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Choice Properties Real Estate Investment Trust Completes Acquisition of Portfolio of Five properties from Loblaw Companies Limited

October 26, 2016

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

TORONTO, Oct. 26, 2016 /CNW/ - Choice Properties Real Estate Investment Trust ("Choice Properties" or the "Trust") (TSX: CHP.UN) today completed the acquisition of a portfolio of five properties from certain subsidiaries of Loblaw Companies Limited (collectively, "Loblaw").  The portfolio comprises one Shoppers Drug Mart ("Shoppers") distribution centre, one Shoppers standalone store, two multi-tenant sites anchored by a Loblaw food store, and one parcel of land that is currently being developed with a Loblaw food store. The aggregate purchase price of the portfolio was approximately $40.9 million, excluding transaction costs and was funded by a combination of cash (approximately 71%) and equity (approximately 29%). 

Highlights of Acquired Portfolio

  • Expands portfolio by approximately 394,000 square feet ("sq. ft.") of gross leasable area ("GLA") that is currently 99.7% occupied;
  • Accretive upon closing with a stabilized net operating income of approximately $2.6 million representing an implied capitalization rate of approximately 6.5%. Upon completion of the Loblaw food store on the parcel of land, the stabilized net operating income increases to approximately $3.1 million representing an implied capitalization rate of approximately 6.6%; and
  • Offers development opportunities with a potential to develop up to 344,000 sq. ft. of incremental GLA, including approximately 310,000 sq. ft. of mixed-use development at the Mississauga, Ontario property and the ongoing greenfield development of a new 28,510 sq. ft. Loblaw food store on a parcel of land in Edmonton, Alberta.

With the acquisition of these five properties, Choice Properties' portfolio consists of 534 properties comprising 513 retail properties, 14 industrial properties, one office complex, and six parcels of undeveloped land, totaling approximately 42.9 million sq. ft. of GLA across Canada. Upon completion of this transaction, the total number of Shoppers Drug Mart-anchored or standalone sites in Choice Properties' portfolio increased to 11 retail sites and one industrial site.

The acquisition was funded through the issuance of 878,713 Class B LP Units of Choice Properties Limited Partnership, which have a value of approximately $12.0 million, and the balance in cash. With the completion of this transaction, Loblaw's and George Weston Limited's effective ownership interests in the Trust are 82.7% and 5.8%, respectively.

Portfolio Summary

The acquired portfolio comprises approximately 394,000 sq. ft. of GLA.  As principal tenant, Loblaw represents approximately 77.7% and 95.0% of total GLA and stabilized NOI, respectively, of this portfolio.  Following the completion of the new Loblaw food store in Edmonton, Alberta, Loblaw will represent approximately 79.2% and 95.9% of total GLA and stabilized NOI, respectively. The leases with Loblaw for the retail properties have an initial term of 15 years, with multiple renewal options and include rent escalations of approximately 7.7% every five years. The industrial property has an 18-year initial lease term with multiple renewal options and includes rent escalations of approximately 6.1% after the first three years and 10.4% every five years thereafter.







Address

Banner

Year Built /
Last Renovated

Loblaw
GLA

Ancillary
GLA

%
Occupied

1390 – 1400 Neilson Rd., Toronto, ON

Shoppers Drug Mart

2014 / NA

17,065

-

100%

3 – 12 Huron Walk,
Manitouwadge, ON

valu-mart

1986 / 2016

8,000

13,598

95%

1250 South Service Rd.,
Mississauga, ON

no frills

1962 / 2016

55,088

74,293

100%

10 DeWare Dr., Moncton, NB

Shoppers Drug Mart Distribution Centre

1995 / 2004

225,990

-

100%

167 Ave & McConachie Way,
Edmonton, AB

NA (Greenfield land)

NA

NA

NA

NA




306,143

87,891

99.7%

 

About Choice Properties Real Estate Investment Trust
Choice Properties Real Estate Investment Trust is an owner, manager and developer of well-located commercial real estate across Canada. Choice Properties' portfolio spans approximately 42.9 million square feet of gross leasable area and consists of 534 properties primarily focused on supermarket- and drug store-anchored shopping centres, stand-alone supermarkets and stand-alone drug stores. Choice Properties' strategy is to create value by enhancing and optimizing its portfolio, through accretive acquisitions, strategic developments and active property management.  Choice Properties' principal tenant and largest unitholder is Loblaw Companies Limited, Canada's largest retailer. Choice Properties' strong alliance with Loblaw Companies Limited positions it well for future growth. For more information, visit Choice Properties' website at www.choicereit.ca and Choice Properties' issuer profile at www.sedar.com.

Forward–Looking Statements
This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects Choice Properties' current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Choice Properties' control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed in the MD&A section of Choice Properties' Second Quarter 2016 Report to Unitholders. Choice Properties does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

"NOI" is not a measure recognized under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and does not have any standardized meaning prescribed by IFRS. NOI is a supplemental measure of an issuer's performance and management believes that NOI is useful in the assessment of the REIT's operating performance for valuation purposes, and is also a relevant measure of the ability of the REIT to earn and declare distributions to Unitholders. NOI, as computed by the REIT, may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to NOI reported by such organizations. NOI should not be construed as an alternative to comprehensive income determined in accordance with IFRS as indicators of the REIT's performance. For additional information regarding this non-IFRS measure, including the definition thereof, please refer to the REIT's most recent management's discussion and analysis of results of operations and financial condition, a copy of which is available at www.sedar.com.

SOURCE Choice Properties Real Estate Investment Trust

Kim Lee, Vice President, Investor Relations and Business Intelligence, Choice Properties Real Estate Investment Trust, t (416) 324-7899, e kim.lee@choicereit.ca

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