TSX SYMBOL: BEI.UN January 10, 2005
Boardwalk REIT Enters British Columbia Market With Portfolio Purchase And Adds To Its Alberta And Quebec Properties
Announces $120 Million Senior Unsecured Debenture Offering
Calgary, Alberta – January 10, 2005
- Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX)
Boardwalk Real Estate Investment Trust
(“Boardwalk REIT” or the “Trust”) is pleased to announce
a series of new acquisitions which are all expected to
close in the first quarter of 2005. The Trust will
acquire a total of 1,325 multi-family rental units located
in the provinces of British Columbia, Alberta and Quebec.
These purchases will add to Boardwalk REIT’s existing
Calgary, Montreal and Quebec City properties, as well as
expand its operations for the first time into the province
of British Columbia. The Trust also announced today that
it will issue, on a marketed underwritten basis, $120
million principal amount of senior unsecured debentures
that will mature on or about January 23, 2012. The offering
is being underwritten by National Bank Financial Inc. and
RBC Capital Markets. It is expected that closing of the
offering will occur on or about January 21, 2005.
This offering, provisionally rated “BBB” with a Stable
trend by Dominion Bond Rating Services, is Boardwalk REIT’s
inaugural senior unsecured debenture issue and is being made
by way of a short form prospectus to be filed with Canadian
securities regulatory authorities. The net proceeds from
the offering will be used by the Trust to fund the
acquisitions described in this press release, to repay
operating lines of credit and for general trust purposes.
“We are pleased to be coming to the market with our
first senior unsecured debt offering,” commented
Sam Kolias, President and CEO of Boardwalk REIT.
“This provides us with an additional source of capital
to fund our growth as Canada’s largest multi-family
residential landlord.”
Alberta and British Columbia portfolio
This 848 unit portfolio has an acquisition price of
approximately $83.1 million, which equates to approximately
$93,300 per unit and approximately $131.20 per rentable
square foot. The acquisition price, per door and per
rentable square foot, includes commercial space within
the Surrey property described below consisting of
40,137 square feet of rentable area at a price of
approximately $98.62 per square foot. The portfolio
will be purchased using proceeds from the above noted
offering and by the granting of interest-free vendor
take back mortgages by the vendor of this portfolio to
the REIT in the amount of approximately $7.9 million
for 2 years (collectively, the “VTB’s”).
The VTB’s are subject to lender and Canada Mortgage
Housing Corporation (“CMHC”) approval, to be secured
against Boardwalk’s Nuns’ Island portfolio in Montreal,
Quebec (“Nuns’ Island”). If lender and/or CMHC approval
cannot be obtained to secure the VTB’s against Nuns’
Island, the VTB’s will, subject to lender approval, be
secured against other real property assets of Boardwalk
acceptable to the vendor of this portfolio,
acting reasonably.
This transaction is expected to close by the end of
January, 2005 and the acquisition has a going in cap
rate of 6.39%. The properties are:
• Sarcee Trail Place – Calgary, AB
– a property consisting of two high-rise buildings
and one mid-rise building with a total of 376 units.
There are 188 one-bedroom and 188 two-bedroom unit
types within the property.
• Horizon Towers – Vancouver (Burnaby), BC
- Horizon Towers has two 13-storey high-rise
buildings with a total of 206 units.
There are 153 one-bedroom and 53 two-bedroom
unit types within the property.
• Surrey Village – Vancouver (Surrey), BC
- Surrey Village consists of one 18-storey
high-rise building with a total of 266 apartment
units.There are 60 bachelor, 163 one-bedroom and
43 two-bedroom unit types within the property.
The property also includes a 3-storey stand-alone
commercial property with 40,137 sq. feet
of rentable area.
The acquisition of the Alberta and British Columbia
Portfolio is subject to successful completion of the
debenture offering, discharge of the existing mortgages
on such properties and successfully securing the VTB’s
against Nuns’ Island or, failing that, against other
real property assets of Boardwalk acceptable to the
vendor of this portfolio, acting reasonably. Although
management of the REIT is confident that such conditions
will be satisfied, there can be no guarantee that such
conditions will be satisfied and, if such conditions
are not satisfied or waived, the REIT will not complete
its proposed purchase of this portfolio.
Sam Kolias stated “We had been investigating the B.C.
market for the right opportunity over the past several
years, and are very pleased to have been able to negotiate
the purchase of these prime assets. The Vancouver area
is the third largest rental market in the country, with
over 100,000 rental units, and the area has experienced
consistently low vacancy rates of around
1.5% over the past 10 years. According to CMHC’s
latest rental survey (October 2004), the vacancy rate
in the city has fallen to 1.3% versus 2.0% a year ago.
