Dundee REIT Agrees to Issue Equity and to AcquireTORONTO, ONTARIO--(Marketwire - Dec. 9, 2009) -
NOT FOR DISTRIBUTIONTO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S.
DUNDEE REIT(TSX:D.UN) announced today that it has entered into an agreement to acquireAdelaide Place, a 655,000 square foot two tower Class A office complex locatedin the financial core of Toronto for $211.5 million (excluding closing costs).This prominent property was extensively retrofitted in 2001, including a fullexterior re-cladding, re-glazing and connection to the Enwave Deep Lake WaterCooling System, and is certified BOMA BESt Level 3. The complex offers a strongand diverse tenant roster with 79 tenants and a staggered rollover profile. Thetransaction is expected to close by February 1, 2010, subsequent to completingsatisfactory due diligence.
The REIT also announced that it hasentered into an agreement to sell 4,800,000 REIT Units, Series A on a boughtdeal basis at a price of $18.75 per Unit to a syndicate of underwriters led byTD Securities Inc. for gross proceeds of $90,000,000. In addition, Dundee REIThas granted the syndicate an over-allotment option, exercisable for a period of30 days following closing, to purchase up to an additional 720,000 Units which,if exercised, would increase the gross offering size to $103,500,000. Theoffering is scheduled to close on or about January 7, 2010, and is subject toregulatory approval.
As previously announced, the Trust has fiveadditional properties comprising 1.15 million square feet of office space inToronto and Ottawa under contract, subject to various conditions. Altogether,Dundee REIT's acquisition pipeline currently contains $352.7 million of highquality properties at an approximate 8.1% cap rate. The acquisitions areexpected to be financed with the net proceeds from this offering, cash on hand,$184.3 million of new and assumed debt, and will be levered well below theREIT's third quarter debt-to-gross book value of 58.4%. In addition, three ofthe properties, which are being acquired for $46.3 million, will remainunencumbered, increasing the number of unencumbered properties to seven, with anestimated market value of $125 million. Subsequent to these transactions, theREIT will have approximately $95 million of borrowing capacity in the form of anunused credit facility and unencumbered assets, providing it with flexibility tomanage its business or the capacity to complete up to $210 million in newacquisitions.
The REIT anticipates closing two of the five previouslyannounced office property transactions by the end of 2009 with the othertransactions closing early in the first quarter of 2010. Taken together, theproperties being acquired have an average occupancy rate of 98%, an averageremaining lease term of 4.6 years and an average in-place net rent per squarefoot of about $13.50. Approximately 16% of the leases will mature over the nexttwo years, with only 4% maturing in 2010.
The acquisitions reflectDundee REIT's strategy to grow its portfolio and to once again achieve greatergeographic diversification among its assets. The following table provides anoverview of theacquisitions:
Estimated
Purchase
Approx. GLA No.of Price Price Per
Location (sq. ft.)Tenants Occupancy ($millions) Sq.Ft.
----------------------------------------------------------------------------
Fivepreviously
announced office
transactions,
located in Toronto
and Ottawa 1,150,000 64 99% $ 141.2 $123
Adelaide Place(181
UniversityAvenue
and 150York
Street),Toronto 655,000 79 98% $ 211.5 $323
----------------------------------------------------------------------------
TOTAL1,805,000 143 98% $ 352.7 $195
----------------------------------------------------------------------------
----------------------------------------------------------------------------
"Sincethe sale of our portfolio in Eastern Canada in 2007, we have acquired or havecontracts to acquire $632 million of assets. Along with Adelaide Place and theother properties currently under contract, we have acquired 438 UniversityAvenue and our partners' 50% interest in 720 Bay Street, both in downtownToronto, and an interest in IBM Corporate Park in Calgary. We also have acontract to acquire BMW's new Canadian headquarters in Toronto once constructionis completed and we are developing a building in Yellowknife that is fullyleased to the Government of Canada. These acquisitions and developmentsdemonstrate our commitment to high quality properties that bring additionalvalue to our business," said Michael Cooper, CEO of Dundee REIT. "On the wholethe assets added to our portfolio over the past two years enhance the overallquality of our portfolio and our ability to generate stable cash flows. Inparticular, we are excited about Adelaide Place, which is a highly recognizable,Class A asset in the financial core of Toronto. Assets like these rarely come tomarket," said Mr. Cooper.
