TORONTO, Dec. 21 /CNW/ - Whiterock Real Estate Investment Trust (TSX: WRK.UN), a growth oriented REIT with a significant presence in major markets, announced today that it has entered into binding agreements to acquire an interest in $112 million of office and industrial buildings located in the Greater Toronto Area (GTA) and Montréal. Management anticipates that these transactions will close in the first quarter of 2011, subject to standard closing conditions.
These multi-tenant office and single-tenant industrial buildings, consisting of a combined 960,000 square feet, offer excellent visibility, a diverse tenant base and easy access to major arterial highways. The average remaining lease term across the assets is approximately 10 years. The majority of these properties will be purchased in partnership with ROI Capital with Whiterock owning a 40% interest and providing property management. Whiterock's portion of the equity required will come from existing cash on hand along with refinancing proceeds obtained from under-leveraged assets in the existing portfolio. The interest rate on these refinancings will be at current first mortgage rates. Management expects the impact from the acquisitions along with refinancing to add over $0.08 to annualized ongoing AFFO. The full impact of this expected increase to AFFO will be realized starting in the second quarter of 2011. The average cap rate on the assets is 7.8% and the average interest rate on the first mortgages is expected to average approximately 4.5%.
GTA Property Descriptions
10 Lower Spadina is located in downtown Toronto just off of the Gardiner Expressway within walking distance to the downtown core and Billy Bishop Toronto City Centre Airport. 10 Lower Spadina is a 7 storey office building totaling approximately 60,000 square feet that is 100% leased with an average remaining lease term of 5.8 years.
2010 Winston Park Drive is a 5 storey, 80,000 square foot office building which is 100% leased with an average remaining lease term of 4.2 years. The property fronts the QEW (one of the GTA's major arterial highways) offering excellent access and visibility.
6501-6559 Mississauga Road property consists of 156,000 square feet of gross leasable area in an office park setting located at the intersection of Erin Mills Parkway and Mississauga Road. The property is well-located giving easy access to the QEW, Highway 403, Highway 410, and Highway 401.
55 Norfolk Street is approximately 13,000 square feet and serves as the Royal Bank of Canada branch for the town of Simcoe.
Montréal Property Descriptions
10001 Metropolitan East Boulevard is a 327,000 square foot, state-of-the-art distribution centre leased for 13 years to The Brick (TSX: BRK.UN). This facility serves as a distribution hub for the Ottawa, Quebec and Eastern Canada markets. The Brick has been in operation since 1971 and is one of Canada's largest volume retailers of furniture, home appliances, and other home furnishings. 10001 Metropolitan East Boulevard has excellent visibility from one of Montréal's major arterial highways (Autoroute 40) and is within 30 minutes of the Pierre Elliott Trudeau International Airport.
1155 Chomedey Boulevard is located in close proximity to arterial highways Autoroute 13 and Highway 440. Consisting of 115,000 square feet of gross leasable area, 1155 Chomedey Boulevard is a fully leased, single tenant flex-office building that serves as the head office and distribution centre for Effigi Inc. Effigi is a 20 year old established multi-national clothing and lifestyle design firm that includes well known brands such as Gagou Tagou, Romeo & Juliette, and Black Mountain. The remaining lease term is 16 years.
1125 50E Avenue is situated on one of Montréal's major arterial freeways. The property is extremely well located with direct access to Hwy 20 and to other major Montréal freeways: Hwy 520, 13, and 15. It is also within close proximity to downtown Montréal and only minutes away from the Montréal International Airport. Consisting of 211,000 square feet of gross leasable area, 1125 50E Avenue is a fully leased, single tenant state-of-the-art production and storage facility that serves as the sole Eastern North American distribution centre for Nellson Nutraceutical LLC. Nellson is the market-leading outsourced formulator and manufacturer of functional bars and powders. The company was founded in 1962 and is headquartered in Los Angeles, California. Nellson's remaining lease term is 8 years.
Whiterock's partner on the GTA and Montréal acquisitions is Return on Innovation Capital Ltd., 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 long term leases. With over $1 billion in assets, ROI Capital Ltd. is one of the fastest growing investment firms in Canada.
Subsequent to these acquisitions, Whiterock will own and co-own a portfolio that totals approximately 7.4 million square feet across 70 properties.
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 relatively stable leasing environment, stable interest costs; stable acquisition capitalization rates and available access to equity and debt capital markets to fund, at acceptable costs, Whiterock's future growth plans, and to enable Whiterock to refinance its debt as it matures. 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.
For further information: For further information:
Frank Bucys, CFO, 416-907-4864
Esam El-Makkawy, 416-642-4726