The Vancouver area also continues to be among the top
three markets in terms of new migrants moving from other
provinces and abroad. Victoria, another B.C. market we
are keeping a close eye on, is currently the country’s
lowest vacancy city according to CMHC’s survey.
Current vacancy sits at 0.6%,
which is down from 1.1% a year ago. Despite strong home
sales and new construction, Victoria vacancy rates fell
due to various factors including:
rising in-migration, strong employment growth,
growing student population and continuing depletion
of rental stock due to conversions.”
“This is our initial entry into the B.C. market and we
look forward to increasing our presence over time as
part of our strategy of continuing to broaden and
diversify our operations into a truly national platform.
We are equally pleased to have identified accretive
acquisitions in markets where we already have
significant size and scale.”
Additional Properties
Boardwalk has also entered into contracts to purchase
three additional properties making up 477 residential
apartment units in the Provinces of Alberta, British
Columbia and Quebec for an aggregate purchase price of
$32.5 million. These acquisitions will be funded
using a combination of the REIT’s operating credit
facility, which will subsequently be partially repaid
from proceeds of the debenture offering, general funds
of the REIT and, in the case of one property, the
assumption of an existing mortgage of $5.3 million
with a fixed interest rate of 6.07% due in January 2009.
These acquisitions are all subject to the REIT concluding
satisfactory due diligence on the properties under
contract. While management of the REIT is confident such
due diligence will be successfully concluded,
there can be no guarantee of such and if such due
diligence is not satisfactorily concluded, the REIT will
not proceed with the proposed acquisitions of some or
all of these additional properties.
In 2004, the Trust acquired a total
of 915 rental units which is just below its
previously disclosed target of between
1,000 to 2,000 units. At the end of 2004,
Boardwalk REIT owned 32,158 multi-family
rental units. Assuming the closing of
all of the above properties, and subsequent
to the 2004 year end, Boardwalk REIT’s
portfolio will have increased by 4.1% to
33,483 units and be further geographically
diversified.
Corporate Profile
Boardwalk REIT is an open-ended real estate investment
trust formed to acquire all of the assets and undertakings
of Boardwalk Equities Inc. Boardwalk REIT’s principal
objectives are to provide its unitholders with monthly
cash distributions, partially on a Canadian income
tax-deferred basis, and to increase the value of its
units through the effective management of its residential
multi-family revenue producing properties and the
acquisition of additional properties. Boardwalk REIT
currently owns and operates in excess of 250 properties
with over 32,000 units totalling approximately 27 million
net rentable square feet, and is Canada’s largest
owner/operator of multi-family rental communities.
Boardwalk REIT’s portfolio is concentrated in the
provinces of Alberta, Saskatchewan, Ontario and Quebec.
Forward Looking Information and Offering of Securities
This press release may contain forward looking statements.
These statements relate, but are not limited to, Boardwalk
REIT’s expectations, intentions, plans and beliefs.
These forward looking statements can generally be
identified by the use of words “anticipated”, “expected” or
the negative thereof or other comparable terminology.
You should be aware that these statements are subject to
known and unknown risks, uncertainties
and other factors, including the risks discussed under the
heading “Risk Factors” in the Management Information
Circular of Boardwalk Equities Inc. available on
www.sedar.com. Actual events or results may differ
materially from those suggested by any forward-looking
statements. You should not place undue reliance on any
forward-looking statements contained in this press release.
By their nature, forward-looking statements involve
numerous assumptions, inherent risks and uncertainties,
both general and specific, that contribute to the
possibility that the predictions, forecasts,
projections and various future events will not occur.
Although management of Boardwalk REIT believes
that the expectations reflected in the forward-looking
statements are reasonable, there can be no assurances
that future results, levels of activity, performance or
achievements will occur as anticipated.
None of Boardwalk REIT nor any other
person assumes responsibility for the accuracy and
completeness of any forward-looking statements, and no
one has any obligations to update or revise any
forward-looking statement, whether as a result of new
information, future events or such other factors which
affect this information, except as
required by law.
This press release shall not constitute an offer to sell,
or the solicitation of an offer to buy,
any securities in any jurisdiction.
The debentures being offered have not been
and will not be registered under the U.S.
Securities Act of 1933 and state securities laws.
Accordingly, the debentures may not be offered
or sold to U.S. person except pursuant to
applicable exemptions from registration.
For further information please contact:
Boardwalk REIT
Sam Kolias,
President and CEO,
(403) 531-9255;
Roberto Geremia,
Senior Vice President, Finance
and Chief Financial Officer,
(403) 531-9255;
Paul Moon,
Director of Corporate Communications,
(403) 531-9255.
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OR FOR DISSEMINATION IN THE UNITED STATES.
ANY FAILURE TO COMPLY WITH THIS RESTRICTION
MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.
