FAM Real Estate Investment Trust Announces acquisition of 1700 Ellice Ave and Disposition of Humboldt Mall

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TORONTO, Dec. 23, 2013 /CNW/ - FAM Real Estate Investment Trust (TSX: F.UN) (TSX: F.WT) ("FAM REIT" or the "REIT") has acquired a 30,268 square foot office building in Winnipeg, MB for $4.0 million, before closing costs from Huntingdon Capital Corp (HNT:TSX, HNT.DB:  TSX and HNT.WT:TSX) ("Huntingdon"). FAM REIT also announces that it has entered into a firm contract with a third party to dispose of Humboldt Mall, a 106,108 square foot retail property, in Humboldt, SK for $1.85 million, before closing costs.

Shant Poladian, Chief Executive Officer of FAM REIT, stated, "Throughout 2013, we undertook multiple initiatives to position FAM REIT for long-term cyclical durability. We expanded our primary market presence through several high quality acquisitions, reduced leverage, enhanced liquidity and lengthened the term to maturity of our mortgage debt. While today's announced transactions are small, they will increase our overall liquidity from approximately $12 million to $17 million, and reduce our leverage ratio by 100 bps to approximately 52.5%. In an environment of anticipated rising long-term interest rates and capital markets uncertainty for REITs, we believe FAM REIT is on sound footing."

Acquisition of 1700 Ellice Avenue, Winnipeg, MB
On December 12, 2013, FAM REIT's Independent Trustees unanimously approved the acquisition of a 30,268 sf multi-tenant office property located at 1700 Ellice Avenue, Winnipeg, MB, from Huntingdon for $4.0 million, before closing adjustments.  Closing was December 20, 2013.

The multi-tenant property is 100% leased with a weighted average remaining lease term of 3.7 years.  The $4.0 million purchase price represents a going-in capitalization rate of 8.4%, after taking into account a normalized 7.5% vacancy allowance.

The purchase price was settled through the issuance of 466,094 Class B LP units, at a price of $8.58 per unit, representing the 20 day volume weighted average price for FAM REIT units as of market close on December 11, 2013.  The Class B LP units are economically equivalent to, and exchangeable on a one for one basis for, FAM REIT trust units.

1700 Ellice Avenue is a natural tuck-in acquisition for FAM REIT, as it completes the integration of Century Business Park, which includes 1680 Ellice Avenue, and 585 Century Street, both of which are currently owned by FAM REIT. The property is well-located in the St. James node, within close proximity to the Trans-Canada Highway and Winnipeg's James Armstrong Richardson International Airport.

FAM REIT has also obtained lender approval to add 1700 Ellice Avenue and 585 Century Street as first charge collateral to its revolving credit facility. Adding these properties to the collateral pool will result in an increase to the revolver's borrowing capacity to $17 million.

The acquisition of 1700 Ellice Avenue constitutes a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101″). The transaction is exempt from the formal valuation and minority approval requirements of MI 61-101 pursuant to the exemptions found in sections 5.5(a) and 5.7(1)(a) of MI 61-101 on the basis that the fair market value of the total amount of the acquisition does not exceed 25% of FAM REIT's market capitalization.

Disposition of Humboldt Mall, Humboldt, SK
On December 10, 2013, a third-party purchaser waived conditions on the purchase of Humboldt Mall, a 106,108 square foot retail property, located at 1919A 8th Avenue in Humboldt, Saskatchewan. The transaction is expected to close on December 30, 2013.

The sale price for Humboldt Mall is $1.85 million, before closing costs and approximates FAM REIT's purchase price at the time of its December 2012 initial public offering. The transaction will be fully satisfied on a cash basis.

As of September 30, 2013, occupancy of Humboldt Mall was 82.9%.  The disposition is consistent with FAM REIT's strategy of owning a diversified commercial property portfolio primarily across Canada's large population centres.

About FAM Real Estate Investment Trust

The REIT is a diversified commercial real estate investment trust focused on owning and acquiring strategically well-located office, industrial and retail real estate located primarily across Canada's large population centres.

Forward-Looking Information:

This press release contains forward-looking information within the meaning of applicable securities legislation, including statements regarding the REIT's financial position, which reflects the REIT's current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, including capital market and interest rate volatility, 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. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE: FAM Real Estate Investment Trust

Shant Poladian, Chief Executive Officer
FAM Real Estate Investment Trust
Telephone: [phone]
Email: [email protected]