True North Comm to acquire five properties for $106.1M
True North Commercial Real Estate Investment Trust has agreed to acquire five properties for a total price of $106.1-million. The REIT has arranged a $25-million offering with four million units at $6.28 per unit.
TRUE NORTH Commercial Real Estate Investment Trust has agreed to acquire the following five properties: (i) a 34,400-square-foot office property at 810 Blanshard St., Victoria, B.C.; (ii) a 120,200-square-foot office property at 1595 16th Ave., Rich mond Hill, On t. (the Greater Toronto Area (GTA) property); (iii) a 148,500-square-foot office property at 301 and 303 Moodie Dr., Ottawa, Ont.; (iv) a 129,200-square-foot office property at 36 and 38 Solutions Dr., Halifax, N.S.; and (v) a 60,600-square-foot office property at 231 Shearson Crescent, Cambridge, Ont.
The total purchase price for the acquisition properties represents a combined implied capitalization rate of approximately 6.9 per cent. Upon completion of the ac-
quisitions, the REIT’s occupancy is expected to remain stable at 97.1 per cent, the REIT’s total portfolio gross revenue from government and credit-rated tenants is anticipated to be 84.7 per cent, and average remaining lease term of the REIT will be 4.3 years.
“These properties not only meet our core acquisition criteria, but also position us for growth by establishing a presence in new markets. With these acquisitions, we have added our first location in Halifax and increased our footprint in Victoria,” said Daniel Drimmer, president and chief executive officer. “This, along with our disciplined approach, help to ensure continued expansion and diversification of the portfolio with credit-rated and government tenants secured under long-term leases.”
The total purchase price for the acquisition properties is expected to be approximately $106.1-million, subject to customary adjustments and exclusive of closing costs. The acquisition will be satisfied by a combination of the following: (i) approximately $28.5-million from the REIT’s bought deal offering of units completed on July 11, 2017; (ii) approximately $15-million from the offering (as defined herein); (iii) first-mortgage financing on the Cambridge property and the Ottawa property in the total amount of approximately $21.9- million; and( iv) approximately $47.6- million from a bridge facility on the Victoria property, the GTA property and the Halifax property.
The bridge facility of up to $47.6-million will be made available by an affiliate of CIBC Capital Markets. Proceeds from the bridge facility may only be used to satisfy the debt portion of the acquisition of the bridge facility properties. The REIT expects to repay the bridge facility with first-mortgage financing arranged on the bridge facility properties on a property-by-property basis.
“Using capital efficiently, while remaining poised to act on opportunities, continues to be a priority. These acquisitions deploy the proceeds of our July offering and a portion of the bought deal being announced today,” added Mr. Drimmer. “We remain committed to building a high-quality property portfolio that will generate long-term value for our unitholders.”
The REIT also announced it has entered into an agreement with a syndicate of underwriters to sell, on a bought deal basis, four million trust units at $6.28 per unit for gross proceeds of approximately $25-million.
The REIT has also granted the underwriters an option, exercisable for a period of 30 days following the closing of the offering, to purchase up to an additional 600,000 units to cover overallotments, if any. The offering is expected to close on or about Oct. 20, 2017.
The REIT intends to use the net proceeds from the offering to partially finance the purchase price of the acquisition properties, to finance future acquisitions and for general trust purposes. The offering is not conditional on the closing of the acquisition properties, and, if any of the acquisition properties does not close, the net proceeds will then be used to finance other potential future acquisitions and for general trust purposes.
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Karen Baxter condensed this news release (firstname.lastname@example.org).
Jeff Matthew Baryshnik, William John Biggar, Roland Andrew Cardy, Daniel Drimmer, Alon Samuel Ossip, Sandy Ivan Poklar
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