TORONTO, June 4 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (the "REIT") announced today it has waived conditions and expects to close the acquisition of a new medical office building, Queen Street Place, in the Edmonton suburb of Spruce Grove, Alberta. The purchase is expected to close in the second quarter of 2010, subject to customary closing conditions.
Queen Street Place is the dominant medical building in its market. It is a newly constructed (2007), fully-leased multi-tenant medical building that is expected to provide secure income yield based on its (a) scale, at approximately 70,000 square feet of gross leasable area, and tenancy mix, which includes two large multi-practitioner clinics, a diagnostic imaging facility, a laboratory, a pharmacy (Rexall) and a mix of other medical and medically-related users such as Alberta Health Services; (b) long term leases, with an average lease term to maturity of approximately seven years; and (c) recent construction, resulting in minimal capital expenditures projected for the next ten years.
Queen Street Place will be the REIT's third asset in the Edmonton market, which is expected to provide operating efficiencies.
In addition, the investment has the potential for value enhancement since the REIT believes that the site can accommodate an additional development of approximately 10,000 square feet of gross leasable area.
The total purchase price is expected to be approximately $21 million, subject to adjustments, which represents approximately an 8% capitalization rate applied to the in-place annual net operating income from the property. NorthWest expects to assume the vendor's existing mortgage (maturing in 2013, with a current balance of approximately $11.5 million at a fixed rate of 5.9%), but it is possible that long term fixed rate refinancing for the property may be arranged in due course following closing of the acquisition. The REIT's equity investment will be funded from existing resources. The acquisition is expected to be immediately accretive.
This investment will be the REIT's first acquisition since its initial public offering ("IPO"). In the REIT's offering prospectus dated March 16, 2010 (the "Prospectus") in respect of the IPO, the REIT outlined its strategic vision and plans for external growth and further consolidation of private sector ownership of medical office buildings and healthcare real estate in Canada. The REIT believes that the Queen Street Place acquisition will further solidify its market leadership in this asset class and its position as "Canada's Healthcare Landlord".
About NorthWest Healthcare Properties Real Estate Investment Trust
NorthWest Healthcare Properties Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT holds a portfolio of 45 income-producing properties, with a focus on medical office buildings and healthcare real estate, comprising approximately 2.7 million square feet of gross leasable area located in British Columbia, Alberta, Ontario, Québec, Nova Scotia and New Brunswick.
This press release may contain forward-looking statements with respect to the REIT, its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe", or "continue" or the negative thereof or similar variations. The REIT's actual results and performance discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulations and the factors described under "Risk Factors" in the Prospectus and the risks and uncertainties set out in the Management Discussion and Analysis dated May 14, 2010 for the Quarter ending March 31, 2010, which are available on www.sedar.com. These cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release, and, except as expressly required by applicable law, the REIT assumes no obligation to update such statements.
"Capitalization rate" and "Net operating income" (or NOI) are not measures recognized under Canadian generally accepted accounting principles ("GAAP") and do not have any standardized meanings prescribed by GAAP. Capitalization rate and NOI are presented in this press release because management of the REIT believes that these non-GAAP measures are relevant in interpreting the purchase price of the property being acquired. Capitalization rate, and NOI, 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 and NOI reported by such organizations.
SOURCE NorthWest Healthcare Properties Real Estate Investment Trust
For further information: For further information: Mike Brady, Senior Vice President, NorthWest Healthcare Properties Real Estate Investment Trust, (416) 366-2000 ext. 243, or www.nwhp.ca