Allied PropertiesREIT is poised to buy a roughly 1 million-square-foot property portfolioin downtown Montreal for C$218 million.
The deals, pending customary conditions, are anticipated to closebefore the second quarter-end.
The company said it will use unsecured debt financing from twoCanadian chartered banks to pay for the acquisitions. The financing is not expectedto result in a material increase in the company's debt ratio.
The portfolio has a total gross leasable area of 1,101,464 squarefeet of office and retail space. It includes the 73%-leased Le Nordelec propertyat 1751 Richardson St., which was built for Northern Electric Co. The building'srental portion comprises 786,954 gross leasable square feet and 520 parking spaces,and the development portion encompasses 37,051 square feet of shell retail spaceand 251,000 square feet of approved and unbuilt residential area.
The other properties in the portfolio are a class I, 67,869-square-footoffice asset at 740 St-Maurice St., which is 85% leased and offers 40 parking spaces;the 100%-leased conventional office building at 8 Place du Commerce St., which comprises57,236 square feet and 193 parking spaces; the 96%-leased building at 480 St-LaurentBlvd., which contains 53,530 square feet of office and retail space and 75 parkingspaces; and the 94%-leased property at 3510 St-Laurent Blvd., which comprises 98,824square feet of class I office and retail space.
The assets, except Le Nordelec, will be subject to first mortgagesamounting to C$33.6 million, with a term expiring in October 2022. The mortgagescarry a 4.05% interest rate, payable in blended installments of principal and interestbased on a 25-year amortization.
Upon completion of the deals, Allied will carry C$178 millionof the assets, including Le Nordelec's retail portion, in its rental portfolio.The remaining C$40 million, comprising Le Nordelec's development portion, will betreated as a property under development. The portion of the assets carried in therental portfolio will have a 6% initial unlevered yield.
The company expects the Le Nordelec acquisition to bring itsunencumbered asset pool to C$1.9 billion from C$1.7 billion at first quarter-end.
The in-place rental revenue from the Le Nordelec acquisitionwill be "meaningfully accretive" to Allied's AFFO per unit, Presidentand CEO Michael Emory said in a release.