The property, known as Siena Apartments, consists of a four-storey apartment building, with a 93-stall underground parkade and is comprised of six one-bedroom and 60 two-bedroom suites. All of the suites are fully furnished and have individual condominium title.
The property is 100% leased to a major oil sands operating company until May 1, 2012. The lease agreement provides the tenant with an option to extend the lease in 2012 for an additional five years at the current market rents at that time.
The purchase price of $30 Million represents an estimated average capitalization rate of 7.5% over the term of the lease. The acquisition will be financed with a new first mortgage loan in the estimated amount of $21 Million, a vendor take-back mortgage loan of $4 Million and the balance in cash. The first mortgage loan will bear interest at an estimated rate of 5.5% for a five-year term and will have a 20-year amortization. The vendor take-back mortgage loan will be a 5% interest only mortgage and will be due on July 1, 2010. The acquisition will close on July 2, 2008.
LREIT will also have a right of first refusal to acquire Phase II of Siena Apartments, which is currently under construction. Phase II will consist of 58-suites, which will also be 100% leased to a major oil sands operating company on a net rent basis for a five-year term. -- www.cnxmarketlink.com