−Entry Into Orlando Market Further Diversifies REIT Portfolio−
TORONTO, ON and DALLAS, TX, June 25, 2014 /CNW/ - Milestone Apartments
REIT (TSX: MST.UN) ("Milestone" or the "REIT") today announced the
closing of the REIT's purchase of Osprey Links at Hunter's Creek (the
"Property" or "Osprey Links"), a 424-unit, Class A multifamily
apartment community located in south Orlando, Florida, for a purchase
price of US$50.7 million. The purchase price represents an estimated
initial capitalization rate of 6.94% and the transaction is expected to
be immediately accretive to the REIT. This acquisition expands the
REIT's market presence in Florida and further diversifies the REIT's
portfolio. Prior to the REIT's purchase, the Property was owned by a
joint venture, of which a minority interest was owned by an affiliate
of The Milestone Group, LLC.
"Osprey Links is part of our proprietary pipeline of multifamily
apartment communities that are held in finite-life partnerships and
managed by The Milestone Group, which allows for a seamless transition
into the REIT portfolio. This off-market transaction further
demonstrates the value creation potential of Milestone's pipeline and
our commitment to the accretive growth of the REIT," said Robert
Landin, CEO of the REIT. "Our entry into the attractive south Orlando
market, which is the largest employment market in metropolitan Orlando,
adds to our existing market presence in Florida, and further
diversifies our overall portfolio within our target markets."
The Property
Osprey Links was built in 1996, features extensive amenities, consistent
with the REIT's established portfolio, and is currently 96.0% occupied.
The average monthly in-place rent at Osprey Links is $1,063 per unit.
The Property is situated on 29 acres within the 4,000-acre master
planned development of Hunter's Creek in south Orlando, Florida.
Residents at Osprey Links enjoy many benefits from the Hunter's Creek
community, including "A" rated public elementary, middle and high
schools, close proximity to a wide variety of dining, shopping and
entertainment venues, and exclusive access to an abundance of parks and
recreational amenities, such as the Hunter's Creek Golf Course, which
is adjacent to the Property. Hunter's Creek has convenient access to
three of the area's major highways and thoroughfares and some of the
city's largest employers, including Walt Disney World, Orlando
International Airport, the Osceola County / City of Kissimmee
Government Center, and Lake Nona's Medical City, all located within a
10 to 15 minute drive from the Property.
Acquisition Funding and Closing
As part of the purchase consideration, the REIT is assuming
approximately US$26.1 million in debt at a fixed rate of 4.57% maturing
on January 1, 2018. The remaining US$24.6 million of the purchase price
was funded using proceeds from the REIT's recent equity bought deal
financing and from the refinancing of its US$228.6 million mortgage
debt facility, both completed in April 2014.
A portion of the purchase price was paid to an affiliate of The
Milestone Group, and as such the acquisition constituted a "related
party transaction" under Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions ("MI 61-101").
Accordingly, the acquisition was reviewed and considered by the
independent members of the REIT's investment committee. The chair of
the REIT's investment committee, with the assistance of third party
advisors, took a lead role in respect of the examination, review and
negotiation of the acquisition and related documentation on behalf of
the REIT. The acquisition was not subject to the formal valuation and
minority approval requirements of MI 61-101 as the fair market value of
the transaction was not more than 25% of the REIT's market
capitalization.
Update on Harbor Creek Financing
As part of the purchase consideration for the Harbor Creek acquisition
previously announced on May 1, 2014, the REIT completed the financing
of Harbor Creek by securing a new 7-year interest only fixed-term
mortgage of US$15.7 million at an interest rate of 3.39%, which
compares favorably to the previously estimated interest rate of 3.55%.
About Milestone Apartments REIT
Milestone Apartments REIT is an unincorporated, open-ended real estate
investment trust that is governed under the laws of Ontario. The REIT's
portfolio consists of 56 multifamily garden-style residential
properties, comprising 18,388 units that are located in 12 major
metropolitan markets throughout the Southeast and Southwest United
States. Milestone Apartments REIT is the largest REIT listed on the TSX
focused solely on the U.S. multifamily sector. The REIT operates its
portfolio through its internal property management company, Milestone
Management, with more than 900 employees across the U.S. Based
in Dallas, TX, TMG Partners, L.P., an affiliate of The Milestone Group,
is the external asset manager of the REIT. For more information, please
visit www.milestonereit.com.
About The Milestone Group
The Milestone Group is a privately-held real estate investment
management company with expertise and presence in major metropolitan
markets throughout the United States. The firm has corporate offices
in Dallas, TX and New York, NY with regional acquisition and management
offices across the United States. Founded in 2004, The Milestone Group
has a strong track record of investing in the U.S. multifamily sector,
including completion of more than US$4.5 billion in multifamily
transactions. For more information, please visit www.milestonegp.com.
Forward-looking information and Non-IFRS Measures
This news release may contain forward-looking statements (within the
meaning of applicable securities laws) relating to business of the REIT
and the environment in which it operates. Forward-looking statements
are identified by words such as "believe", "anticipate", "expect",
"intend", "plan", "will", "may", "estimate" and other similar
expressions. These statements are based on the REIT's expectations,
estimates, forecasts and projections and include, without limitation,
statements regarding the initial capitalization rate of the acquisition
and the effect of the acquisition on the financial performance of the
REIT (including the degree to which the acquisition will be accretive).
They are not guarantees of future performance and involve risks and
uncertainties that are difficult to control or predict. These risks and
uncertainties are discussed in the REIT's Annual Information Form dated
March 19, 2014, available at www.sedar.com and include, without limitation, risks relating to general and local
economic and business conditions, leasing risks (including the
financial condition of tenants and risks associated with the ability to
lease vacant space), financing risks and interest and currency rate
fluctuations. The forward-looking statements in this news release are
based on certain assumptions, including that the economy remains
stable, rental rates at Osprey Links will continue to grow, interest
rates remain stable, and the REIT continues to have access to capital.
There can be no assurance that forward-looking statements will prove to
be accurate as 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. The REIT undertakes no obligation
to publicly update any such statement or to reflect new information or
the occurrence of future events or circumstances.
"Initial capitalization rate" is not a measure recognized under IFRS and
does not have a standardized meaning prescribed by IFRS. Initial
capitalization rate is presented in this news release because
management of the REIT believes that this measure is relevant in
interpreting the purchase price of the Property being acquired.
Capitalization rate, as computed by the REIT, may differ from similar
computations as reported by other similar organizations and,
accordingly, may not be comparable to capitalization rate reported by
such organizations.
SOURCE Milestone Apartments REIT
