Whiterock Real Estate Investment Trust
TSX : WRK.UN

Whiterock Real Estate Investment Trust

August 10, 2011 07:00 ET

Whiterock REIT Completes $77 Million of Accretive Acquisitions of U.S. Class A Office and Industrial Properties

TORONTO, ONTARIO--(Marketwire - Aug. 10, 2011) - Whiterock Real Estate Investment Trust ("Whiterock") (TSX:WRK.UN) announced today that it has completed the previously announced purchase of a Class A newly built, long-term leased, single-tenant office building in the greater Kansas City area for approximately US$38 million (before closing costs) and a Class A newly built, long-term leased, single-tenant industrial building in the greater Nashville area for approximately US$39 million (before closing costs). These properties are 100% leased to investment grade tenants, with a total rentable area of approximately 902,000 square feet and a weighted average remaining lease term of approximately 15 years. Management expects the impact from these acquisitions to add approximately $0.01 to annualized on-going AFFO per unit. The first full quarter impact of this increase to AFFO per unit is expected to be realized commencing in the fourth quarter of 2011.

"These acquisitions present an excellent opportunity for Whiterock to expand into the U.S. through newly built, long-term leased properties, backed by investment grade tenants," said Jason Underwood, Chief Executive Officer. "We expect these U.S. properties to deliver consistent and reliable cash flows, low volatility, upside through rent steps, and geographic diversification. We continue to successfully execute on our disciplined and accretive growth strategy, building long-term value for our unitholders."

The assets were purchased by Whiterock on a wholly-owned basis, with Whiterock assuming property management. The average capitalization rate on the assets is approximately 7.5% and the interest rate on the new long-term fixed rate first mortgage is 5.75%.

U.S. Bank Operations Centre – Overland Park, Kansas

U.S. Bank Operations Centre is a Class A newly built, 5-storey suburban office building consisting of 185,178 square feet located in Overland Park, Kansas, the largest office sub-market with the most activity and highest demand in the greater Kansas City area. The building is 100% leased through November 2020 to U.S. Bank National Association ("U.S. Bank"), a subsidiary of Minneapolis-based U.S. Bancorp (S&P: AA-, Fitch: AA-, Moody's: Aa2), the 5th largest commercial bank in the U.S.

After a nationwide search considering over 300 locations, U.S. Bank chose this location in Overland Park for the largest of their 9 nationwide operations centres. The property was built in 2006 and renovated in 2009 in accordance with plans and specifications developed by U.S. Bank, which committed to invest more than US$20 million of its own capital into building improvements. The building is situated on 10 acres and features 846 parking spaces.

The purchase price of approximately US$38 million (before closing costs), representing a capitalization rate of approximately 7.6%, was financed with the proceeds from the recently completed equity offering and, along with the Nissan Distribution Centre acquisition, from the proceeds of a new US$50 million 10-year first mortgage at a fixed rate of 5.75%.

Nissan Distribution Centre – Mount Juliet, Tennessee

Nissan Distribution Centre is a Class A newly built industrial building consisting of 717,160 square feet located in Mount Juliet, Tennessee, centrally located in the newest industrial sub-market in the greater Nashville area. The building is 100% leased through March 2026 to Nissan North America, Inc. ("Nissan North America"), a subsidiary of Nissan Motor Co., Ltd. (S&P: BBB+, Moody's: Baa2), the 2nd largest automaker in Japan.

Nissan Distribution Centre, built in 2009 and located in proximity to Nissan North America's headquarters in Franklin, Tennessee, is a key global distribution facility for Nissan and supplies production parts to plants worldwide, including those in Brazil, Mexico, Japan, Thailand, and the Middle East. The building is situated on 59 acres and features 258 car spaces and 275 trailer spaces. The building has expansion capabilities for an additional 485,000 square feet of rentable area. Nissan North America coordinates all of Nissan's operations in Canada, the U.S., and Mexico, and accounts for almost 40% of Nissan Motor's sales worldwide. Nissan North America is one of the largest corporate employers in the greater Nashville area, employing over 8,500 individuals.

The purchase price of approximately US$39 million (before closing costs), representing a capitalization rate of approximately 7.4%, was financed with the proceeds from the recently completed equity offering and, along with the U.S. Bank Operations Centre acquisition, from the proceeds of a new US$50 million 10-year first mortgage at a fixed rate of 5.75%.

About Whiterock REIT

With these new U.S. acquisitions, along with the recently completed acquisitions of Sussex Centre and London City Centre, Whiterock's wholly-owned, co-owned, and long-term leased aggregate real estate portfolio now totals approximately 10 million square feet across 77 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, which can be obtained 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 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 specifically required by applicable law, Whiterock does not undertake, and 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