Business
Firm Capital Property Trust Announces Agreement to Acquire a 70% Interest in a 27 Property Retail Portfolio For $22.9 Million
TORONTO , May 12, 2014 /CNW/ - Firm Capital Property Trust (" FCPT " or the " Trust "), (...
About this update from Firm Capital Property Trust
[{"type":"text","content":"\n\nTORONTO, May 12, 2014 /CNW/ - Firm Capital Property Trust (\"FCPT\" or the \"Trust\"), (TSXV: FCD.UN) is pleased to announce it has entered into a binding agreement to acquire a 70% interest in a 27 property retail portfolio with the balance being acquired by an entity related to the Trust. The purchase price for the entire portfolio is approximately $32.7 million (excluding closing costs and one-time adjustments), of which the Trust will pay approximately $22.9 million (excluding closing costs and one-time adjustments) for its 70% participation. The acquisition is expected to close during Q2/2014.\n\nACQUISITION DETAILS:The Portfolio is comprised of 234,768 square feet of gross leasable area across Canada with the majority of the portfolio being located in Ontario. The Portfolio has a weighted average lease term of 3.4 years and a total of 50 tenants with the largest being PPG Industries Inc.(PPG:NYSE) an investment grade rated entity accounting for 32% of Net Operating Income (\"NOI\"), operating predominantly under the Dulux Paints brand. The Portfolio is approximately 95% occupied with no significant short term lease maturities. \n\nFINANCIAL IMPACT:The funding required by the Trust for its 70% interest in the Portfolio will be sourced from a combination of existing cash, the revolving credit facility, the assumption of existing mortgage debt and the arrangement of new first mortgage financing. The assumption of existing mortgage debt and the arrangement of new first mortgage financing represents a 58% loan-to-purchase price. Pro forma closing the Trust expects the acquisition to reduce the AFFO payout ratio to approximately 75% on an annualized basis, well below the Trust's targeted AFFO payout ratio of 85%, while increasing our Debt/Gross Book Value (\"GBV\") ratio nominally to 56%, which continues to be below the Trust's 60% debt/GBV target. Going forward PPG Industries would be the Trust's largest tenant at 9% of NOI; however lease maturities would be spread over 12 locations.\n\nPORTFOLIO HIGHLIGHTS:Pro forma the acquisition, the Trust's investment portfolio will be well diversified across geographies and asset classes. 54% of NOI will come from Ontario, followed by Quebec (31%), Nova Scotia (10%) and British Columbia, Alberta, Manitoba and New Brunswick (collectively 5%). 60% of NOI will come from our Net Lease Con...