Milestone Apartments REIT Announces US$50.7 Million Property Acquisition

−Entry Into Orlando Market Further Diversifies REIT Portfolio−

TORONTO, ON and DALLAS, TX, June 25, 2014 /CNW/ - Milestone Apartments REIT (TSX: MST.UN) ("Milestone" or the "REIT") today announced the closing of the REIT's purchase of Osprey Links at Hunter's Creek (the "Property" or "Osprey Links"), a 424-unit, Class A multifamily apartment community located in south Orlando, Florida, for a purchase price of US$50.7 million. The purchase price represents an estimated initial capitalization rate of 6.94% and the transaction is expected to be immediately accretive to the REIT. This acquisition expands the REIT's market presence in Florida and further diversifies the REIT's portfolio. Prior to the REIT's purchase, the Property was owned by a joint venture, of which a minority interest was owned by an affiliate of The Milestone Group, LLC.

"Osprey Links is part of our proprietary pipeline of multifamily apartment communities that are held in finite-life partnerships and managed by The Milestone Group, which allows for a seamless transition into the REIT portfolio. This off-market transaction further demonstrates the value creation potential of Milestone's pipeline and our commitment to the accretive growth of the REIT," said Robert Landin, CEO of the REIT. "Our entry into the attractive south Orlando market, which is the largest employment market in metropolitan Orlando, adds to our existing market presence in Florida, and further diversifies our overall portfolio within our target markets."

The Property

Osprey Links was built in 1996, features extensive amenities, consistent with the REIT's established portfolio, and is currently 96.0% occupied. The average monthly in-place rent at Osprey Links is $1,063 per unit. The Property is situated on 29 acres within the 4,000-acre master planned development of Hunter's Creek in south Orlando, Florida. Residents at Osprey Links enjoy many benefits from the Hunter's Creek community, including "A" rated public elementary, middle and high schools, close proximity to a wide variety of dining, shopping and entertainment venues, and exclusive access to an abundance of parks and recreational amenities, such as the Hunter's Creek Golf Course, which is adjacent to the Property. Hunter's Creek has convenient access to three of the area's major highways and thoroughfares and some of the city's largest employers, including Walt Disney World, Orlando International Airport, the Osceola County / City of Kissimmee Government Center, and Lake Nona's Medical City, all located within a 10 to 15 minute drive from the Property.

Acquisition Funding and Closing

As part of the purchase consideration, the REIT is assuming approximately US$26.1 million in debt at a fixed rate of 4.57% maturing on January 1, 2018. The remaining US$24.6 million of the purchase price was funded using proceeds from the REIT's recent equity bought deal financing and from the refinancing of its US$228.6 million mortgage debt facility, both completed in April 2014.

A portion of the purchase price was paid to an affiliate of The Milestone Group, and as such the acquisition constituted a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Accordingly, the acquisition was reviewed and considered by the independent members of the REIT's investment committee. The chair of the REIT's investment committee, with the assistance of third party advisors, took a lead role in respect of the examination, review and negotiation of the acquisition and related documentation on behalf of the REIT. The acquisition was not subject to the formal valuation and minority approval requirements of MI 61-101 as the fair market value of the transaction was not more than 25% of the REIT's market capitalization.

Update on Harbor Creek Financing

As part of the purchase consideration for the Harbor Creek acquisition previously announced on May 1, 2014, the REIT completed the financing of Harbor Creek by securing a new 7-year interest only fixed-term mortgage of US$15.7 million at an interest rate of 3.39%, which compares favorably to the previously estimated interest rate of 3.55%.

About Milestone Apartments REIT

Milestone Apartments REIT is an unincorporated, open-ended real estate investment trust that is governed under the laws of Ontario. The REIT's portfolio consists of 56 multifamily garden-style residential properties, comprising 18,388 units that are located in 12 major metropolitan markets throughout the Southeast and Southwest United States. Milestone Apartments REIT is the largest REIT listed on the TSX focused solely on the U.S. multifamily sector. The REIT operates its portfolio through its internal property management company, Milestone Management, with more than 900 employees across the U.S. Based in Dallas, TX, TMG Partners, L.P., an affiliate of The Milestone Group, is the external asset manager of the REIT. For more information, please visit www.milestonereit.com.

About The Milestone Group

The Milestone Group is a privately-held real estate investment management company with expertise and presence in major metropolitan markets throughout the United States. The firm has corporate offices in Dallas, TX and New York, NY with regional acquisition and management offices across the United States.  Founded in 2004, The Milestone Group has a strong track record of investing in the U.S. multifamily sector, including completion of more than US$4.5 billion in multifamily transactions.  For more information, please visit www.milestonegp.com. 

Forward-looking information and Non-IFRS Measures

This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to business of the REIT and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on the REIT's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the initial capitalization rate of the acquisition and the effect of the acquisition on the financial performance of the REIT (including the degree to which the acquisition will be accretive). They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. These risks and uncertainties are discussed in the REIT's Annual Information Form dated March 19, 2014, available at www.sedar.com and include, without limitation, risks relating to general and local economic and business conditions, leasing risks (including the financial condition of tenants and risks associated with the ability to lease vacant space), financing risks and interest and currency rate fluctuations. The forward-looking statements in this news release are based on certain assumptions, including that the economy remains stable, rental rates at Osprey Links will continue to grow, interest rates remain stable, and the REIT continues to have access to capital. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The REIT undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances.

"Initial capitalization rate" is not a measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. Initial capitalization rate is presented in this news release because management of the REIT believes that this measure is relevant in interpreting the purchase price of the Property being acquired. Capitalization rate, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to capitalization rate reported by such organizations.

SOURCE: Milestone Apartments REIT

Robert Debs, Investor Relations
Milestone Apartments REIT 
Tel: [phone]

Bruce Wigle
BMIR, Investor Relations
Tel: [phone], x 232