NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES
Toronto, ON (February 21, 2013) – True North Apartment Real Estate Investment Trust (the “REIT”) (TSXV: TN.UN) is pleased to announce that it intends to acquire (the “Acquisition”) four multi-family properties (the “Properties”) in Ontario for an aggregate purchase price of $25.7 million (inclusive of an installment note to be provided at closing). The Properties consist of four mid-rise buildings and a townhouse complex, and are located in Kitchener, Guelph and Brantford.
The Properties were originally constructed between 1968 and 1972, and comprise a total of 265 suites, the majority of which are two bedroom units. These suites are currently 97% occupied at an average in-place rent of $833 per suite. In keeping with the REIT’s stated strategy, the Properties are well maintained, and near-term capital expenditures are expected to be minimal. The transaction further demonstrates the benefits of the REIT’s relationship with Starlight Investments Ltd. (“Starlight”) through their ability to source attractive off-market acquisition opportunities for the REIT.
The purchase price of $25.7 million implies a capitalization rate of approximately 5.7% or $96,900/unit. The purchase price will be financed through a combination of cash and the assumption of $12.7 million in existing mortgage debt, representing a transaction debt-to-gross-book-value of 49.4%. On closing of the Acquisition, the assumed mortgage debt is expected to have an effective weighted average term to maturity of 7.8 years and an effective 2.5% interest rate after giving effect to an installment note to be provided in connection with the Acquisition. The impact on the REIT’s overall capital structure is expected to be minimal. Completion of the Acquisition is expected to occur on or about February 28, 2013.
“The REIT is very pleased to be able to further strengthen both our overall property portfolio, as well as our position in Kitchener and Guelph, two communities where we have witnessed strong performance to date,” stated Leslie Veiner, the REIT’s Chief Executive Officer. “While the transaction is immediately accretive, we look forward to increasing its value by pursuing opportunities for further organic growth.”
Acquired Properties Summary
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are provided for the purposes of assisting the reader in understanding the REIT’s financial position and results of operations as at and for the periods ended on certain dates and to present information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to the REIT’s future outlook and anticipated events or other financial or operating results, including completion of the Acquisition and may include statements regarding the financial position, business strategy, budgets, litigation, the implied capitalization rate of a particular acquisition, projected costs, anticipated capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. Particularly, 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”, “seek”, “aim”, “estimate”, “target”, “project”, “predict”, “forecast”, “potential”, “continue”, “likely”, “schedule”, or the negative thereof or other similar expressions concerning matters that are not historical facts.
Forward-looking statements necessarily involve known and unknown risks and uncertainties, that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the REIT’s control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the risks discussed in the REIT’s materials filed with Canadian securities regulatory authorities from time to time on www.sedar.com. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance that actual results will be consistent with such forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian economy will remain stable over the next 12 months; inflation will remain relatively low; interest rates will remain stable; conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate; the Canadian capital markets will continue to provide the REIT with access to equity and/or debt at reasonable rates when required; Starlight will continue its involvement as asset manager of the REIT in accordance with its current asset management agreement; and the risks identified or referenced above, collectively, will not have a material impact on the REIT. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.
The forward-looking statements made in this press release are dated, and relate only to events or information, as of the date of this press release. Except as specifically required by 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.
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario.
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. Additional information concerning the REIT is available at www.sedar.com.
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.
For further information, please contact:
Chief Executive Officer
Chief Financial Officer