Retrocom Mid-Market Real Estate Investment Trust

Retrocom Mid-Market Real Estate Investment Trust

December 14, 2010 08:08 ET

Retrocom Mid-Market REIT Announces Acquisition of $140.6 Million Property Portfolio

TORONTO, ONTARIO--(Marketwire - Dec. 14, 2010) - 


Retrocom Mid-Market Real Estate Investment Trust (TSX:RMM.UN) (the "REIT" or "Retrocom") announced today that it has waived due diligence conditions in an agreement with Counsel Corporation to acquire six investment properties and a parcel of land for a total purchase price of approximately $143.6 million (inclusive of approximately $3.0 million of transaction costs). The acquisitions, comprising of investment properties totalling approximately 812,000 square feet and approximately one acre of undeveloped land, will increase Retrocom's investment property base by approximately 38%.

"This acquisition represents a significant and accretive transaction for Retrocom Mid-Market REIT." said Richard Michaeloff, Chief Executive Officer. "By increasing our investment property base we create a stronger national platform with an increased scale that we believe will benefit both our tenants and unitholders going forward. The Counsel properties fit well with our existing portfolio in terms of markets, size and tenant mix and will offer a stable contribution to Retrocom's operating income."

The purchase price of $143.6 million, including transaction costs, represents a weighted average going-in capitalization rate in excess of 7.5% and will be satisfied by the assumption of existing mortgage debt of approximately $57.3 million, and a combination of proceeds received from the REIT's recent equity offering, operating line draws, cash on hand and additional financing to be placed on one of the acquired properties.

Four of the properties are strategically located and complement existing Retrocom markets and the remaining two properties are both located in Thunder Bay, Ontario. In particular, 52% of the gross leasable area is located in the Greater Toronto Area. The portfolio is 98% leased with an overall average remaining lease term of approximately 11 years on anchor tenants and over 8 years on the overall portfolio. Approximately 53% of the gross leasable area features department store, grocery, pharmacy, institutional and bank tenancies.

Property Name and Location Rentable Area Square Feet Occupancy Major Tenants
Yorkgate Mall Toronto, ON 217,526 97% Loblaw (No Frills), HBC (Zellers), LCBO, IDA Drugs, BMO, Seneca College
Kingspoint Plaza Brampton, ON 202,358 99% Shoppers Drug Mart, Goodlife Fitness, Giant Tiger, Queens Medical
Hartzel Plaza St. Catharines, ON 67,972 100% Metro (Food Basics), Niagara Community Care Access Centre
McIntyre Centre Thunder Bay, ON 66,081 100% Shoppers Drug Mart, Goodlife Fitness, Fabricland, Bulk Barn
Red River Plaza Thunder Bay, ON 19,000 100% Salvation Army, Blockbuster
Lancaster Mall Saint John, NB 238,892 96% Loblaw (No Frills), HBC (Zellers), Shoppers Drug Mart, Urban Planet, BMO, McDonald's
Total Portfolio 811,829 98%  

Upon closing, with the exception of Lancaster Mall, mortgages will be assumed on five of the properties as well as a mortgage of a leasehold interest on Kingspoint Plaza, all totaling an outstanding balance of approximately $57.3 million, bearing a weighted average interest rate of approximately 5.5%, and with maturities occurring between 2016 to 2018. Retrocom plans on funding part of the purchase price by placing a conventional first mortgage on Lancaster Mall of approximately $20 million.

The land parcel acquired is located across the road from Lancaster Mall in Saint John, New Brunswick and represents $0.6 million of the total purchase price which will be satisfied by a cash payment and a vendor-take back mortgage.

The acquisitions are expected to close by December 31, 2010 and are subject to customary closing conditions.

About Retrocom Mid-Market REIT

Retrocom Mid-Market REIT is an Ontario unincorporated open-end real estate investment trust which focuses on owning and acquiring mid-market commercial properties in primary and secondary cities across Canada with the objective of producing a geographically diversified portfolio of properties with stable and growing cash flows.

Cautionary Statements

This press release contains forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", and by discussions of strategies that involve risks and uncertainties. The forward-looking statements are based on certain key expectations and assumptions made by the REIT. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Although management of the REIT believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance or achievements will occur as anticipated. Neither the REIT nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements, and no one has any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or such other factors which affect this information, except as required by law.

"Capitalization rate" is not a measure recognized under Canadian generally accepted accounting principles ("GAAP") and does not have any standardized meaning prescribed by GAAP. Capitalization rate is presented in this press release because management of Retrocom believes that this non-GAAP measure is relevant in interpreting the purchase price of the properties being acquired. Capitalization rate, as computed by Retrocom, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to capitalization rate reported by such organizations.

Contact Information

  • Retrocom Mid-Market Real Estate Investment Trust
    Richard Michaeloff
    Chief Executive Officer
    (416) 741-7999 ext. 5227
    (416) 741-7993 (FAX)