Whiterock Real Estate Investment Trust
TSX : WRK.UN

Whiterock Real Estate Investment Trust

December 14, 2011 07:00 ET

Whiterock REIT Announces Agreement to Acquire $108 Million of Accretive Office Properties in Edmonton

TORONTO, ONTARIO--(Marketwire - Dec. 14, 2011) - Whiterock Real Estate Investment Trust ("Whiterock" or the "REIT") (TSX:WRK.UN) announced today that it has entered into an agreement to purchase a portfolio of 9 newly built, multi-tenant flex office properties in Edmonton, Alberta, with a total gross leasable area of 619,792 square feet, for approximately $108 million (before closing costs), representing a capitalization rate of approximately 7.6%. Management expects the impact from this acquisition to add approximately $0.02 to annualized adjusted funds from operations ("AFFO") per unit. The first full quarter impact of this increase to AFFO per unit is expected to be realized commencing in the second quarter of 2012.

"The acquisition of this portfolio expands Whiterock's strong presence in Western Canada, which already includes almost 2 million square feet of gross leasable area across 23 properties, and further highlights Whiterock's positioning as a leading owner and manager of high-quality office properties in major Canadian markets," said Jason Underwood, Chief Executive Officer. "We continue to successfully execute on our disciplined and accretive growth strategy, building long-term value for our unitholders."

Flex Office Portfolio - Edmonton, Alberta

The portfolio comprises 9 newly built, multi-tenant flex office properties with a total gross leasable area of 619,792 square feet. The portfolio has an average occupancy rate of 91% and an average remaining lease term of approximately 3 years. The portfolio's diverse tenant mix primarily services the oil and gas sector in northern Alberta. No single tenant occupies over 10% of the portfolio, and excluding the top 3 tenants, no single tenant occupies over 3%. The portfolio's top 3 tenants, Flint Energy Services, Genivar, and Dominion Leasing, together account for approximately 20% of the portfolio's total gross leasable area and have an average remaining lease term of approximately 5 years.

The 9 properties include the following separate and distinct buildings: St. Albert Trail Place, Broadmoor Places I, II, VII, and VIII, Yellowhead West, Alberta Park Places I and II, and Trans West Place.

St. Albert Trail Place

The property, located on the east side of 146 Street NW and just north of 131 Avenue NW, is situated in an area that consists of commercial and light industrial land uses. St. Albert Trail links the cities of Edmonton and St. Albert and provides access to Yellowhead Highway and Anthony Henday Highway. The property, constructed in 2006, consists of a two-storey, multi-tenant commercial office building with a gross leasable area of 40,132 square feet. The property includes a single-level heated underground parking garage with approximately 80 stalls and surface parking with approximately 220 stalls.

Broadmoor Place I

Broadmoor Place I is located in Sherwood Park, a dynamic business park at the southeast corner of the intersection of Pembina Road and Broadmoor Boulevard. Over 80% of the building is built out as premium office space and provides excellent retail exposure and strong signage along Broadmoor Boulevard. The property is well located with excellent accessibilities to major arterial roadways including Broadmoor Boulevard, Yellowhead Highway, and Anthony Henday Highway. The property, constructed in 2000, consists of a two-storey commercial flex office/warehouse with a gross leasable area of 82,964 square feet. Surface parking is provided with approximately 230 stalls.

Broadmoor Place II

Broadmoor Place II is situated on Broadmoor Boulevard, a highly trafficked road with more than 20,000 vehicles passing along on a daily basis. There are three entranceways located on the northwest, south, and southwest portions of the site providing convenient access to the site. The property, constructed in 2001, consists of a two-storey commercial flex office/warehouse building with a gross leasable area of 76,376 square feet. Surface parking is provided with approximately 230 stalls.

Broadmoor Place VII

Broadmoor Place VII is a flexible building designed to accommodate a variety of tenant configurations. The property is well located with proximity and convenient access to major arterial roadways including Broadmoor Boulevard, Yellowhead Highway, and Anthony Henday Highway. Significant traffic is also generated by the adjacent recreation complex, Millennium Place, which has over two million visitors per year. The property, constructed in 2007, consists of a two-storey commercial flex office building with a gross leasable area of 82,531 square feet. Surface parking is provided with approximately 294 stalls.

