TORONTO--(BUSINESS WIRE)--Agellan Commercial Real Estate Investment Trust (the “REIT” or “Agellan”) (TSX:ACR.UN) is pleased to provide an update on its recent activities and investment focus.
New Lease with Porsche Cars Canada at Parkway Place, Toronto, Ontario
The REIT announced that it has entered into a 20-year long-term lease agreement (the “Lease”) with Porsche Cars Canada Limited (“Porsche”) at Parkway Place in Toronto, Ontario.
As per the terms of the Lease, Porsche will lease approximately 60,000 square feet of space at a newly constructed dealership on existing lands at Parkway Place. The REIT will contribute approximately 3.3 acres of land, which is currently used for parking.
In addition to constructing the Porsche dealership under a build to suit agreement, the REIT will construct a retail and parking facility that will address both the reduction of surface parking due to the newly constructed dealership and bring additional retail amenities to the Parkway Place complex and the surrounding area. Upon completion, the retail and parking facility will consist of approximately 37,000 square feet of necessity and food-oriented retailers as well as over 700 covered stalls.
The REITs ability to contribute 3.3 acres of land, which is currently not earning significant income or driving net asset value, to the transaction, will act as the equity contribution required to obtain the debt financing for the construction projects. The transaction remains subject to certain municipal approvals and the expected completion time for the retail and parking facility will be in 2016 and the expected completion time for the newly constructed Porsche dealership will be in 2017.
Parkway Place, Toronto, Ontario
The Board has authorized management of the REIT to explore the potential sale of all or a portion of Parkway Place. Parkway Place represents the REIT’s single largest asset. If a sale of this asset is ultimately consummated, the REIT currently intends to reinvest the related proceeds of disposition in U.S. real estate assets. No assurance can be given, however, that any such sale will be consummated.
Sale of 20 Valleywood Drive, Markham, Ontario
On December 22, 2014, a third-party purchaser acquired 20 Valleywood Drive from the REIT for approximately $8.2 million (before closing costs), representing an in-place capitalization rate of 5.9%. This disposition is consistent with the REIT’s strategy of recycling capital by selling assets in certain markets that are no longer aligned with its core strategies in order to fund new investment opportunities. The REIT currently intends to reinvest the related proceeds of disposition in U.S. real estate assets.
The disposition is expected to close on February 6, 2015.
Acquisition of Properties in Atlanta Georgia
On January 13, 2015, the REIT entered into an agreement to purchase 6 industrial properties (the “Oakbrook Technology ”Center) located in Atlanta, Georgia for a total purchase price of US$12.9 million, representing a going-in capitalization rate of 8.35%. The Oakbrook Technology Center consists of 299,174 square feet in a park-like setting, and is 95% occupied with 28 tenants. The REIT intends to finance the acquisition through its working capital and available funds from its credit facility.
This transaction is expected to close on February 9, 2015.
240 Bank Street, Ottawa, Ontario &
195-215 Bellehumeur Street, Gatineau, Quebec
The Board has authorized management of the REIT to explore the potential sale of 240 Bank Street and 195-215 Bellehumeur Street. If a sale of these two assets is ultimately consummated, the REIT currently intends to reinvest the related proceeds of disposition in U.S. real estate assets. No assurance can be given, however, that any such sales will be consummated.
Updated Investment Strategy
The Board has approved a new U.S.-focused investment strategy that was recommended by the REIT’s external asset manager whereby the REIT will seek to dispose of all or substantially all of its existing Canadian real estate assets and reinvest the related proceeds of disposition in U.S. real estate assets.
The REIT believes that, in the near term, acquiring additional U.S. real estate assets will be in the best interests of the REIT and its unitholders as U.S. valuations, financing and operating fundamentals are currently more attractive than in Canada. The REIT expects to pursue U.S. acquisitions with a focus on properties within markets that the REIT currently operates, and in U.S. markets that offer high quality commercial real estate at compelling relative valuations. The REIT intends to utilize a flexible, opportunity driven growth strategy and take advantage of its agile framework to source attractive relative valuations in various asset classes and geographic locations. While it is expected that any acquisitions by the REIT would be immediately accretive, the REIT may also consider and complete acquisitions that improve the overall quality of its portfolio and/or will be accretive over the longer term.
Notwithstanding the REIT’s new U.S.-focused investment strategy, the REIT may nonetheless acquire certain properties in Canada from time to time if a particular Canadian acquisition opportunity is determined by the REIT to be the best interests of its unitholders.
About Agellan Commercial Real Estate Investment Trust
The REIT is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT was created for the purpose of acquiring and owning industrial, office and retail properties in select target markets in the United States and Canada.
The REIT's current portfolio aggregates approximately 4.3 million square feet of gross leasable area in 26 properties. The properties are primarily located in major urban markets in the United States and Canada.
Forward-Looking Statements
This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.