Choice Properties Real Estate Investment Trust Completes Acquisition of Warehouse Property and Provides Update on Recent Property Transactions

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TORONTO, Feb. 2, 2015 /CNW/ - Choice Properties Real Estate Investment Trust ("Choice Properties" or the "Trust") (TSX: CHP.UN) provided today an update on recent property transactions, including the closing of the previously announced acquisition of a warehouse property in Pickering, Ontario.

"We enter 2015 with positive momentum toward expanding our footprint and building our development pipeline," said John Morrison, President and Chief Executive Officer, Choice Properties.  "These transactions demonstrate Choice Properties' ability to leverage and build strategic relationships to drive growth and deliver results."

Acquisition of 1400 Church St., Pickering, Ontario
On January 30, 2015, Choice Properties completed the previously announced acquisition of a 921,000 square foot warehouse in Pickering, Ontario from Loblaw Companies Limited ("Loblaw").  The total purchase price for the property was approximately $81.2 million, excluding transaction costs.  The acquisition was immediately accretive with a stabilized Net Operating Income ("NOI") of $5.3 million, representing a capitalization rate of 6.50%. This acquisition was funded entirely with cash.  The modern ambient temperature warehouse, which was constructed in 2005 and expanded in 2012, is well-located east of Toronto with access to major transportation routes.  The warehouse is fully occupied by Loblaw as the single tenant with a 20-year initial lease term and six five-year renewal options.

Expansion of development pipeline through Strategic Partnerships with PenEquity Realty Corporation in Brampton, Ontario; Barrie, Ontario; and Kanata, Ontario
Choice Properties has expanded its growth pipeline with the formation of strategic partnerships with PenEquity Realty Corporation ("PenEquity") for the development of three separate sites in Ontario.

Brampton, Ontario
As previously announced, on November 7, 2014, Choice Properties acquired a 70% interest in a joint venture limited partnership with a subsidiary of PenEquity for approximately $18.0 million in cash, before transaction costs. The limited partnership holds 21 acres of land in an emerging sector of Brampton, Ontario.  Pursuant to the lease agreement with Loblaw, the limited partnership expects to commence the development of a Loblaw-bannered grocery anchored retail centre of approximately 200,000 square feet upon satisfaction of certain conditions.  PenEquity will act as development manager and provide various services including, planning/development approvals, leasing, and construction management.  Upon completion of the retail centre in Brampton, Choice Properties has the option to acquire the remaining interest in the property.

Barrie, Ontario
On January 9, 2015, Choice Properties acquired a 16-acre parcel of land in Barrie, Ontario from Loblaw for approximately $11.5 million, before transaction costs. The acquisition was funded through the issuance of 265,665 Exchangeable Units, which have a value of approximately $2.8 million and the balance in cash. Choice Properties intends to develop the property in conjunction with an adjacent 21-acre parcel of land owned by PenEquity (the "PenEquity Parcel") to construct an integrated retail centre spanning a total of 37 acres. The combined site is well-located with easy access to Highway 400, at a major intersection (Duckworth Street and Cundles Road) in north Barrie. Choice Properties has provided mezzanine and bridge financing to PenEquity in the form of a two-year mortgage of $22.5 million with an option to extend, under certain conditions, for an additional year and a 6-month loan of $0.5 million, respectively. The total retail offering is expected to span approximately 350,000 square feet, of which Choice Properties will develop approximately 150,000 square feet, including a Loblaw-bannered grocery store of approximately 60,000 square feet.  Pursuant to negotiated lease terms, Choice Properties expects to start construction of the grocery store in mid-2015 that involves the relocation and expansion of an existing Loblaw bannered grocery store on a nearby Choice Properties site, for which marketing and leasing activity is currently underway.  Upon 85% occupancy of the retail plaza, Choice Properties has the option to acquire the PenEquity Parcel. 

Kanata, Ontario
On January 30, 2015, Choice Properties entered into a co-ownership agreement with PenEquity and another partner to acquire a 9-acre parcel of land in Kanata, Ontario.  The purchase price for the property was approximately $4.0 million with Choice Properties' proportionate share being 50% or approximately $2.0 million.  Choice Properties will fund its partners' collective 50% interest through a 5-year mezzanine loan. This joint venture provides Choice Properties the opportunity to benefit from an existing and maturing purchase option held by PenEquity and its partner to acquire this desirable parcel of land situated in a developing community in the Fernbank area of Kanata. This is a longer-term project with construction of a grocery anchored retail development expected to commence in the second half of 2017. 

About Choice Properties Real Estate Investment Trust
Choice Properties Real Estate Investment Trust is an owner, manager and developer of well-located retail and commercial real estate across Canada. Choice Properties' portfolio spans approximately 38.9 million square feet of gross leasable area and consists of 474 properties primarily focused on supermarket-anchored shopping centres and stand-alone supermarkets. Choice Properties' strategy is to create value by enhancing and optimizing its portfolio through development, accretive acquisitions and active property management. Choice Properties' principal tenant and largest Unitholder is Loblaw Companies Limited, Canada's largest retailer. Choice Properties' strong alliance with Loblaw positions it well for future growth. For more information, visit Choice Properties' website at www.choicereit.ca and Choice Properties' issuer profile at www.sedar.com.

About PenEquity Realty Corporation
PenEquity Realty Corporation is a privately owned full service real estate investment advisor focused on Ontario based retail development and asset/property management. PenEquity's portfolio of properties currently under development spans over 2 million square feet with another 1.6 million square feet of third party properties under management.  The portfolio ranges from grocery anchored neighbourhood developments, to large scale entertainment and lifestyle centres, to regional retail commercial nodes. Since 1984, PenEquity has sourced out new opportunities and redefined the Canadian retail landscape by anticipating future market trends and making them a reality in today's marketplace.  For more information, please visit www.penequity.com

Forward–Looking Statements
This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects Choice Properties' current expectations regarding future events, including the timing of development activities. 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 Choice Properties' 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 in the "Enterprise Risks and Risk Management" section of the MD&A in the Trust's 2013 Annual Report, as well as the "Risk Factor" section in the Trust's 2013 Annual Information Form.  Choice Properties does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

NOI is not a measure recognized under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and does not have any standardized meaning prescribed by IFRS. NOI is a supplemental measure of an issuer's performance and management believes that NOI is useful in the assessment of the Trust's operating performance for valuation purposes, and is also a relevant measure of the ability of the Trust to earn and declare distributions to Unitholders. NOI, as computed by the Trust, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to NOI reported by such organizations. NOI should not be construed as an alternative to comprehensive income determined in accordance with IFRS as indicators of the Trust's performance. For additional information regarding this non-IFRS measure, including the definition thereof, please refer to the Trust's most recent management discussion and analysis of results of operations and financial condition, a copy of which is available at www.sedar.com.

SOURCE Choice Properties Real Estate Investment Trust

Kim Lee, Vice President, Investor Relations and Planning & Analysis, Choice Properties Real Estate Investment Trust, t [phone], e [email protected]