Broadmoor Place VIII

Broadmoor Place VIII is well located with proximity and convenient access to major arterial roadways including Broadmoor Boulevard, Yellowhead Highway, and Anthony Henday Highway. Adjacent to the site is a retail complex and Holiday Inn Express creating traffic to the area. The property, constructed in 2007, consists of a two-storey commercial flex office building with a gross leasable area of 89,033 square feet. Surface parking is provided for approximately 294 vehicles.

Yellowhead West

Yellowhead West, situated in Yellowhead West Industrial Park, is a fully tilt-up concrete executive style building located on Winterburn Road and 115 Avenue. The site is occupied by two single-storey multi-tenant commercial buildings, constructed in 2005, with mezzanine office levels and a gross leasable area of 82,341 square feet. Surface parking is provided with approximately 215 stalls.

Alberta Park Place I & II

Alberta Park Place I & II are located in the heart of Edmonton's west end business park district. Alberta Park Place II is strategically located on the north side of 114 Avenue with Alberta Park Place I situated just north of the site. Alberta Park Place I was constructed in 1972 and substantially renovated in 2007, while Alberta Park Place II was constructed in 2007. Both buildings include mezzanine office space. Rail access is provided directly behind the buildings. The properties sit on 4.3 acres of land with a gross leasable area of 77,206 square feet. Surface parking is provided with approximately 197 stalls.

Trans West Place

Trans West Place is located in the heart of Acheson Industrial Park with excellent access to major arterial roads. The property is situated on the south side of Township Road 531A, approximately 0.35 kilometers west of Highway 60 in Parkland County. The property, constructed in 2008, is well located, giving easy access to two arterial roads, Highway 16 and 16A, while providing quick entry points to Edmonton. The property sits on 6.7 acres of land with a gross leasable area of 89,209 square feet. Surface parking is provided with approximately 170 stalls.

The portfolio will be acquired in co-ownership with ROI Capital Ltd., an established investment firm based in Toronto, Ontario with over $1.4 billion in assets under management, with Whiterock owning 40% and exclusively managing the properties. The purchase price of approximately $108 million (before closing costs), net of assumed first mortgages on 5 of the 9 properties of approximately $35 million at an average fixed rate of approximately 3.75% with an average remaining term of approximately 3 years, is expected to be financed with the proceeds from the recently completed $65 million public offering of units and convertible unsecured subordinated debentures and from new first mortgages on 4 of the 9 properties of approximately $33 million at a fixed rate expected to be approximately 4.00% with a term of 5 years. Management anticipates that the acquisition will close in the first quarter of 2012, subject to standard closing conditions.

About Whiterock REIT

Whiterock REIT is a growth-oriented diversified commercial REIT with a wholly-owned, co-owned, and long-term leased aggregate real estate portfolio that, subsequent to this acquisition, will total approximately 10.8 million square feet of gross leasable area across 88 properties, geographically diversified across 8 Canadian provinces and 2 U.S. states.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect" "estimate", "anticipate", "intend", "believe" or "continue", the negative forms thereof and similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future events or performance and, by their nature, are based on Whiterock's estimates and assumptions, which are subject to known and unknown risks, uncertainties and other factors that may cause the actual events, results or prospects to be materially different from those expressed or implied herein. Readers are cautioned that a number of factors, including those discussed in the section entitled "Risk Factors" in Whiterock's Annual Information Form (available at www.sedar.com), could cause actual events, results or prospects to differ materially from those stated or implied. These factors should be considered carefully, and a reader should not place undue reliance on forward-looking statements, as there can be no assurance that actual events, results or prospects will be consistent with such statements. In particular, but without limitation, there can be no assurance that Whiterock will be able to increase its AFFO or achieve the expected capitalization rate on the assets to be acquired or the expected average interest rate on the new first mortgages. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a relatively stable leasing environment, the maintenance of current occupancy levels, stable interest costs, limited dilution from conversion of convertible debentures; stable acquisition capitalization rates and available access to equity and debt capital markets to fund, at acceptable costs, Whiterock's future growth plans, and to enable Whiterock to refinance its debt as it matures. In addition, historic performance is not necessarily indicative of future results. Except as required by law, Whiterock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Whiterock Real Estate Investment Trust
    Jason Underwood
    CEO
    (416) 907-4861

    Whiterock Real Estate Investment Trust
    Kursat Kacira
    CFO
    (416) 572-0427
    www.whiterockreit.ca