TORONTO , March 20, 2013 /CNW/ - KEYreit (KRE-UN.TO) jointly with one of Ontario's leading developers, The Rockport Group ("Rockport"), announced today an agreement for the sale and future redevelopment of KEYreit's property located at 829 St. Clair Avenue West, Toronto (the "St. Clair Property").
KEYreit has agreed to sell the St. Clair Property to Rockport for $3.29 million (the "Sale Price"), in exchange for a promissory note equal to the Sale Price. Upon completion of the redevelopment, KEYreit has the option of purchasing the retail component of the project at a discount to its future market value. If KEYreit exercises this option, the promissory note and accrued interest may be used towards the purchase price.
The closing of the sale of the St. Clair Property is conditional upon a number of factors with the latest possible date being October 1, 2017 .
The St. Clair Property lands are approximately 11,000 square feet in size and currently contain a 2,593 square foot single-tenant building that is leased to Soul Restaurants ( Canada ) Inc., and operating as a KFC restaurant. Rockport has purchased the adjacent lands at 833 and 835 St. Clair Avenue West and intends to develop a nine story premium condominium complex of approximately 125 suites, totalling up to 110,000 square feet of Residential development. The redevelopment will also consist of retail at street-level of approximately 10,000 square feet that KEYreit has the option of purchasing as described above.
"We recognize that we have a lot of great properties that are currently being under-utilized," said John Bitove, Chief Executive Officer of KEYreit. "As Canada becomes more urban, it is time for us to make the most of our core assets and capitalize on our cities' growth. The sale of the St. Clair Property is the first example of KEYreit extracting maximum value from its urban property portfolio. The St. Clair Property currently has a book value of $1.45 million reflecting its current use as a single-tenant property leased to a quick service restaurant operator. However, the property's actual value is more than double this when the higher and better permitted use is applied. We are excited about this project as it lays out one model which KEYreit intends to use in order to maximize value for unitholders by intensifying its urban properties over the long-term. This model eliminates the REIT's redevelopment risk, but provides KEYreit with an opportunity to increase and upgrade one of its prime urban retail assets. In addition, we are also very pleased to be working with one of Ontario's premier developers, Rockport, on our first intensification project".
"We are thrilled to be working with KEYreit on this exciting project," said Jack Winberg , Chief Executive Officer of Rockport. "KEYreit has been a great partner and we are hopeful there may be similar opportunities for us to continue to work together in the future. We are very pleased to be able to execute on this transaction which permits KEYreit to turn 2,600 square feet of 30 year old, single-purpose space into over 10,000 square feet of brand new, much more versatile and valuable retail space at no risk, and gives us the opportunity to create a new residential community in an emerging, dynamic area of the City; so it's a win-win situation".
This press release contains certain information or statements that may constitute forward-looking information within the meaning of securities laws, which reflect the current view of KEYreit with respect to the REIT's objectives, plans, goals, strategies, future growth, results of financial and operating performance and business prospects and opportunities. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "forecast", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. In particular, forward-looking information included in this press release includes, but is not limited to, statements with respect to the REIT's redevelopment plans of its urban properties, ability to lease vacant property units, execute planned acquisitions, collect minimum rents, diversify its tenant base, undertake land intensification projects, refinance loans and mortgages at their maturity, complete accretive acquisitions, and maintain or grow monthly cash distribution levels, and also with respect to the timing of such events. Forward-looking information should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All of the statements and information in this press release containing forward-looking information are qualified by these cautionary statements.
Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management's good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to the REIT's reliance on key tenants, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, distributions, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in the REIT's most recent Annual Information Form available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to the REIT or that the REIT currently believes to be less significant may also adversely affect the REIT.
KEYreit cautions readers that the list of factors is not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by the REIT will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, the REIT. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date.
The REIT disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
KEYreit (KRE-UN.TO) is Canada's premier small-box retail property owner with 226 properties in nine provinces across Canada . KEYreit's properties are well located and geographically diverse across Canada with the majority of all properties containing long-term quadruple net leases.
About The Rockport Group
Rockport is a fully integrated land development and construction concern now in its 56th successful year of contributing to the growth of the Toronto area. It has a broad range of real estate investment experience and expertise and has developed a particular specialty in the creation of mid and high-rise condominium and seniors housing communities on infill urban properties. To learn more about Rockport please go to our web site at www.rockportgroup.net
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