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Melcor REIT buying Alberta commercial property for C$55M

Melcor Real Estate Investment Trust agreed to acquire a 283,235-square-foot retail power center in Grande Prairie, Alberta, from an undisclosed third party for about C$54.8 million.

The 33.3-acre property comprises 15 buildings with parking space for 1,264 vehicles. As of Oct. 1, it was 98.9% leased to 29 tenants, with a weighted average lease term of 4.4 years. Walmart Supercentre and Save On Foods shadow anchor the property.

The diversified REIT will partially fund the acquisition through the net proceeds of a C$40 million bought-deal public offering of convertible unsecured subordinated debentures, which comes with a C$6 million overallotment option. The debentures will bear interest at a rate of 5.10% per annum, payable semiannually in arrears on June 30 and Dec. 31 in each year commencing on Dec. 31, until Dec. 31, 2024.

CIBC Capital Markets is the lead underwriter for the debt offering that is expected to close on or about Oct. 29.

The remainder of the purchase price will be funded by proceeds from a draw on Melcor's revolving credit facility, as well as proceeds of a concurrent private placement of up to C$15.0 million of class B limited partnership units to Melcor Developments Ltd.

Additionally, Melcor said it intends to fully redeem C$34.5 million worth of its series 5.50% convertible debentures outstanding, which will mature Dec. 31.