Realex Properties Corp. announces completion of acquisition of portfolio of Ontario properties



    CALGARY, Sept. 30 /CNW/ - Realex Properties Corp. ("Realex" or the
"Corporation") is pleased to announce that it has completed its previously
announced acquisition of a portfolio of 6 office buildings located in
Kitchener and Waterloo, Ontario, comprising approximately 932,000 sq. ft. of
rentable area, approximately 2,000 parking stalls and 470,000 sq. ft of
development entitlements. The development entitlements include lands held for
development, an option to purchase a leasehold interest in an additional
building as well as options to jointly develop certain lands, all within the
Kitchener-Waterloo area. As part of the transaction, Realex has also acquired
the property management company which currently manages the properties being
acquired, and has third party management contracts in place for 100,000 sq.
ft. of additional commercial space (collectively, these transactions
constitute the "Acquisition").
    The aggregate purchase price for the Acquisition, including estimated
closing and acquisition costs, is $142.0 million. The purchase price was
satisfied through cash consideration of $44.7 million, vendor take-back
mortgages aggregating $10.5 million, the assumption of existing property level
mortgage debt totalling approximately $66.2 million, and the issuance of
7,444,071 common shares and 8,014,575 non-voting shares of Realex to the
vendors at a deemed price of $1.33 per share. 6,880,161 of the common shares
and 7,450,666 of the non-voting shares issued in connection with the
Acquisition are subject to a four-month hold which expires on January 31,
    The portfolio acquired is a multi-property collection of low and mid-rise
office buildings that are 92% occupied and benefit from a number of national
tenants. The portfolio has a weighted average lease term of 6.5 years and
rental rates that will support future increases. The weighted average interest
rate and remaining term on the assumed mortgages is 5.2% and 7.2 years
respectively. The vendor take-back mortgages will bear interest at a weighted
average rate of 6% per annum and have a weighted average term to maturity of
approximately 2.4 years.
    To fund a portion of the cash consideration, the Corporation completed a
$25.0 million bridge financing, having an effective interest rate, including
commitment fees, of approximately 9% and an initial term of 9 months,
extendable for an additional 6 month period upon payment of an additional fee.
The balance of the cash consideration was funded by a private placement of an
aggregate of 11,906,435 subscription receipts at a price of $2.30 per
subscription receipt, issued in July 2008, which resulted in aggregate gross
proceeds of approximately $27.4 million. Upon closing of the Acquisition, each
subscription receipt has automatically converted into one common share and one
non-voting share of Realex, without any additional consideration. The common
shares and the non-voting shares are subject to a four-month hold expiring on
November 16, 2008. RBC Capital Markets and Genuity Capital Markets, acted as
co-lead agents and co-bookrunners, and Desjardins Securities Inc. and TD
Securities Inc. acted as agents for this private placement. The agents
received an aggregate fee of $1,154,238 in connection with the private
placement, $577,119 of which was paid on closing of the private placement and
$577,119 (plus interest earned) of which was paid on closing of the
Acquisition. Following completion of the Acquisition, Realex has an aggregate
of 43,743,403 common shares and 109,620,940 non-voting shares outstanding.
    With the acquisition of the portfolio (formerly owned by the Conrad
family), Realex will be able to leverage a Southwestern Ontario team of
23 people led by Adrian Conrad, who has been appointed Vice President,
Southwestern Ontario of the Corporation. Adrian Conrad has over 20 years of
industry experience in the construction, development and property management
business. In addition, Manfred Conrad has been appointed to the Realex Board
of Directors, bringing with him over 30 years of experience as one of the
Kitchener-Waterloo area's largest developers and managers of commercial real
    "We are pleased to have completed this strategic Acquisition, which
establishes a national real estate platform for Realex, underpinned by
excellent management teams in strong core markets in both western and central
Canada. We welcome Manfred Conrad to our board of directors and Adrian Conrad
to our senior management team as we look forward to working together to
maximize Realex's internal growth potential and explore new expansion
opportunities in the future," said Realex's President and Chief Executive
Officer, Marc Sardachuk.

    The TSX Venture Exchange has neither approved nor disapproved the
    contents of this news release. The TSX Venture Exchange does not accept
    responsibility for the adequacy or accuracy of this news release.

    This press release may contain forward looking statements and information
within the meaning of applicable securities legislation. Although Realex
Properties Corp. believes that the anticipated future results, performance or
achievements expressed or implied by the forward looking statements and
information are based upon reasonable assumptions and expectations, the reader
should not place undue reliance on forward looking statements and information
because they involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Realex to
differ materially from anticipated future results, performance or achievement
expressed or implied by such forward looking statements and information.
Accordingly, Realex cannot give any assurance that its expectations will in
fact occur and cautions that actual results may differ materially from those
in the forward looking statements. Factors that could cause actual results to
differ materially from those set forth in the forward looking statements and
information include: general economic conditions; local real estate conditions
including the development of properties in close proximity to Realex's
properties; timely leasing of newly-developed properties and re-leasing of
occupied square footage upon expiration; dependence on tenants' financial
condition; the uncertainties of real estate development and acquisition
activity; the ability to effectively integrate acquisitions; interest rates;
availability of equity and debt financing; the impact of newly-adopted
accounting principles on Realex's accounting policies and on period-to-period
comparisons of financial results; and other risks and factors described from
time to time in the documents filed by Realex with the securities regulators
in Canada, including in the Annual Information Form under the heading
"Description of the Business - Risk Factors" and in Realex's annual
Management's Discussion and Analysis. Realex undertakes no obligation to
publicly update or revise any forward looking statements or information,
whether as a result of new information, future events or otherwise, except as
required by securities laws.

For further information:

For further information: Marc Sardachuk, President and Chief Executive
Officer, Realex Properties Corp., Telephone: (403) 264-5889, Facsimile: (403)
264-5892; Mark Suchan, Chief Financial Officer, Realex Properties Corp.,
Telephone: (403) 264-5889, Facsimile: (403) 264-5892

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