REIT to raise its interest in Calgary's Scotia Centre to 100 percent and is expanding into Toronto retail property market
MONTREAL, Jan. 11, 2012 /CNW Telbec/ - CANMARC Real Estate Investment Trust ("CANMARC" or the "REIT") (TSX: CMQ.UN) announced today that it has entered into agreements to acquire two retail properties in Toronto, Ontario and Jonquière, Quebec, and the 50 percent interest in Calgary's Scotia Centre office and retail complex it does not already own. Each of these acquisitions is subject to satisfaction of usual closing conditions. Total acquisition price for the three properties is approximately $213 million, representing a going-in capitalization rate of approximately 6.8 percent. In total, the three acquisitions add 664,357 square feet or approximately 7.6 percent of gross leasable area ("GLA") to the REIT's portfolio of high quality office, retail and residential properties. These acquisitions are a result of CANMARC's active growth strategy. CANMARC earlier identified an acquisition pipeline in excess of $250 million. Each of the three acquisitions is accretive to adjusted funds from operations.
"With these three accretive acquisitions today, CANMARC continues to deliver on its strategy of building a solid footprint of office and retail properties in key real estate markets across Canada," said Jim Beckerleg, President and Chief Executive Officer. "We are making our first significant investment in the Ontario market and we are growing our presence in two regions of Canada - Alberta and Quebec - where we can further lever our established management platforms."
"Together, these acquisitions increase our gross leasable area by approximately 7.6 percent, which is a great start to 2012. It is the beginning of what promises to be another year of strong growth for CANMARC. These acquisitions demonstrate once again to our unitholders that CANMARC is focused on building value through accretive acquisitions of quality office and retail properties, and through strong organic growth," continued Mr. Beckerleg.
Scotia Centre, Calgary, Alberta
CANMARC is acquiring the 50 percent equity interest in Scotia Centre in downtown Calgary, Alberta that the REIT does not already own, bringing the REIT's interest to 100 percent. CANMARC is the sole manager of the property. The purchase price is $140 million and is accretive to adjusted funds from operations. It is payable in cash at the closing of the acquisition, which is expected to occur later this month.
"The Calgary office market is an important one for us and our acquisition of the remaining 50 percent interest in this landmark property will enhance value and provide CANMARC with all the benefits of 100 percent ownership. This transaction not only increases our square footage in downtown Calgary office market, it solidifies our presence as a major landlord in one of Canada's fastest growing cities," said Mr. Beckerleg. "We continue to actively seek good opportunities there."
Prominently located in the heart of Calgary's financial and retail district, Scotia Centre is a 42-storey class "A" office tower with a 3-storey retail concourse. The complex contains 630,431 square feet of gross leasable area ("GLA"), including 546,494 square feet of office space, 83,937 square feet of retail space and 84 tenant parking stalls. It is located directly across the street from Calgary's C-Train, a light rapid transit system.
The five largest tenants of Scotia Centre include Scotiabank, Gowlings, Shaw Cablesystems, NuVista Energy and Chinook Energy, who together occupy 63.2 percent of the building.
Woodside Square, Toronto
"CANMARC is very excited about the acquisition of Woodside Square in Toronto, our first retail acquisition in Canada's largest retail and office market," said Mr. Beckerleg. "The Woodside Square transaction aligns perfectly with our strategy of growing by accretive acquisitions and provides a strong base for building a management platform in the Ontario market. The addition of this high-quality asset to our portfolio meets our declared objective of expanding in Ontario to increase our national footprint."
The purchase price for the Toronto mall is $59.25 million for a 100 percent interest in the property. The acquisition is accretive to adjusted funds from operations and is expected to close before the end of January.
Woodside Square is an enclosed anchored community shopping centre comprised of 282,952 square feet of GLA on 24.46 acres. The property is anchored by strong brand name tenants, including Food Basics, Shoppers Drug Mart and an LCBO outlet; and includes major retailers and services such as three Canadian chartered banks branches, Le Chateau, Dollarama, a freestanding McDonald's on a restaurant pad and others. The property is primarily single-storey; however it has a fully leased mezzanine with 9,084 square feet of office space and a cinema. The weighted average lease term for major tenants is more than 7 years.
Woodside Square was constructed in three stages from 1977 through 1990 and has been maintained by the seller at a very high standard. It strategically occupies a full city block and is at the corner of two major Toronto arteries (Finch Avenue East and McCowan Road) where more than 50,000 vehicles pass by each day. Woodside Square is in close proximity to surrounding residential high rise buildings and mature single-family neighbourhoods. In addition, a secondary public school located immediately west of the property provides increased foot traffic in the mall.
Marché Jonquière
Marché Jonquière is a recently developed and renovated "Class A" grocery and drug store anchored neighbourhood strip centre. The 66,189 square foot mall is anchored by a freestanding IGA built in 2008, by a Jean Coutu pharmacy and a Desjardins credit union branch. The two other tenants located in the strip are a Couche-Tard convenience store and gas station and a brand-name restaurant. The original strip centre was fully renovated and upgraded by the vendor in 2009. The weighted average lease term is over 14 years.
The purchase price for the mall is $13.76 million for a 100 percent interest in the property. The acquisition is accretive to adjusted funds from operations and is expected to close before the end of January.
"We have maintained a steady pace of growth since our initial public offering in May 2010, with fourteen accretive acquisitions and a strong track record of organic growth," concluded Mr. Beckerleg. "We are managing an active pipeline of potential acquisitions and we remain focused on achieving our strategic growth plan for 2012 and beyond. Growing value and providing a stable stream of distributions for CANMARC unitholders remain our highest priorities."
The total purchase price of approximately $213 million for the three acquisitions will be satisfied in part by the assumption of approximately $37 million of existing mortgages. The balance of the purchase price will be funded by mortgages totalling $94 million and the use of cash on hand and existing and expanded credit facilities. CANMARC is still considering further acquisitions in its pipeline as part of its continued acquisition strategy.
About CANMARC Real Estate Investment Trust
CANMARC (www.canmarc.ca) is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Quebec. Managed internally, CANMARC owns a portfolio of Canadian income-producing commercial properties, consisting of retail and office properties with certain industrial properties. In total, CANMARC properties comprise approximately 8.8 million square feet of commercial gross leasable area and 464 multi-family residential units located in Quebec, Atlantic Canada, Western Canada and Ontario.
Forward-looking Statements
This news release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in the REIT's latest annual information form.
The REIT's objectives and forward-looking statements are based on certain assumptions, including that (i) the REIT will receive financing on favourable terms; (ii) the future level of indebtedness of the REIT and its future growth potential will remain consistent with the REIT's current expectations; (iii) there will be no changes to tax laws adversely affecting the REIT's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on the REIT's operations, including its financing capacity and asset value, will remain consistent with the REIT's current expectations; (v) the performance of the REIT's investments in Canada will proceed on a basis consistent with the REIT's current expectations; and (vi) capital markets will provide the REIT with readily available access to equity and/or debt.
The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. The REIT, except as required by applicable securities legislation, does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulatory authorities, including its latest annual information form, which are available on SEDAR at www.sedar.com.
| James W. Beckerleg President and Chief Executive Officer CANMARC Real Estate Investment Trust 514-931-2591 |
Mélanie Tardif NATIONAL Public Relations 514-843-2060 |
| Gordon G. Lawlor, CA Executive Vice President, Chief Financial Officer and Secretary CANMARC Real Estate Investment Trust 514-931-2591 |
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