Daily Commercial News - July 8, 2010
Crombie Real Estate Investment Trust ("Crombie") (TSX:CRR.UN) announced today that it has entered into a non-binding letter of intent for the acquisition of $102 million of Canadian retail properties with Sobeys (a wholly owned subsidiary of Empire Company Limited ("Empire") (TSX:EMP.A)) comprising a portfolio of 11 retail properties (the "Portfolio"). The Portfolio totals approximately 496,630 square feet and consists of eight properties located in Western Canada, two in Ontario and one in Atlantic Canada.
Crombie has also entered into an agreement with a syndicate of underwriters co-led by CIBC World Markets Inc. and TD Securities Inc., to issue, on a bought-deal basis, 2,670,000 units (the "Units") at a price of $11.05 per unit for gross proceeds of approximately $29.5 million. Concurrently, ECL Developments Limited (a wholly owned subsidiary of Empire) in satisfaction of its pre-emptive right with respect to the public Unit offering will subscribe for 1,855,000 Exchangeable LP Units at a price of $11.05 per unit for additional gross proceeds of $20.5 million. The total $50 million offering is subject to regulatory approval.
Crombie intends to use the net proceeds from this offering to fund in part the acquisition of the Portfolio, additional acquisitions to be completed later in 2010 and for general trust purposes. The Sobeys portfolio acquisition is subject to completion of a definitive agreement and normal due diligence.
The Portfolio is 100% leased and comprised of six freestanding Sobeys stores, four freestanding Sobeys stores with retail pads; and one Sobeys anchored plaza. Sobeys, Canada's second largest retail grocer will occupy approximately 95% of the total acquired space on lease terms averaging 20 years. The acquisition price represents a going in capitalization rate of approximately 7.7%.
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