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.

Stockwatch Daily - - FRONT PAGE - Mr. Daniel Drim­mer re­ports

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 of­fer­ing

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.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

Jeff Matthew Barysh­nik, Wil­liam John Big­gar, Roland An­drew Cardy, Daniel Drim­mer, Alon Samuel Os­sip, Sandy Ivan Pok­lar

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