the space coming due in 2017 is already leased.
On February 28, 2017, the REIT completed the closing of the acquisition of a 50% undivided interest in a property located at 1750 Jean-Berchmans-Michaud Street, Drummondville, Québec for a purchase price of $3.0 million, excluding closing costs. The property is a freestanding single-tenant industrial property built in 1997 and totaling 171,119 square feet of gross leasable area on 10.75 acres of land. It is fully occupied under a long-term lease of 12 years with contracted annual rent steps, expiring in 2028. The purchase price of $3.0 million was satisfied by the assumption of 50% of a recently completed 4% ten-year mortgage of approximately $4.0 million and the issuance of 383,598 Class B LP Units, at a price of $2.25 per Class B LP Unit.
PROREIT continues to focus on finding new accretive acquisitions. In addition to other opportunities in the pipeline, we expect to complete the acquisition this spring of the remaining four properties announced as part of the eleven property transaction last October.
There continues to be substantial opportunity to acquire good quality commercial properties in suburban markets in the Maritimes and in Quebec, not to mention in markets in many of the thriving communities in Ontario. PROREIT’s significant network in the commercial real estate business in Canada, along with Management’s proven ability to access equity markets to finance acquisitions, are competitive strengths that support the REIT’s ongoing access to great real estate opportunities in its focus markets.
Management believes that while interest rates may rise over the course of 2017, much of the potential increase has already been integrated into equity valuations in the REIT sector. Market participants recognize that rising interest rates are indicative of a strong economy, which generally has a positive impact on real estate prices and leasing activity.
Management also continues to pursue internal development opportunities, as discussed above. The REIT’s properties in Nova Scotia and New Brunswick provide several opportunities for future development. The Miramichi, N.B. mall has substantial excess land that provides an opportunity to develop two new retail pads. Other significant lease-up and development opportunities exist at the recently acquired properties in Digby, N.S. and in the Halifax suburb of St. Margaret’s Bay, N.S. These opportunities are currently being advanced and Management we will keep investors informed of any new development decisions.
Annual Meeting of Shareholders
PROREIT is pleased to invite unitholders to its annual meeting of unitholders, to be held at 11:00 a.m. (Halifax Time) on Wednesday May 31, 2017 in the Atlantic Ballroom at the Westin Nova Scotian Hotel, located at 1181 Hollis Street, Halifax, Nova Scotia.
PROREIT is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. PROREIT owns a portfolio of diversified commercial real estate properties in Canada, with growth objectives focused on primary and secondary markets in Québec and Atlantic Canada, with selective expansion into Ontario and Western Canada.
Non-IFRS and Operational Key Performance Indicators
PROREIT’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this press release, as a complement to results provided in accordance with IFRS, PROREIT discloses and discusses certain non-IFRS financial measures, including Adjusted Funds From Operations (“AFFO”), Funds From Operations (“FFO”), Net Operating Income (“NOI”), debt to gross book value, interest coverage ratio, debt service coverage ratio, and payout ratios as well as other measures discussed elsewhere in this release. These non-IFRS measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other issuers. PROREIT has presented such non-IFRS measures as Management believes they are relevant measures of PROREIT’s underlying operating performance and debt management. Non-IFRS measures should not be considered as alternatives to net income, cash generated from (utilized in) operating activities or comparable metrics determined in accordance with IFRS as indicators of PROREIT’s performance, liquidity, cash flow, and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the “Non-IFRS and Operational Key Performance Indicators” section in PROREIT’s Management’s Discussion and Analysis for the three and twelve months ended December 31, 2016, available on SEDAR at www.sedar.com.
Certain statements contained in this news release constitute forward-looking information within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by such terms such as “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue”, “likely”, “schedule”, or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to the extent to PROREIT’s future financial performance, future development opportunities and the ability of PROREIT to execute its growth strategies. Forward?looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond PROREIT’s control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward?looking statements.
PROREIT’s objectives and forward?looking statements are based on certain assumptions, including that (i) PROREIT will receive financing on favourable terms; (ii) the future level of indebtedness of PROREIT and its future growth potential will remain consistent with PROREIT’s current expectations; (iii) there will be no changes to tax laws adversely affecting PROREIT’s financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on PROREIT’s operations, including its financing capacity and asset value, will remain consistent with PROREIT’s current expectations; (v) the performance of PROREIT’s investments in Canada will proceed on a basis consistent with PROREIT’s current expectations; and (vi) capital markets will provide PROREIT with readily available access to equity and/or debt.
Additional information about these assumptions and risks and uncertainties is contained under “Risk Factors” in PROREIT’s latest annual information form, which is available on SEDAR at www.sedar.com, and in other filings that PROREIT has made and may make with applicable securities authorities in the future.
The forward?looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. Investors are cautioned not to put undue reliance on forward?looking statements. All forward?looking statements in this press release are made as of the date of this press release. PROREIT does not undertake to update any such forward?looking information whether as a result of new information, future events or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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PRO Real Estate Investment Trust
James W. Beckerleg
President and Chief Executive Officer
PRO Real Estate Investment Trust
Gordon G. Lawlor, CPA, CA
Chief Financial Officer
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