recently renovated contemporary 87,105 square foot office building in Downtown Toronto, with an approximately 24,000 square foot parking area. The building is 100% leased with an average remaining lease term of almost 8 years and has benefited from significant capital investment by its primary tenant, Technicolor Creative Services Canada Inc. It houses one of North America's premiere and technically sophisticated post production facilities. Technicolor's Creative Services division provides the widest array of end-to-end creative solutions in the world. Their state of the art services include: sound services, visual effects, post-production, digital preview screenings, digital intermediates, digital cinema and home entertainment mastering.
Whiterock's 40% equity investment in the office building and 20% equity investment in the distribution centre, net of debt, will total approximately $5.0 million including closing costs, with an in-place AFFO return of approximately 15%. Whiterock intends to use cash on hand and its acquisition and operating facility to finance its investment in these properties.
The transactions are scheduled to close in December 2009. Including these acquisitions, Whiterock's portfolio totals 3.5 million square feet across 47 properties, with a weighted average lease term of approximately 8 years. 57% of the portfolio consists of government and investment grade tenants. 100% of distributions made in prior years were classed as a return of capital for tax purposes. At the close of market on December 1, 2009, Whiterock's units provided a yield of 12.0%.
This news release contains "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect" "estimate", "anticipate", "intend", "believe" or "continue", the negative forms thereof and similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future events or performance and, by their nature, are based on Whiterock's estimates and assumptions, which are subject to known and unknown risks, uncertainties and other factors that may cause the actual events, results or prospects to be materially different from those expressed or implied herein. Readers are cautioned that a number of factors, including those discussed in the section entitled "Risk Factors" in Whiterock's Annual Information Form which can be obtained at www.sedar.com, could cause actual events, results or prospects to differ materially from those stated or implied. These factors should be considered carefully, and a reader should not place undue reliance on forward-looking statements, as there can be no assurance that actual events, results or prospects will be consistent with such statements. In particular, but without limitation, there can be no assurance that Whiterock will be to able to increase its AFFO. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a less robust leasing environment than has been seen for the last several years; relatively stable interest costs; an increase in acquisition capitalization rates and more limited access to equity and debt capital markets to fund, at acceptable costs, Whiterock's growth plans, and to enable Whiterock to refinance its debts as they mature. Except as required by law, Whiterock does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
SOURCE WHITEROCK REAL ESTATE INVESTMENT TRUST
For further information: For further information: www.whiterockreit.ca, Frank Bucys, CFO, (416) 907-4864; Jennifer Kosloski, (416) 979-3026