TORONTO, ONTARIO -- (Marketwire) -- 04/26/12 -- Canadian Real Estate Investment Trust (CREIT) (TSX: REF.UN) announced that it has entered into an agreement to acquire a 50% managing interest in Calgary Place, an office complex located in Calgary, Alberta (the Property).
The purchase price for the Property is $156.0 million (CREIT's share). Typical due diligence conditions have been satisfied and the agreement is now subject only to standard closing conditions. The closing is scheduled for May 2012.
Calgary Place is being acquired in a co-ownership with KingSett Capital on behalf of its Canadian Real Estate Income Fund. CREIT is responsible for providing full property management, leasing, accounting and project management services.
CREIT recently acquired the Altius Centre office complex in Calgary, also with KingSett. The addition of Calgary Place completes an objective of CREIT and KingSett to jointly co-own a significant office investment in downtown Calgary's central business core.
Calgary Place is comprised of approximately 575,000 square feet of leasable area in two Class A office towers connected by a two-level retail podium. Situated beneath the office towers is a two-level parking facility comprised of 276 parking stalls. The attractive parking ratio of 1 stall per 1,800 square feet of leaseable office area provides a significant parking amenity which is in high demand in downtown Calgary.
The Property benefits from one of the busiest connections to Calgary's Plus 15 pedestrian walkway system (Plus 15) which is linked to all major office buildings in Calgary's business core.
Calgary Place is currently 99.7% leased to a variety of high quality tenants. The weighted average remaining lease term for the Property is approximately 3 years. Near term lease expiries represent an opportunity in the tight Calgary office market where demand for space is strong and rental rates are rising, particularly in Class A properties.
Downtown Calgary's robust office market has experienced ten (10) consecutive quarters of positive absorption, and vacancy in Class A office space continues to diminish.
The purchase price is expected to be partially settled with the placement of a new mortgage secured by the Property. A financing agreement has been entered into for a loan amount equal to $95.0 million (CREIT's share) with an interest rate of 3.91% and a term to maturity of seven (7) years. The balance of the purchase price will be funded with cash on hand and/or through CREIT's bank facilities.
Stephen Johnson, President and Chief Executive Officer of CREIT said "Calgary Place is a high quality office complex that is very well located in Calgary's downtown central business district. Properties of this calibre are difficult to acquire, so we are very pleased to add Calgary Place to our real estate portfolio. We are also delighted to expand our co-owner relationship with KingSett."
Including Calgary Place, CREIT will have a 50% ownership interest and manage 1.9 million square feet of high quality office space within a three block radius in downtown Calgary (comprised of Sun Life Plaza, Altius Centre and Calgary Place).
CREIT is a real estate investment trust focused on accumulating a portfolio of high-quality real estate assets and delivering the benefits of real estate ownership to Unitholders. The primary benefit is a reliable and, over time, increasing cash distribution.
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This news release contains forward-looking statements relating to our operations and the environment in which we operate, which are based on our expectations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. We undertake no obligation to publicly update any such statement, to reflect new information or the occurrence of future events or circumstances, except as required by law.
Canadian Real Estate Investment Trust
Executive Vice President, Investments and Leasing