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Morguard North American Residential Reit acquires USD633m of US multi-family assets

Morguard North American Residential Real Estate Investment Trust has finalised two separate agreements to acquire a total of 6,474 multi-family residential units in the US for gross consideration of USD633m.

The first agreement is for the purchase, through a subsidiary, of 12 multi-family residential apartment and town home complexes comprised of 3,752 units located in Dallas, Texas, Denver, Colorado, Tampa, Florida, Raleigh, North Carolina and Atlanta, Georgia. The acquisition is expected to close on or about 31 March and conditions, other than customary closing conditions and certain consents, have now been satisfied.

The 12 properties are low rise, enclave, garden-style walk-ups with surface and covered parking, leasing centres and amenity packages with a weighted average age from construction of 11+years (featuring 2,200 units built post 2002).

Additionally, the Reit has finalised an agreement to purchase, through a subsidiary, 12 multi-family residential apartment and town home complexes comprised of 2,722 units located in Pensacola, Florida, Mobile, Alabama and south-west Louisiana from Morguard Corporation. The acquisition is expected to close during the first quarter of 2013 and conditions, other than customary closing conditions and certain consents, have now been satisfied.

The properties are typical enclave three-storey garden style walk-ups with up-graded suites, surface and covered parking, leasing centres and amenity packages; the properties are generally in excess of 15 years old.

Combined, the two portfolios, will be purchased for gross consideration of approximately USD633m (excluding closing costs and asset performance bonus'), financed through (i) the assumption of mortgages in the principal amount of approximately USD400m with a weighted average interest rate of 4.5 per cent and a weighted average maturity of 4.5 years; and (ii) other available sources of funds.

After closing both transactions, the Reit will own interests in a total of 12,850 units in Canada and the US valued at approximately USD1.5bn.

"These investments afford the Reit the opportunity to acquire a portfolio of institutional quality assets with a known operational history, solid yield and high quality physical plant," says Rai Sahi, chief executive officer, Morguard North American Residential Reit. "This acquisition will contribute to the Reit on an accretive basis and is indicative of our US growth strategy."

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