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TORONTO, July 17 /CNW/ - Whiterock Real Estate Investment Trust
("Whiterock" or the "REIT") today announced that it has closed the previously
announced agreements to acquire $80 million of commercial properties in
Calgary and Edmonton, Alberta. With the completion of this acquisition,
approximately 33% of Whiterock's portfolio by net operating income is now in
the high growth Saskatchewan and Alberta markets. The transaction is
approximately $0.08 accretive to Funds From Operations ("FFO") per unit and
$0.03 accretive to Whiterock's Adjusted Funds From Operations ("AFFO") per
unit.
This portfolio totals approximately 341,000 square feet of real estate
(approximately 54% office, 30% industrial, and 16% retail) over eight
properties. In total, these assets are currently 99% leased with a 5.7 year
average remaining lease term. Current market rents are on average 20% above
in-place leases.
The purchase price of $80 million, excluding closing and transaction
costs, represents a going-in capitalization rate of approximately 7.0%. The
purchase price has been satisfied with a $22.8 million private placement of
new units and new convertible unsecured subordinated debentures to the vendor,
with the balance of the funds provided by new and assumed mortgages at an
average rate of 5.8% and an average term of 5.1 years, as well as Whiterock's
$40 million revolving credit facility. The vendor received $11.4 million of
new units issued at $11.50 per unit and $11.4 million of new convertible
unsecured subordinated debentures with a 6.0% coupon, a 4-year term, and a
conversion price of $13.22 per unit.
"Whiterock is pleased to complete this acquisition and build its presence
in Alberta, as well as establish a new relationship with a strong local real
estate investment group. As previously stated, the portfolio is immediately
accretive to both FFO and AFFO and has $1 million of below market rents, most
of which can be captured over the near-term. Additionally, the issuance of the
new units and the new convertible unsecured subordinated debentures at these
levels to a sophisticated vendor is a clear indication of Whiterock's current
value proposition and future upside potential" said Jason Underwood, CEO.
About Whiterock
With the closing of this acquisition, Whiterock's portfolio consists of
41 properties totalling 3.1 million square feet, located in 13 primary and
secondary markets across Canada, including Calgary, Edmonton, Regina,
Saskatoon, Toronto, Ottawa, Montreal and Quebec City. The average lease term
is approximately 7.9 years, with approximately 61% leased to government or
investment grade firms.