- Acquisitions Increase Milestone's Presence in Denver and Atlanta, Further Diversifying Property Portfolio -
TORONTO AND DALLAS, May 1, 2014 /CNW/ - Milestone Apartments REIT (TSX: MST.UN) ("Milestone" or the "REIT") today announced that it has entered into separate agreements to purchase Legacy Heights, a 384-unit multifamily apartment community in the Westminster submarket of Denver, Colorado; and Harbor Creek, a 316-unit multifamily apartment community in the Canton submarket of Atlanta, Georgia. The purchase price for Legacy Heights is US$50.3 million, representing an estimated initial capitalization rate of 6.48%. The purchase price for Harbor Creek is US$28.0 million, representing an estimated initial capitalization rate of 6.82%. Both acquisitions are expected to be accretive to the REIT.
"Legacy Heights and Harbor Creek are high-quality properties with high occupancy rates that fit well with our established portfolio of garden-style, multifamily apartment communities located in growing metropolitan markets throughout the southeast and southwest United States. The submarkets of Westminster in Denver and Canton in Atlanta have attractive employment and demographic trends, and both Legacy Heights and Harbor Creek are well situated in these respective communities to attract our target mid-market renters," said Robert Landin, CEO of Milestone Apartments REIT. "We remain focused on acquisition opportunities with similar attributes that are accretive to the REIT."
Legacy Heights was built in 1998 and is currently approximately 96% occupied. The property features extensive amenities consistent with the REIT's established portfolio and is adjacent to a large shopping center, providing residents with convenient shopping, dining and entertainment options. Legacy Heights is located near Interlocken Business Park, a preferred office location for high-tech employers in the Denver Metropolitan Statistical Area ("MSA"). According to CBRE Econometric Advisors and MPF research, Denver's employment growth, multifamily rent growth and occupancy levels all rank amongst the strongest in the United States. A significant opportunity exists for Milestone to increase the value of Legacy Heights through an extensive unit interior value-add program, with only a small percentage of the units updated by the prior owner.
Harbor Creek was built in two phases in 2003 and 2007, and is currently approximately 98% occupied. The property features extensive amenities consistent with the REIT's established portfolio and benefits from its close proximity to several employment centers, including downtown Atlanta. Harbor Creek is in Cherokee County, a growing health care hub in North Georgia with five major health care facilities currently, and a number of facility expansion and new development projects planned for the future. The REIT has identified a number of potential revenue growth opportunities for the asset, including a proven unit interior upgrade program, as well as the opportunity to develop 60 additional units on the property, representing the last available multifamily zoned land in the immediate area.
Acquisition Funding and Closing
As part of the purchase consideration for Legacy Heights, the REIT will assume a fixed rate mortgage of approximately US$34.5 million at an interest rate of 3.78%, with an interest only portion through August 1, 2016, and with the loan maturing on August 1, 2022. The balance of the purchase price will be funded using proceeds raised from the previously announced equity bought deal financing and the refinancing of the US$228.6 million mortgage debt facility, both completed in April 2014. The acquisition, which is subject to customary closing conditions, is expected to close by July 2014.
As part of the purchase consideration for Harbor Creek, the REIT has negotiated a new 7-year interest only fixed-term mortgage of approximately US$15.7 million at an interest rate of approximately 3.55%. The balance of the purchase price will be funded using proceeds raised from the previously announced equity bought deal financing and the refinancing of the US$228.6 million mortgage debt facility, both completed in April 2014. The acquisition, which is subject to customary closing conditions, is expected to close by May 2014.
About Milestone Apartments REIT
Milestone Apartments REIT is an unincorporated, open-ended real estate investment trust that is governed under the laws of Ontario. The REIT's portfolio consists of 54 multifamily garden-style residential properties, comprising 17,648 units that are located in 11 major metropolitan markets throughout the Southeast and Southwest United States. Milestone Apartments REIT is the largest REIT listed on the TSX focused solely on the U.S. multifamily sector. The REIT operates its portfolio through its internal property management company, Milestone Management, with more than 900 employees across the U.S. Based in Dallas, TX, TMG Partners, L.P., an affiliate of The Milestone Group, is the external asset manager of the REIT. For more information, please visit www.milestonereit.com.
About The Milestone Group
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, TX and New York, NY 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 more than US$4.5 billion in multifamily transactions. For more information, please visit www.milestonegp.com.
Forward-looking information and non-IFRS measures
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", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on the REIT's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the anticipated closing date of the proposed acquisitions, the initial capitalization rate of the proposed acquisitions, the effect of the proposed acquisitions on the financial performance of the REIT (including the degree to which the acquisitions will be accretive), the ability to arrange mortgage financing and the ability to increase revenue for the acquired properties. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. 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 annual information form available at www.sedar.com. The forward-looking statements in this news release are based on certain assumptions, including that the economy remains stable, rental rates at Legacy Heights and Harbor Creek will continue to grow, interest rates remain stable, and the REIT will continue to have access to capital. 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 any such statement, whether as a result of new information, future events or otherwise.
"Initial capitalization rate" is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. Initial capitalization rate is presented in this news release because management of the REIT believes that this measure is relevant in interpreting the purchase price of the property being acquired. Capitalization rate, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to capitalization rate reported by such other organizations.
SOURCE: Milestone Apartments REIT
For further information:
Robert Debs, Investor Relations
Milestone Apartments REIT
Bruce Wigle, Investor Relations
Bryan Mills Iradesso (BMIR)
Tel: 416.447.4740, x 232