Firm Capital Property Trust Announces the Acquisition of a 50% Interest in an Industrial Portfolio and Non-Brokered Private Placement

Firm Capital Property Trust (FCPT) is pleased to announce that the Trust has contracted to purchase a 50% participation in a property portfolio acquisition. The total acquisition of 25 industrial buildings located in Montreal is $48.2 million, excluding transaction costs (the Portfolio). The acquisition is still subject to certain due diligence conditions.
The Portfolio is comprised of 1,029,898 square feet located in Montreal. The Portfolio consists of seventeen multi-tenant and eight single-tenant industrial buildings. The Portfolio has a total of 90 tenants. The Portfolio is in proximity to Pierre Elliott Trudeau Airport as well as the Trans-Canada Highway. The Portfolio is approximately 90% occupied.
The acquisition is an off market transaction originated and structured by the Trust's asset manager, Firm Capital Realty Partners Inc. 100% of the Portfolio is being acquired for $48.2 million, before transaction costs, or under $47 per square foot. The Portfolio will be financed with a new first mortgage to be provided by a Canadian Chartered Bank for proceeds of approximately $32 million. Subject to timing, the closing may occur by utilizing a bridge acquisition facility, which will subsequently be replaced with long term bank financing. Long term financing interest rates are currently in the 3.75% and 4.5% range depending if the term is five or ten years. 50% of the Portfolio will be acquired by the Trust, while the remaining 50% will be acquired by an entity associated with the Asset Manager that consists predominantly of senior management and certain trustees of FCPT. The joint acquisition by the parties associated with the Asset Manager confirms the alignment of interests and is in accordance with the Trust's stated business strategy of completing joint acquisitions with experienced real estate industry professionals. The Portfolio acquisition is expected to close on or around July 24, 2013.
The funding required by the Trust for its 50% interest in the Portfolio will come from a combination of existing cash resources and a Board of Trustees approved non-brokered private placement of up to $8.0 million at $5.10 per trust unit. Closing of the non-brokered private placement will occur on or about July 24, 2013.
Pro-forma the Portfolio acquisition and financing activity, the Trust's Adjusted Funds From Operations (AFFO) payout ratio is anticipated to be below 80% (assuming 10 year mortgage debt interest rates) and Debt to Gross Book Value of approximately 55%. The Trust will increase the size of its current portfolio to approximately $58 million and will grow to 30 properties. In addition, the acquisition adds diversification through the addition of the industrial asset class to the existing retail and medical office portfolio.

on July 8, 2013