Primaris Retail REIT
TSX : PMZ.UN

Primaris Retail REIT

June 08, 2006 07:16 ET

Primaris Retail REIT Announces $114 Million Acquisitions

TORONTO, ONTARIO--(CCNMatthews - June 8, 2006) - Primaris Retail REIT (TSX:PMZ.UN) announces today that it has agreed to acquire a portfolio of 4 shopping centres at a total purchase price of $114.3 million, including transaction costs, and will increase the book value of the portfolio to over $1.2 billion. The purchase will be financed by $55 million of debt and $59.3 million of cash on hand. One of the four assets will not be encumbered by debt. The transaction is expected to close by June 15, 2006.

Closing is subject to a number of normal conditions. In addition, closing is subject to the receipt of a lender's consent to the assumption by Primaris of a loan secured by one of these assets. Primaris believes the timing of receipt of such consent is not predictable and could easily delay the scheduled closing.



PORTFOLIO DESCRIPTION
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Asset Location GLA Occupancy Asset Type
1. Alliston Mills
Shopping Centre Alliston, ON 191,126 98.70% Open,
Neighbourhood
2. Forest Glen
Shopping Centre Kitchener ON 127,058 89.34% Open,
Neighbourhood
3. South Cambridge
Centre Cambridge, ON 190,130 100.00% Open,
Neighbourhood
4. Sugar Loaf Mall Campbellton, NB 196,291 90.34% Enclosed,
Community
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704,605


The portfolio is composed of 84% nationally branded tenants, and has a portfolio occupancy of 94.5%. Major tenants at these assets include: Zellers, Loblaw (under the Zehrs and Valu Mart banners) and 2 new-format Shoppers Drug Mart pads. Of the 40,178 SF vacant space, 90% or 36,061 square feet, of it will be head leased by the vendor for 3 years at market rates. The leases have an average term to maturity of approximately 7.5 years. The portfolio has a smooth lease expiry profile with no more than 19% of total area expiring in any one year.

There is a Canadian Tire store located next to each of the Alliston Mills and Sugar Loaf properties that do not form part of the purchase, but act as shadow anchors for those shopping centres.

Two lease agreements within the portfolio contain options in favour of tenants to purchase a portion of the portfolio. In one case the option relates to a portion of the Alliston Mills Shopping Centre and is exercisable as early as 2009. In the other case, the option relates to either a defined portion of, or the entire site of, the South Cambridge Centre property. In this case, the option may not be exercised before 2018. The terms of both options were considered in the underwriting of the portfolio.

The acquisition will further diversify Primaris' holdings in the Ontario market as well as make an initial investment in a new market: New Brunswick. Furthermore, the potential for future acquisitions of similar property types will be facilitated by the management team applied to this investment.

The debt will be a combination of the assumption of an existing loan as well as the refinancing of some existing loans. The debt will have a weighted average interest rate of 5.6% and an average term to maturity of 9.5 years.

The acquisition of this portfolio meets the Primaris stated strategy of producing stable, growing cash distributions, enhanced asset and unit value and a diversified, growing portfolio. The acquisition will expand Primaris' overall tenant base, and further diversify its holdings geographically.

At March 31, 2006, Primaris had a debt to gross book ratio of approximately 48.0%. This ratio increases to approximately 52.5% after giving pro forma effect for this acquisition and the previously announced refinancing of Orchard Park Shopping Centre, completed since March 31st. Management believes it has additional acquisition capacity of $190 million while remaining within a comfortable debt to gross book value ratio of 57%.

Primaris Retail REIT is a TSX listed real estate investment trust (TSX:PMZ.UN). Upon completion of this transaction, Primaris Retail REIT will own 20 properties comprising approximately 7.75 million square feet located in Canada. As of May 31, 2006 the REIT had 51,168,221 units issued and outstanding.

Contact Information

  • Primaris Retail REIT
    R. Michael Latimer
    Chief Executive Officer
    (416) 865-5353
    or
    Primaris Retail REIT
    Louis M. Forbes
    Senior Vice President and Chief Financial Officer
    (416) 865-5360