Dundee REIT
TSX : D.UN

Dundee REIT

June 17, 2010 09:29 ET

Dundee REIT Completes Over-Allotment Option and Updates on Acquisition Strategy

TORONTO, ONTARIO--(Marketwire - June 17, 2010) -

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

DUNDEE REIT (TSX:D.UN) announced today the closing of the issuance of an additional 615,000 REIT Units, Series A ("Units") at a price of $24.40 per Unit for gross proceeds of $15,006,000. The issuance was pursuant to the exercise by the underwriters of their over-allotment option with respect to Dundee REIT's recently completed offering of 4,100,000 Units on June 2, 2010. The exercise of the over-allotment option increases the total gross proceeds of the offering to $115,046,000.

The net proceeds of the offering will be used for funding acquisitions which have been identified, as well as for future acquisitions and general trust purposes.

The Trust also provided an update on its acquisition strategy. Since Dundee REIT commenced its acquisition program in September 2009, it has completed approximately $539.5 million in acquisitions, adding over 2.5 million square feet of mainly office properties to its portfolio. In addition, the REIT has another $190.9 million of properties under contract and in its acquisition pipeline.

The acquisition program reflects Dundee REIT's strategy to grow its portfolio with high quality assets and to once again achieve greater geographic diversification of its assets across Canada. The acquired properties are a great fit with the REIT's existing portfolio and effectively re-establish a presence in familiar markets. The following table provides an overview of these acquisitions:

Location Property
Type
Approx. GLA (sq. ft.) Purchase
Price
($millions)
Closing
Date
Cap Rate
720 Bay Street, Toronto (remaining 50% interest) Office 123,872 $ 25.9 September 1, 2009  
1125-1145 Innovation Drive, Ottawa Office 118,653 16.7 December 16, 2009  
6655-6725 Airport Road, Mississauga Office 329,728 50.6 December 18, 2009  
2645 Skymark Avenue, Mississauga Office 142,487 14.9 December 30, 2009  
Gateway Office Park, Ottawa Office 120,600 14.7 December 30, 2009  
Adelaide Place, Toronto Office 654,249 217.4 January 18, 2010  
Aviva Corporate Centre, Toronto Office 436,704 45.9 February 10, 2010  
10130 – 103rd Street, Edmonton Office 261,581 90.9 April 16, 2010  
2340 St. Laurent Blvd., Ottawa Industrial 114,724 11.1 April, 21, 2010  
Financial Building, Regina Office 65,764 14.0 May 4, 2010  
30 Eglinton Avenue West, Mississauga Office 164,926 37.4 May 31, 2010  
Total Closed   2,533,288 $ 539.5   8.0%
60 Columbia Way and 625 Cochrane Dr., Markham Office 317,419 60.8 Q2 2010  
Acquisition pipeline (Toronto & Montreal) Office/
industrial
1,539,641 130.1 Q3 2010  
Total Firm and Pipeline   1,857,060 $ 190.9   8.9%
TOTAL CLOSED, UNDER CONTRACT & PIPELINE   4,390,348 $ 730.4   8.2%

The properties acquired since September 2009 had, upon closing, an average occupancy rate of 97%, an average remaining lease term of more than 5 years and an average in-place net rent of $14.98 per square foot, significantly below the market rent of $16.83. Upon completion of the acquisitions detailed above, the proportion of net operating income derived from the Calgary office portfolio will shrink to approximately 34%, down from 54% at Q3 2009. The properties all have strong tenant profiles with three of the new tenants, Aviva, Winners Merchants International and Enbridge Pipelines, now listed amongst the REIT's top ten tenants based on their contribution to gross revenue.

"These acquisitions demonstrate our commitment to diversify and grow our portfolio, and to bring additional value to our business," said Michael Cooper, CEO of Dundee REIT. "When we completed the acquisition of Adelaide Place in January, I indicated our expectation to acquire another $400 million of properties this year. Mid-way through the year, we are just shy of achieving that goal. I'm really excited about what we've accomplished so far. We have a track record for growth and we look forward to expanding our portfolio further in the second half of 2010," said Mr. Cooper.

While expanding its asset base, Dundee has been able to strengthen its balance sheet by lowering its debt-to-gross book value from 59.3% at year-end to 54.7% in the first quarter and build up a pool of unencumbered assets representing an estimated market value of approximately $200 million. Dundee REIT has completed three equity offerings this year, pursuant to which it has issued 14.8 million units for approximately $333.7 million. In addition, the trading price of Dundee's units has increased nearly 19%, from $20.75 at year-end to $24.77 as of yesterday's close, giving Dundee REIT a total market capitalization of approximately $983 million. Effective March 22, 2010, Dundee REIT was added to the S&P/TSX Composite Index.

This press release is not an offer of securities for sale in the United States. The units being offered have not been and will not be registered under the United States Securities Act of 1933 and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of that Act.

Dundee REIT is an unincorporated, open-ended real estate investment trust and provides high quality, affordable business premises. It is focused on owning, acquiring, leasing and managing mid-sized urban and suburban office and industrial properties in Canada. Dundee REIT's portfolio currently consists of approximately 9.1 million square feet of gross leasable area, located across Canada. Dundee REIT's portfolio is well diversified by geographic location and tenant mix. For more information, please visit www.dundeereit.com.

Contact Information

  • DUNDEE REAL ESTATE INVESTMENT TRUST
    Michael J. Cooper
    Vice Chairman and Chief Executive Officer
    (416) 365-5145
    mcooper@dundeereit.com
    or
    DUNDEE REAL ESTATE INVESTMENT TRUST
    J. Michael Knowlton
    President and Chief Operating Officer
    (416) 365-2325
    mknowlton@dundeereit.com
    or
    DUNDEE REAL ESTATE INVESTMENT TRUST
    Mario Barrafato
    Senior Vice-President and Chief Financial Officer
    (416) 365-4132
    mbarrafato@dundeereit.com