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PROREIT In JV With Crestpoint Real Estate Investments In A $228 Mln Deal

PRO Real Estate Investment Trust (PRV.UN), Tuesday announced a joint venture agreement with Crestpoint Real Estate Investments Ltd. a commercial real estate and mortgage investment manager to each acquire a 50 percent interest in 21 primarily industrial properties currently owned by a third party, for price of $228 million.

In this connection, PROREIT would sell a 50 percent interest in 21 of its currently owned properties to Crestpoint, valued $227 million, for a consideration to PROREIT of approximately $113.5 million (before closing costs).

The strategic agreement is to jointly own an industrial-focused portfolio comprising nearly 3.1 million square feet of gross leasable area of 42 properties, including 41 properties in Halifax, Nova Scotia, and one property in Moncton, New Brunswick.

The combined transaction, which would be immediately accretive to earnings, would result in PROREIT and Crestpoint to each have a 50 percent ownership interest in the 42-property portfolio. PROREIT, through its wholly-owned property management business Compass Commercial Realty, would act as the sole property manager for the entire portfolio and would collect industry standard fees.

PROREIT's acquisition of the 50 percent interest in the 21 properties, totaling 1.6 million square feet, for a cost to PROREIT of approximately $114 million (excluding closing costs), would be financed from the proceeds of a 50 percent interest in approximately $148 million of new fixed-rate mortgages and the balance of approximately $40 million would be satisfied with cash on hand, including cash from the proceeds of the sale of a 50 percent interest in existing properties to Crestpoint.

PROREIT's sale of a 50 percent interest in 21 of its currently owned properties, totaling 1.5 million square feet, will result in considerations of approximately $49 million in cash to be received from Crestpoint (before closing costs), who will also assume a 50 percent interest in approximately $129 million of fixed-rate mortgages currently held by PROREIT.

The balance of the proceeds to PROREIT, net of the acquisition payment, will be used to reduce the REIT's credit facility. The transaction is expected to close in the coming weeks and is subject to customary closing conditions.

The 21 acquisition properties are located in Halifax Burnside Industrial Park, increasing PROREIT's presence in the area to 42 properties.

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