RE:New shares being issued at $9.00would be good to paste the remainder of why the money is needed: \
The Trust intends to use the net proceeds from the Offering to partially fund the acquisition of two office properties located in the Trust's target markets in Germany, to partially fund the redemption of its outstanding 5.5% convertible unsecured subordinated debentures due July 31, 2018 (the "5.5% Convertible Debentures"), and for general trust purposes. In the event that one or both of the acquisitions do not close, the applicable portion of the net proceeds from the Offering may be used to fund the redemption of the 5.5% Convertible Debentures, for general trust purposes, or to fund future acquisitions.
Property Acquisitions
Dream Global is currently in exclusive or advanced negotiations on the acquisition of two properties located in the Trust's target markets in Germany. These two well-located properties together comprise approximately 88,800 square meters (955,800 square feet) of gross leasable area and benefit from good transport connections. The two properties have a weighted average occupancy of approximately 99%, with strong covenants, and an average term of approximately 7.8 years. The combined purchase price of the two properties is anticipated to be approximately EUR105.6 million ($151.5 million) and will be funded partially from the proceeds of the Offering with the remainder funded through the Trust's ongoing capital recycling program. Dream Global is seeking to acquire these assets at an average going-in cap rate of approximately 7.6%, which would represent a spread of over 600 basis points over current long-term mortgage financing rates, translating to an AFFO yield of over 11%, which is expected to be accretive to the Trust's current cost of capital. The Trust is currently working towards settling definitive documentation with the goal of closing on these two transactions in the fourth quarter of 2016.
Redemption of 5.5% Convertible Debentures
The Trust intends to redeem all of its 5.5% Convertible Debentures totaling approximately $161 million of principal amount. The lending environment in Germany remains favourable and the Trust is currently working toward refinancing a number of its properties at attractive rates in order to generate proceeds from additional mortgage debt. Dream Global anticipates that it will apply the net proceeds of these refinancings, together with a portion of net proceeds of the Offering, to redeem its outstanding 5.5% Convertible Debentures.
Benefits of the Transactions
Upon completion of the transactions referred to above, which are targeted to occur by year-end, the Trust will achieve a number of key objectives, including an improvement in its overall portfolio quality, an increase in tenant diversification, a reduction in leverage and increased financial flexibility to pursue future acquisitions or joint ventures.