InStorage Real Estate Investment Trust
TSX VENTURE : IS.UN

InStorage Real Estate Investment Trust

December 11, 2006 07:51 ET

InStorage REIT Announces $35.5 Million of Self-Storage Investments and a $25 Million Bought Deal Private Placement Financing

TORONTO, ONTARIO--(Marketwire - Dec. 11, 2006) -

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

Attention Business Editors:

InStorage Real Estate Investment Trust (the "REIT") (TSX VENTURE:IS.UN) announced today that, together with InScotia Developments LP ("InScotia"), it has agreed to make investments in a portfolio of 10 high quality self-storage properties (the "Properties") located in Western Canada. The REIT will purchase three of the Properties that are operating on a stabilized basis (the "Stabilized Properties") for an aggregate purchase price of approximately $21.7 million. Two of the Stabilized Properties are located in Calgary, Alberta, and the third in Okotoks, Alberta. Collectively the Stabilized Properties represent approximately 190,000 square feet of net rentable area and approximately 1,300 self-storage units. The seven remaining Properties have not yet achieved stabilized operations (the "Non-Stabilized Properties") and will be acquired by InScotia Developments LP with, among other sources of funding, mezzanine loan financing in the principal amount of approximately $13.8 million provided by the REIT pursuant to the terms of the development agreement between the REIT and InScotia.

The acquisition of the Properties is subject to various conditions, including the completion of due diligence investigations with respect to the Properties and related assets that must be satisfactory to the REIT and InScotia in their sole discretion. There can be no assurance that the conditions under the acquisition agreement will be satisfied or that the acquisition will be successfully completed. If the conditions under the agreement are fulfilled, the acquisition is scheduled to close on February 15, 2007.

In addition, the REIT announced that it has entered into an agreement with Canaccord Adams (the "Underwriter") to sell, on a bought deal private placement basis, 19,231,000 trust units (the "Units") at a price of $1.30 per Unit, for gross proceeds to the REIT of $25,000,300 (the "Financing"). The Underwriter will have the option to increase the Financing by up to 3,847,000 Units for additional gross proceeds of up to $5,001,100 at any time prior to closing. The Financing is expected to close on or about December 29, 2006 and the units sold under the offering will be subject to a four-month hold period pursuant to applicable securities laws.

The net proceeds of the private placement will be used to fund a portion of the purchase price for the Stabilized Properties and to fund the mezzanine loan to InScotia described above. The REIT will fund the remainder of the purchase price for the Stabilized Properties with available cash on hand and secured bank financing.

"The acquisition of these self-storage properties will increase our exposure to western Canada, further expand our national platform, and solidify InStorage as a leading national consolidator of self-storage properties. This is consistent with our stated strategy of producing a stable and growing stream of cash distributions for unitholders from the ownership and management of high quality self-storage properties," said James Tadeson, Chief Executive Officer of InStorage REIT.

InStorage Real Estate Investment Trust

InStorage REIT is an unincorporated open-ended real estate investment trust that invests primarily in self-storage properties and ancillary businesses throughout Canada. The REIT indirectly owns and operates 20 self-storage properties located in Ontario and Alberta.

Additional information concerning InStorage REIT may be obtained on the SEDAR website at www.sedar.com, under the REIT's profile.

Forward-Looking Information

This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Examples of such statements include the intention to complete the transactions mentioned above, as disclosed or at all. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of the REIT, its subsidiaries and InScotia Developments LP to obtain necessary financing and satisfy conditions under applicable transaction agreements; the level of activity in the underlying self-storage business of the REIT, the self-storage industry and in the economy generally; consumer interest in the services and products of the REIT's subsidiaries; competition; and anticipated and unanticipated costs. While the REIT anticipates that subsequent events and developments may cause its views to change, it specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the REIT's views as of any date subsequent to the date of this press release. Although the REIT has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT. Additional factors are noted under "Risks and Uncertainties" in the Management's Discussion and Analysis of the REIT for the interim period ended September 30, 2006, a copy of which may be obtained on the SEDAR website at www.sedar.com.

Contact Information

  • InStorage Real Estate Investment Trust
    T. James Tadeson
    Chief Executive Officer
    (416) 867-9705