TORONTO/DALLAS, Jan. 14, 2015 /CNW/ - Milestone Apartments Real Estate Investment Trust (TSX: MST.UN) ("Milestone" or the "REIT") today announced that it has entered into an agreement to purchase The Manor Homes of Arborwalk ("Arborwalk" or the "Property"), a 280-unit, Class A multifamily apartment community located in the Lee's Summit submarket of Kansas City, Missouri, for a purchase price of US$37.25 million, representing an estimated year one capitalization rate of 6.65% (the "Acquisition"). The Acquisition is expected to be accretive to the REIT.
"Arborwalk is an off-market acquisition sourced for the REIT through our strong network of industry relationships. We look forward to entering the Kansas City market and further diversifying the REIT's portfolio," said Robert Landin, CEO of Milestone. "Kansas City has a population of over two million people, average household income above the national average and favourable employment and demographic trends. The supply and demand characteristics in the Lee's Summit submarket in particular are very attractive, supporting positive rental rates and stable occupancy. Importantly, we have identified opportunities to increase cash flow at Arborwalk through the implementation of Milestone's operating efficiencies and value enhancement program."
Arborwalk was built in 2006 and is currently approximately 97% occupied, with average monthly rents of approximately US$975 per unit. Consistent with the REIT's established portfolio, Arborwalk features extensive amenities including a clubhouse, business center, media room, fitness center, an outdoor pool area and extensive green space. Arborwalk is the only apartment community in the Lee's Summit submarket that offers private attached garages for all of its units.
The Lee's Summit submarket is attractive to families, attributable in part to its highly rated school system, which has earned Missouri's highest ranking for educational achievement. The Property, which has convenient access to major transportation corridors, is located within close proximity to large employment centers including the Truman Medical Center, Saint Luke's East Hospital, Sprint Corporation's headquarters, where 7,500 of its employees are located, and the US$4.45 billion Cerner Corporate Campus, currently under construction. Cerner, a major health care information technology company, is Kansas City's largest private sector employer with approximately 10,000 employees. Cerner is currently expanding its presence at this location to include 3.7 million square feet of office space that can house 16,000 employees when complete. Only six miles north of the Property is Summit Fair shopping center, a 500,000 square foot open air lifestyle center with a variety of major department stores, specialty shops and restaurants.
Acquisition Funding and Closing
As part of the purchase consideration for Arborwalk, the REIT is negotiating a new, interest only, fixed-rate mortgage of approximately US$20.5 million, with the balance of the purchase price expected to be funded using the REIT's available cash and revolving line of credit. The Acquisition, which is subject to customary closing conditions, is expected to close by March 1, 2015. The REIT will disclose the final details of the purchase, including financing terms, following closing of the Acquisition.
Milestone is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT's portfolio consists of 59 multifamily garden-style residential properties, comprising 19,553 units that are located in 12 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 more than 900 employees across the United States. Based in Dallas, Texas, 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 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 Acquisition, the initial capitalization rate of the Acquisition, the effect of the Acquisition on the financial performance of the REIT (including the degree to which the Acquisition will be accretive), the proposed financing of the Acquisition and the ability to enhance the value of Arborwalk through the implementation of Milestone's operating efficiencies. 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 Arborwalk will continue to grow, interest rates remain stable, the REIT will continue to have access to capital and that the REIT will satisfy all conditions to completion of the Acquisition. 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.
"Year one capitalization rate" is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. Year one 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. 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, Tel: 214.561.1215; Bruce Wigle, Investor Relations, Bay Street Communications, Tel: 647.496.7856