True North Apartment REIT Announces Third Quarter 2012 Results

TORONTO, Nov. 8, 2012 /CNW/ - True North Apartment Real Estate Investment Trust (TSX: TN.UN) (the "REIT") today announced its financial and operating results for both the three months ended September 30, 2012 ("third quarter of 2012") and the period from January 12, 2012 to September 30, 2012.

THIRD QUARTER 2012 HIGHLIGHTS

• Completed off-market acquisitions of 127 buildings in Montreal, Quebec, and five buildings in London, Ontario, comprising a total of 1,748 suites, for a combined purchase price of $138.5 million
• Subsequent to quarter-end, completed the acquisition of 26 properties, comprising a total of 2,076 suites in Nova Scotia, New Brunswick, and Ontario for $139.0 million
• Achieved portfolio occupancy of 95.5% and Average Monthly Rents of $729 at September 30, 2012
• Implemented a distribution reinvestment plan allowing Unitholders the opportunity to acquire additional Units at a 3% discount to the weighted average closing price of the Units for the five trading days preceding the distribution date

"The third quarter was an eventful period for the REIT, and I am very pleased at the progress represented by each of these events," stated Leslie Veiner, the REIT's Chief Executive Officer. "Our three recently completed acquisitions significantly increased not only the size of our property portfolio, but also its geographic diversity. In total, the REIT now owns 3,953 suites across four provinces."

Operating Results

The REIT's operating results for the third quarter of 2012 include a full quarter's contribution from the first three properties acquired in June 2012, results for the Montreal, Québec properties from their acquisition on July 17, 2012, and results for the London, Ontario properties from their acquisition on August 31, 2012.

For properties owned as of September 30, 2012, Average Monthly Rents were $729 and portfolio occupancy was 95.5%.  Property revenues for the third quarter of 2012 were $3.3 million and Net Operating Income ("NOI") was $2.2 million.

Financial Position

The REIT's debt to Gross Book Value ("GBV") was 65.2% as of September 30, 2012.  The interest coverage ratio for the third quarter of 2012 was 3.16 times. Both these metrics fall within the REIT's stated targets. The weighted average interest rate on the REIT's mortgage portfolio was 2.85%, and the weighted average term to maturity was 3.3 years. As of September 30, 2012, approximately 55% of the REIT's mortgage portfolio was CMHC insured.  Following the closing of the acquisition of 26 properties on October 1, 2012 (see "Subsequent Event'), the debt to GBV decreased to 61% and the weighted average term to maturity increased to approximately 4.5 years.

On October 1, 2012, the REIT entered into a new credit agreement with a Canadian chartered bank to obtain a $15.0 million floating rate revolving credit facility in conjunction with the closing of the acquisition of the above-noted property portfolio.  The credit facility bears interest at Prime plus 125 basis points or Bankers' Acceptances plus 225 basis points, and is secured by a pool of both first and second mortgages. On October 1, 2012, these mortgages provided for a borrowing base of $10.3 million under the credit facility.

Summary of Third Quarter Transactions

On July 17, 2012, the REIT completed the acquisition of 127 buildings comprising 1,528 suites in Montreal, Québec. The purchase price for this acquisition was $121.0 million, which the REIT satisfied by a combination of approximately $37.0 million in cash and the assumption of $58.0 million in mortgage debt, and a $26.0 million vendor take-back mortgage. The assumed mortgages have an effective interest rate of 2.75% and an expected weighted average term to maturity of approximately three years.

On August 31, 2012, the REIT completed the acquisition of five buildings comprising 220 suites in London, Ontario. The purchase price for this acquisition was $17.5 million, which the REIT satisfied by a combination of $6.0 million in cash, $11.0 million of new mortgage debt, and a $0.5 million vendor take-back mortgage.

Subsequent Event

On October 1, 2012, the REIT completed the acquisition of 26 properties comprising 2,076 suites in Nova Scotia, New Brunswick, and Ontario. The REIT acquired these properties by acquiring control of Blue-Starlight LP, an entity which was controlled by Daniel Drimmer, a trustee of the REIT. The purchase price for this acquisition was $139.0 million, which the REIT satisfied by a combination of $52.1 million in cash, the assumption of approximately $58.6 million of mortgage debt,  $12.4 million of new mortgage debt, $0.9 million vendor take-back mortgage, and the issuance of 3,512,878 Class B units of Blue-Starlight LP. These Class B units are both economically equivalent to and exchangeable for Units of the REIT on a one for one basis, and are accompanied by special voting units that provide their holder with equivalent voting rights to holders of Units of the REIT.

For complete details of the REIT's financial and operating results, please refer to Management's Discussion & Analysis for the third quarter of 2012 which is available at www.sedar.com.

About the REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. Additional information concerning the REIT may be obtained from the management information circular dated May 4, 2012 of Wand Capital Corporation and is available at www.sedar.com.

The REIT focuses on a long-term strategy to generate stable cash distributions on a tax-efficient basis for unitholders. The REIT intends to actively look for opportunities to expand its asset base and increase its distributable cash flow through acquisitions of additional multi-suite residential rental properties across Canada, the United States and other jurisdictions where opportunities may arise.

Forward-looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives. Statements regarding future results, performance, achievements, prospects or opportunities for the REIT or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the anticipated future growth of the REIT in 2012 and 2013.

Although the forward-looking statements contained in this press release are based upon assumptions that management of the REIT believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the REIT's control, which may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

The forward-looking statements made in this press release relate only to events or information as of the date hereof. Except as required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

The TSXV has neither approved nor disapproved the contents of this press release.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: True North Apartment Real Estate Investment Trust

Leslie Veiner 
Chief Executive Officer 
[phone]

or

Martin Liddell 
Chief Financial Officer 
[phone]