The acquisitions under consideration are invarious stages of due diligence and while Dundee REIT expects to complete thesetransactions, no such assurance can be given. Dundee REIT has an extensive andsuccessful track record for sourcing and completing a large volume oftransactions. Between 2003 and 2008, Dundee REIT completed $2.3 billion ofacquisitions involving more than 70 transactions.
The following tabledepicts Dundee REITs net operating income ("NOI") by geographic region bothbefore and after the completion of the acquisitions anddevelopments.
ProformaNOI NOI
Post-acquisition September 30,2009
----------------------------------------------------------------------------
CalgaryOffice 38% 54%
BritishColumbia Office 6%8%
Saskatchewan &Northwest
TerritoriesOffice 17% 15%
OntarioOffice 32%13%
Industrial 7%10%
----------------------------------------------------------------------------
Theunits being offered have not been and will not be registered under the UnitedStates Securities Act of 1933 and accordingly are not being offered for sale andmay not be offered, sold or delivered, directly or indirectly within the UnitedStates, its possessions and other areas subject to its jurisdiction or to, orfor the account or for the benefit of a U.S. person, except pursuant to anexemption from the registration requirements of that Act.
PropertyDescriptions (To view the properties, please visit the following link:
https://media3.marketwire.com/docs/DUNDimg1209.pdf.)
AdelaidePlace, 181 University Avenue and 150 York Street, Toronto - This two tower ClassA office complex is located in the financial core of Toronto, on the north sideof Adelaide Street West between York Street and University Avenue and isconnected to Toronto's PATH underground walkway system. It containsapproximately 655,000 square feet of space, the vast majority of which is officebut also includes some retail and a bank branch at grade level. Both towers wereextensively retrofitted in 2001, including a full exterior re-cladding andre-glazing and connection to the Enwave Deep Lake Water Cooling System. Theproperty offers a diverse tenant roster including CIBC, DBRS and Medcan HealthManagement. The buildings are BOMA BESt Level 3 certified.
6655-6725Airport Road, Mississauga - This four building office complex is locatedopposite Toronto Pearson International Airport, one of the largest and busiestairports in North America. The property, which was built between 1983 and 1987,comprises approximately 330,000 square feet of space. Significant tenantsinclude Winners and Aditya Birla Minacs (a large global outsource and callcentre operation) both of which have long-term leases.
AvivaCorporate Centre, Toronto - This property, which was owned by Dundee REIT priorto its sale in 2007, consists of four buildings and is located in easternToronto. Three office buildings comprise approximately 351,000 square feet, themajority of which is leased to Aviva, one of the world's largest insurancecompanies. The fourth building, which comprises approximately 87,000 squarefeet, is a warehouse building.
2645 Skymark Avenue, Mississauga -This building is located in the Airport Corporate Centre near the TorontoPearson International Airport and comprises 143,000 square feet of office andflex space. The office space is leased to Worley Parsons, a global engineeringgroup listed on the Australian Stock Exchange. The warehouse space, with a clearceiling height of 32 feet, is leased to The Fashion Distributors, a third partylogistics provider.
1125-1145 Innovation Drive, Ottawa - The propertyconsists of three linked suburban office buildings in the Kanata submarket inwestern Ottawa. The property, which was built in 2001, contains 119,000 squarefeet of space fully occupied by three tenants: CAE, a world-leading aviationtraining and simulation company, Edgewater, a defence communications company andSkywave, a global satellite communications company.
Gateway OfficePark, Ottawa - This three building office complex is also located in the Kanatasubmarket. The property was built between 1987 and 1989 and comprisesapproximately 120,000 square feet .Together with the acquisition of InnovationDrive, these properties will help Dundee REIT to re-establish a presence inOttawa.
Dundee REIT is an unincorporated, open-ended real estateinvestment trust and provides high quality, affordable business premises. It isfocused on owning, acquiring, leasing and managing mid-sized urban and suburbanoffice and industrial properties in Canada. Dundee REIT's portfolio currentlyconsists of approximately 6.8 million square feet of gross leasable area,located primarily in Western Canada. Dundee REIT's portfolio is well diversifiedby geographic location and tenant mix. For more information, please visit
www.dundeereit.com.