Agellan Commercial Real Estate Investment Trust
TSX : ACR.UN

September 30, 2013 16:20 ET

Agellan Commercial Real Estate Investment Trust Announces C$30 Million Equity Offering and US$45 Million Houston Acquisition

TORONTO, ONTARIO--(Marketwired - Sept. 30, 2013) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Agellan Commercial Real Estate Investment Trust (TSX:ACR.UN) (the "REIT") announced today that is has entered into an agreement to acquire two office properties municipally known as Beltway 8 Corporate Centre III & IV (the "Acquisition Properties") in Houston, Texas. The Acquisition Properties, located in the Houston Techway and Energy corridor, comprise approximately 260,000 square feet of gross leasable area and will be acquired for approximately US$45 million, representing a going-in capitalization rate of 8.2%. The Acquisition Properties, which are part of a larger corporate office park, were built in 2006 and 2007 are 100% occupied by six investment grade tenants with a weighted average remaining lease term of approximately five years.

Acquisition Highlights

  • The REIT continues to execute its growth plan by acquiring well-located, high-quality properties in major U.S. markets experiencing significant growth.
  • The Acquisition Properties are adjacent to the REIT's most recent acquisition, Beltway II, and in a strategically clustered portfolio providing economies of scale in key Houston submarkets.
  • The REIT has negotiated an interest only 5-year term mortgage of approximately US$25 million with an annual interest rate of approximately 3.5%.
  • The Acquisition Properties, which are fully leased to six investment grade tenants, have an attractive lease maturity profile with near-term expiring rents currently below market.
  • The Acquisition is expected to be immediately accretive to the REIT's Adjusted Funds From Operations ("AFFO") per unit.

Frank Camenzuli, the REIT's Chief Executive Officer, commented, "This is our second acquisition in the Houston Beltway Corridor. The acquisition is consistent with our previously stated growth strategy of acquiring high-quality assets located in strategic clusters in growing markets at attractive relative valuations. The REIT continues to see similar investment opportunities in targeted U.S. markets."

Equity Offering

In connection with the Acquisition, the REIT announced that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets (the "Underwriters"), on a bought deal basis, 3,450,000 units (the "Units") at a price of $8.70 per Unit (the "Offering Price") for gross proceeds to the REIT of $30,015,000 (the "Offering"). The REIT has also granted the underwriters an over-allotment option to purchase up to an additional 345,000 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering. The Offering is expected to close on or about October 9, 2013 and is subject to regulatory approval, including the approval of the Toronto Stock Exchange.

The REIT intends to use the net proceeds from the Offering primarily for the funding of a portion of the purchase price in respect of the Acquisition Properties, to repay indebtedness and for general business purposes. In the event that the Offering is completed and the REIT is subsequently unable to complete one or both of the Acquisitions, the REIT would use the net proceeds of the Offering to fund future acquisitions, to repay indebtedness and for general business purposes.

The Acquisition is subject to certain closing conditions typical for transactions of this type. The Acquisition is scheduled to close on or about October 30, 2013. The Offering is not conditional upon the closing of the Acquisition. There can be no assurance that all conditions to closing of the Acquisition will be satisfied or waived.

The Units will be offered in Canada by way of a prospectus supplement to the REIT's short form base shelf prospectus dated August 6, 2013, which will be filed in each of the provinces and territories of Canada.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Monthly Cash Distribution

The REIT is currently making and intends to make monthly distributions of $0.06458 per unit. The first cash distribution to which purchasers of Units under the Offering would be eligible to participate in will be the distribution payable on November 15, 2013 to unitholders of record as at October 31, 2013.

About Agellan Commercial Real Estate Investment Trust

The REIT is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario.

The REIT owns and operates a portfolio of industrial, office and retail properties in growing markets in the United States and Canada. The REIT's current portfolio comprises approximately 4.3 million square feet of gross leasable area across 24 properties. The properties are primarily located in Texas, Ontario and the U.S. Midwest. The REIT's portfolio is well diversified by geographic location, asset class and tenant mix.

Forward-Looking Statements

This press release contains forward-looking information within the meaning of applicable securities legislation, 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, 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.

"AFFO" 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. AFFO is a supplemental measure of an issuer's performance and management believes that AFFO is useful in the assessment of the REIT's operating performance for valuation purposes, and is also a relevant measure of the ability of the REIT to earn and declare distributions to unitholders. AFFO, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to AFFO reported by such organizations. AFFO should not be construed as an alternative to comprehensive income determined in accordance with IFRS as indicators of the REIT's performance. For additional information regarding this non-IFRS measure, including the definition thereof, please refer to the REIT's most recent management's discussion and analysis of results of operations and financial condition, a copy of which is available at www.sedar.com.

Contact Information

  • Agellan Commercial Real Estate Investment Trust
    Derek Dermott
    President
    (416) 593-6800 x269
    (416) 593-6700 (FAX)

    Agellan Commercial Real Estate Investment Trust
    Frank Camenzuli
    CEO
    (416) 593-6800 x226
    (416) 593-6700 (FAX)