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Whiterock REIT Completes Accretive GTA Office Acquisition, Increases Credit Facility, Refinances Mortgages, and Issues New Seri

^{Published on 2011-08-26 04:11:19 - Market Wire}
 

TORONTO, Aug. 26, 2011 /CNW/ - Whiterock Real Estate Investment Trust ("Whiterock") (TSX: WRK.UN) announced that it completed the purchase of a two-tower multi-tenanted office complex directly across from Toronto Pearson International Airport in Mississauga, Ontario for approximately $31.5 million (before closing costs). Whiterock also increased its credit facility from $20 million to $35 million, reduced the interest rate by 88 basis points, and extended the remaining term from 1 year to 2 years.  In addition, Whiterock refinanced existing mortgages to generate net proceeds of approximately $13.5 million, reduced the average interest rate from 5.7% to 3.6%, and extended the average remaining term from 2 years to 5 years. Lastly, Whiterock completed a new issue of $10 million in aggregate principal amount of senior unsecured non-convertible debentures due September 30, 2016, which bear interest at a rate of 5.95% per annum payable monthly and are redeemable at Whiterock's option. Management expects the impact from the acquisition and the related debt financings to add approximately $0.03 to annualized on-going 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 fourth quarter of 2011.

"The acquisition of this property in the Toronto Pearson Airport office node further establishes Whiterock as a leading owner and manager of high-quality office buildings in the Greater Toronto Area," said Jason Underwood, Chief Executive Officer. "We are especially pleased that this property, strategically located in close proximity to our existing Airway Centre property, adds to our growing market share in the GTA West / Pearson Airport corridor. We continue to successfully execute on our disciplined and accretive growth strategy, building long-term value for our unitholders."

"The increase in our credit facility and the improvements in the terms provide Whiterock with additional financial flexibility as we pursue further growth opportunities," said Kursat Kacira, Chief Financial Officer. "In addition, the mortgage refinancings recognize the significant embedded equity in our properties and provide us with significant interest rate savings. The new issue of debentures also provides us with an attractive source of unsecured and non-convertible debt capital."

Airport Road Complex - Mississauga, Ontario

Airport Road Complex is a two-tower multi-tenanted office complex consisting of 170,805 square feet located directly across from Toronto Pearson International Airport in Mississauga, Ontario. The property is 95% leased with an average remaining lease term of approximately 4.6 years. The property benefits from a strong and diverse tenant roster, with major tenants including Merge OEM, The Second Cup, Teradata, G&K Services, and Air Canada Pilots Association. The property is ideally located in the Toronto Pearson International Airport office node, strategically located in close proximity to Whiterock's existing Airway Centre property, and benefits from close proximity to all major arterial highways. The complex's two buildings, rising 5 and 7 storeys, are situated on 4.6 acres and feature 533 parking spaces.

Whiterock acquired the Airport Road Complex on a wholly-owned basis, with Whiterock assuming property management services. The purchase price of approximately $31.5 million (before closing costs), representing a capitalization rate of approximately 7.4%, was financed through a combination of proceeds including approximately $13.5 million from the refinancings of first mortgages on three wholly-owned properties in Regina, Saskatchewan, approximately $10 million from the new issue of senior unsecured non-convertible debentures, and approximately $8 million drawn on the new increased credit facility.

New Increased Credit Facility

Concurrent with the completion of the Airport Road Complex acquisition, Whiterock entered into a new credit facility agreement with its existing lender, The Toronto-Dominion Bank, to increase Whiterock's existing revolving acquisition and operating credit facility (the "Facility") from $20 million to $35 million, to reduce the interest rate on the Facility by 88 basis points, and to extend the Facility's remaining term from 1 year to 2 years. The Facility bears interest at prime rate plus 188 basis points or bankers' acceptance rate plus 288 basis points. Approximately $8 million of the Facility was drawn and used by Whiterock to partially fund the acquisition of the Airport Road Complex.

New Mortgage Refinancings

Concurrent with the completion of the Airport Road Complex acquisition, Whiterock completed the new refinancings of first mortgages on three wholly-owned properties in Regina, Saskatchewan.  The refinancings generated net proceeds to Whiterock of approximately $13.5 million, reduced the average interest rate from 5.7% to 3.6%, and extended the average remaining term from 2 years to 5 years.  Whiterock used the proceeds of the new mortgage refinancings to partially fund the acquisition of the Airport Road Complex.

New Issue of Unsecured Debentures

On August 8, 2011, Whiterock completed a new issue of $10 million in aggregate principal amount of senior unsecured non-convertible debentures due September 30, 2016 (the "Series L Debentures"). The Series L Debentures bear interest at a rate of 5.95% per annum payable monthly, commencing September 30, 2011, and are redeemable at Whiterock's option. The Series L Debentures were issued through a private placement offering to ROI Capital Ltd., an established investment firm based in Toronto, Ontario with over $1.3 billion in assets under management, and are not listed on The Toronto Stock Exchange. Whiterock used the proceeds of the new issue of Series L Debentures to partially fund the acquisition of the Airport Road Complex.

About Whiterock REIT

With the new Airport Road Complex acquisition, Whiterock's wholly-owned, co-owned, and long-term leased aggregate real estate portfolio now totals approximately 10.1 million square feet of gross leasable area across 78 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 asset acquired. 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.