Primaris Retail REIT
TSX : PMZ.UN

Primaris Retail REIT

October 25, 2005 08:17 ET

Primaris Retail REIT Announces $153 Million Acquisitions

TORONTO, ONTARIO--(CCNMatthews - Oct. 25, 2005) - Primaris Retail REIT (TSX:PMZ.UN) announces today that it has agreed to acquire the Lambton Mall, located in Sarnia, Ontario. The acquisition represents a total purchase price of $108 million, including transaction costs, and will increase the book value of the portfolio to over $1.1 billion. This is the seventh acquisition Primaris has made in 2005.

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

About Lambton Mall

Lambton Mall is an approximately 630,000 square foot enclosed regional shopping centre located in Sarnia, Ontario and was developed over several phases between 1970 and 2001. It is anchored by Sears, Wal-Mart and Canadian Tire - the only locations for each of the three stores in the Sarnia trade area. Other significant tenants include Tepperman's, Toys 'R Us and Marks Work Warehouse. The shopping centre is located on 48 acres of land, just west of the intersection of Highway 402 and Modeland Road. Lambton Mall is the dominant shopping centre in its market, with the next closest enclosed regional mall being an hour's drive away in London, Ontario.

The three anchor tenants represent 59.4% of the gross leasable area of the centre. There is 14.8 years remaining on the weighted average lease term for these stores, excluding renewal options. The Wal-Mart store, comprising 129,121 square feet, was built in 2001; Canadian Tire, comprising 106,331 square feet, was built in 1996; and Sears, comprising 135,258 square feet on two levels, was built in 2001. The mall is currently 98.7% leased, with 88.4% national tenants, 8.3% regional tenants and 2.0% local tenants.

Sarnia has a population of approximately 75,000 people, and is a part of Lambton County, which has a total population of approximately 135,000 people. It is located in southwestern Ontario at the southern end of Lake Huron, and is connected to the state of Michigan by the Bluewater Bridge. Lambton County has an average household income of $58,600.

Lambton Mall is not currently encumbered by any debt. Primaris is in the process of arranging a conventional fixed-rate mortgage to be secured by the property, subject to the successful completion of the acquisition. The purchase will be funded by a combination of cash on hand, existing credit facilities and the new financing mentioned above. It is expected that the new loan will be funded either at the time of purchase or very shortly thereafter. The loan amount will be approximately $69 million and will have a 15-year term. The interest rate, when established, will approximate the then yield on a benchmark Government of Canada yield, plus a credit spread of 107 basis points.

Primaris has purchased the property from a private corporation. The acquisition is expected to close on December 1, 2005.

President and CEO Michael Latimer said "The acquisition of Lambton Mall will be accretive to Primaris' distributable income as we expect the year one, unlevered net operating income return on this investment to be approximately 7.0%. We are pleased to be adding an asset of this quality, located in the strong southwestern Ontario economy, to our portfolio as we continue to diversify both geographically and in tenant mix"

Eglinton Square Update

Primaris completed the previously announced acquisition of Eglinton Square on October 17th. The acquisition represents a total purchase price of $45 million including transaction costs.

At June 30, 2005, Primaris had a debt to gross book ratio of approximately 54.7%. This ratio decreases to approximately 53.3% after giving pro forma effect for transactions occurring since June 30th. Management believes it has additional acquisition capacity of $110 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 16 shopping centres comprising approximately 7 million square feet located in Canada. As of October 1, 2005 the REIT had 44,391,559 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