Avenir Diversified Income Trust

Avenir Diversified Income Trust

October 26, 2006 16:54 ET

Avenir Diversified Income Trust Acquires Real Estate and Oil and Gas Assets and Provides Operational Update

CALGARY, ALBERTA--(CCNMatthews - Oct. 26, 2006) -

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States.

Avenir Diversified Income Trust (the "Trust") (TSX:AVF.UN) is pleased to announce acquisitions in both its real estate and oil and gas business units, as well as provide an operational update in its financial services business unit.

Real Estate:

The Trust has completed the purchase of two portfolios consisting of 26 buildings and 186,740 leasable square feet. The aggregate purchase price of the two portfolios totals approximately $29.2 million with mortgaging financing of $18.4 million provided by two financial institutions with the balance of the funds provided through existing facilities. These transactions provide a levered annual return of approximately 12% to the Trust based on an annual cash flow stream of approximately $1.3 million in the initial five year terms.

The first portfolio contains eleven (11) Kentucky Fried Chicken ("KFC") franchise locations situated in North Central Alberta and British Columbia ("BC") and the second portfolio consists of fifteen (15) Landmark Theatre locations throughout Western Canada, primarily in Alberta and BC. The purchase represents a long-term, stable cash flow for the Trust as the KFC leases are 10 year terms (leases are also cross-collateralized across locations) and the Landmark Theatre leases are for 20 year terms (also cross-collateralized across locations). The Trust has a further option on three additional locations currently under development within the portfolios.

Avenir will continue to focus on unique opportunities with respect to real estate acquisition strategies offering stable cash flow. The Trust portfolio now consists of 31 separate properties with a total area of approximately 625,000 square feet located primarily throughout Western Canada.

Oil and Gas:

The Trust is also pleased to announce the acquisition of oil and gas assets in its East Central and Southern Alberta core areas. The two acquisitions, which total approximately $11.4 million, including fees and normal industry adjustments, consist of both working interest and overriding royalty production. The working interest production consists of 250 BOE per day (approximately 432 Mboe total proved reserves and 527 Mboe of proved plus probable reserves) and the royalty production consists of 25 BOE per day (60 Mboe total proved reserves and 69 Mboe proved plus probable reserves).

On a reserve BOE basis the combined acquisition cost, less land value of $545,000, is $22.13 per BOE (total proved) and $18.27 per BOE (proved plus probable). On a cash flow and production basis, the transaction represents approximately 4.0 times annualized cash flow and $39,593 per producing BOE. Combined, the 275 BOE per day consists of approximately 27% oil and 73% natural gas, and brings the Trust's current production to approximately 3,625 BOE per day.

The oil and gas transaction was funded through available credit facilities.

Financial Services:

Enervest Limited Partnership advises that Enervest Diversified Income Trust has completed a $260 million exchange offering, its largest to date. The Trust, through EnerVest Limited Partnership receives a management fee from the Enervest Group of funds based on assets under management. With this recent exchange offering, the total assets under management for the Enervest Group of Funds is over $2.2 billion. The Trust has agreed to pay for the fees associated with this exchange offering. The offering is immediately accretive to the Trust's net asset value.

Q3 2006 Results

The Trust expects to release third quarter 2006 financial results on Tuesday November 14, 2006.

The Trust is a diversified royalty and business trust which combines the cashflow streams from the three business segments of Energy, Financial Services and Real Estate with a target payout ratio of 75% to 80% in order to provide sustainable distributions. Currently the Trust's cash flow split is approximately 40% Energy and 60% Financial Services and Real Estate.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Forward Looking Statements

Certain information regarding Avenir Diversified Income Trust set forth in this document, including management's assessment of the Trust's future plans and operations contains forward looking statements that involve substantial known and unknown risks and uncertainties. These forward looking statements are subject to numerous risks and uncertainties, some of which are beyond the Trust's and management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, imperfection of reserve estimates, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The Trust's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward looking statements and accordingly, no assurance can be given that any of the events anticipated to occur or transpire from the forward looking statements will provide what, if any benefits to the Trust.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Avenir Diversified Income Trust
    William Gallacher
    President & CEO
    (403) 237-9949
    (403) 237-0903 (FAX)
    Avenir Diversified Income Trust
    Gary Dundas
    Vice President & CFO
    (403) 237-9949
    (403) 237-0903 (FAX)
    Avenir Diversified Income Trust
    Suite 300, 808 - 1st Street S.W.
    Calgary, Alberta T2P 1M9