True North REIT buys 340 Laurier

The Canadian Press ~ OBJ
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True North Commercial Real Estate Investment Trust (TSXV:TNT.UN) announced Monday that it's acquiring five office and retail properties across the country for $144.7 million.

The Sir Wilfrid Laurier Building at 340 Laurier Ave.

The string of transactions will see the REIT buy buildings in Ontario, Alberta and New Brunswick for a total of 561,882 square feet of office and retail space.

The Sir Wilfrid Laurier Building at 340 Laurier Ave. contains 270,000 square feet spread out over 13 floors. It is fully leased, with the federal government occupying roughly 98 per cent of its rentable area.

While True North said in a statement that the building is "well maintained," other sources have said in recent years that the property is in poor condition and that future owners may face challenges retaining government tenants.

The average remaining lease term, weighted by gross revenue, at 340 Laurier Ave. is 5.1 years, according to True North.

The Sir Wilfrid Laurier Building, which houses the Correctional Service of Canada and Public Safety Canada, made headlines last month when a gas leak forced the evacuation of more than 1,000 workers.

The acquisitions will be made through a combination of $50.1 million in cash and $94.6 million of new mortgage debt, including a vendor take-back mortgage of $1.7 million in the case of one of the properties, True North said.

To finance the cash component of the purchase price, True North has agreed to sell, on a bought deal basis, more than 14.5 million units at a price of $3.83 per unit for aggregate gross proceeds of $55.7 million to a syndicate of underwriters led by Raymond James Ltd.

An over allotment option, if fully exercised, could bring the gross offer to $64.1 million.

"We are very pleased with these strategic acquisitions, which fit our stated strategy of initially focusing on secondary markets," said president and CEO Daniel Drimmer.

"Furthermore, the strong tenant base of the acquired properties will contribute to the overall quality of the REIT's portfolio," added Drimmer, who is also chairman of the company's board.

-With files from Peter Kovessy

Organizations: REIT, Sir Wilfrid Laurier Building, Correctional Service of Canada and Public Safety Canada Raymond James Ltd.

Geographic location: Ontario, Alberta, New Brunswick

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  • J
    January 25, 2013 - 10:00

    You should ask some of the people who work there how "well maintained" the building is... what with the gas leaks, the mice infestations, the constant evacuations of the building for health reasons, etc.