STELLARTON, NS, Aug. 27 /CNW/ – Crombie Real Estate Investment Trust ("Crombie") (TSX: CRR.UN) is pleased to report that it completed a $15 million mortgage financing with the Business Development Bank of Canada ("BDC") on 10 properties acquired in a portfolio acquisition in April of 2008. The proceeds of this financing will be applied to repay in part a floating rate term facility (the "Term Facility") used to partially finance the acquisition by Crombie of a portfolio of 61 properties (the "Portfolio Acquisition").
The $15 million of mortgage financing is being provided for some of the smaller, more rural properties involved in the Portfolio Acquisition and represents approximately 62.2% of the original purchase value of the 10 properties financed.
The mortgages will have a 20 year term and a 20 year amortization with a fixed interest rate of 7.30%. Factoring in the cost of settling the delayed interest rate swap placed upon assumption of the Term Facility, the overall weighted average interest rate is 8.71%.
Including today's financing, approximately $156 million of the original $280 million Term Facility has now been replaced with long term debt. The overall weighted average interest rate for the financings to date is approximately 6.74%, including the cost of settling the related delayed interest rate swap agreements. This is 39 basis points higher than the 6.35% rate used to model the pro forma accretion of the Portfolio Acquisition.
Commenting on the closing of the financing, Donald Clow, F.C.A., President and Chief Executive Officer stated: "This financing, while not large in dollar size, was strategically important for Crombie to complete as it provided long-term financing for some of the smaller, more rural properties acquired in the portfolio acquisition. Crombie will continue to aggressively pursue other avenues to replace the remainder of the Term Facility with long-term financing."
Crombie is an open-ended real estate investment trust established under, and governed by, the laws of the Province of Ontario. The trust invests in income-producing retail, office and mixed-use properties in Canada, with a future growth strategy focused primarily on the acquisition of retail properties. Crombie currently owns a portfolio of 113 commercial properties in seven provinces, comprising approximately 11.1 million square feet of rentable space.
BDC is Canada's business development bank. From more than 100 offices across the country, BDC promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs. Visit www.bdc.ca for more information.
This news release may contain forward looking statements that reflect the current expectations of management of Crombie about Crombie's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "continue", "may", "will", "estimate", "anticipate", "believe", "expect", "intend" and similar expressions have been used to identify these forward looking statements. These statements reflect current beliefs and are based on information currently available to management of Crombie. Forward looking statements necessarily involve known and unknown risks and uncertainties. A number of factors, including those discussed in the 2008 annual Management Discussion and Analysis under "Risk Management", could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward looking statements. There can be no assurance that the expectations of management of Crombie will prove to be correct.
In particular, certain statements in this document discuss Crombie's anticipated outlook of future events. These statements include, but are not limited to refinancing of the remaining Term Facility, which could be impacted by credit markets conditions including liquidity, credit spreads and other financing risks. Readers are cautioned that such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Crombie can give no assurance that actual results will be consistent with these forward-looking statements.
Contact: Scott Ball, C.A., Vice President, Chief Financial Officer and Secretary, Crombie REIT, (902) 755-8100