Partners Real Estate Investment Trust | Toronto and Barrie

Partners Real Estate Investment Trust  is pleased to announce that it has closed its acquisition of three retail centres (the "Properties") under the terms described in the REIT's press release dated April 2, 2014. The REIT purchased three Ontario Properties which include the mixed use urban Hamilton City Centre in Hamilton, the multi-tenanted retail Crossroads Centre in London, and a multi-tenanted retail property in Kemptville. The REIT has purchased only the stabilized in-place Net Operating Income ("NOI") of the Properties.
"This acquisition is one of many of the initiatives that the REIT has undertaken in the last 60 days. We are thrilled to complete this acquisition. These assets serve to enhance our internalization objectives within the Ontario marketplace," stated Ron McCowan, Partners' interim CEO. "Ontario is a geography where Partners now boasts a strong operational infrastructure. This acquisition also greatly improves the size of our property portfolio, increasing our gross leasable area by approximately 22%. We look forward to working with Holyrood Holdings Limited as they pursue at their sole cost new leasing for the REIT which focuses on national retailers. In addition the vendor, again at their sole cost, will execute significant investments which cover the development activities and capital expenditures the Properties."

Acquisition Terms

As previously disclosed, Partners has paid Holyrood Holdings Limited (the "Vendor") an immediate consideration of approximately $90,100,000. This amount includes $83,200,000 to satisfy the purchase of the Properties, with the balance of $6,900,000 as a promissory note receivable generating annualized interest of 5.4%. This consideration has been satisfied by (i) the assumption of debt secured by the Properties, (ii) the issuance of 1,188,188 units of the REIT ("REIT Units"), issued at an effective price of $5.80 per REIT Unit, and (iii) the issuance of 4,813,517 class B units (the "Class B Units") of a limited partnership formed by the REIT for the purposes of completing the acquisition, at an effective price of $5.80 per Class B Unit. The Class B Units are exchangeable for REIT Units on a one-for-one basis and the economic equivalent of REIT Units and carry the right to vote at the REIT level. Given the effect to the issuance of the REIT Units and Class B Units, the Vendor is expected to hold approximately 18.7% of the REIT's outstanding Units, calculated on a fully diluted basis.


The Properties consist of a total of approximately 612,000 square feet of gross leasable area. The REIT has acquired 462,027 square feet of fully leased premises for the previously noted acquisition cost of $82,300,000 which is expected to generate $5.4 million in annualized NOI. The purchase price paid for the Properties relates only to fully leased units and six head leases. As a result of this transaction, Partners effective portfolio's occupancy will increase by 0.5 percentage points to 96.9%, compared to 96.4% as at December 31, 2013.


Pursuant to the transaction, Partners has entered into a development agreement with the Vendor for a term of 3 years, subject to limited extension rights. At its sole cost and expense, the Vendor will serve as the developer and is obligated to perform specific leasing, marketing, and development activities including major tenant improvement investments. This agreement is specific to detailed vacant or undeveloped space located on the Properties. Upon receipt and approval by Partners of qualified leases, the REIT has agreed to pay the Vendor (i) up to $25,000,000 (the "Contingent Deferred Payment") on a total of 149,483 square feet of gross leasable area, and (ii) an earn-out in respect of certain undeveloped space (the "Earn-Out Payments) that would result in the REIT acquiring an additional 69,000 square feet of gross leasable area over and above the 611,510 square feet already acquired.