These properties are being acquired for aggregate purchase prices of $247.6 million and US$68.8, representing a weighted-average capitalization rate of 6.4%. The purchase prices are being settled with cash on hand and from the proceeds of new and assumed mortgage financing aggregating $106.4 million and US$34.4 million. The mortgage financing bears interest at a weighted-average annual rate of 3.5% and with a weighted-average term to maturity of 8.5 years.
Subsequent to March 31, 2013, Artis announced a bought deal equity offering for $172.5 million of aggregate gross proceeds (including the exercise of in full of the underwriters' over-allotment option). The offering is expected to close on May 9, 2013.
Portfolio Operational and Leasing Results
Portfolio occupancy at March 31, 2013 increased to 95.8% (96.8% including commitments on vacant space) from 95.6% at December 31, 2012, and 95.0% at March 31, 2012.
Excluding GAAP adjustments for straight-line rent and amortization of tenant inducements, Same Property NOI results for Q1-13 increased 2.4% over Q1-12 results.
In Q1-13, Artis renewed 733,424 square feet of leasable area at a weighted-average rate increase of 6.9%.
Considering all properties owned at March 31, 2013, 10.6% of the portfolio's leasable area is set to expire in 2013 and 10.3% in 2014. Thus far, 48.3% of leasable area expiring in 2013 has been renewed or committed to new leases. Management estimates that the weighted-average market rent for leases expiring in the remainder of 2013 and in 2014 are 5.8% and 7.7%, respectively, above in-place rents. Across the portfolio, management estimates that the weighted-average market rents at expiry for the entire portfolio are 8.9% above in-place rents.
The weighted-average term to maturity of leases at March 31, 2013, is 4.9 years. Approximately 63.1% of the REIT's gross revenue is derived from national or government tenants. Government tenants account for 7.0% of the portfolio's gross revenues, with a weighted-average lease term to maturity of 7.7 years. The top twenty non-government tenants are well-diversified across industry sectors include many national, international and publicly listed companies. They collectively account for 19.1% of the portfolio's gross revenues, with a weighted-average term to maturity of 6.7 years.
Upcoming Webcast and Conference Call:
Interested parties are invited to participate in a conference call with management on Wednesday, May 8, 2013 at 12:00 p.m. CST (1:00 p.m. EST). In order to participate, please dial 1-416-340-2216 or 1-866-226-1792. You will be required to identify yourself and the organization on whose behalf you are participating.
Alternatively, you may access the simultaneous webcast by following the link from our website at http://www.artisreit.com/investor-link/conference-callspresentations/. Prior to the webcast, you may follow the link to confirm you have the right software and system requirements.
If you cannot participate on May 8, 2013, a replay of the conference call will be available by dialing 1-905-694-9451 or 1-800-408-3053 and entering passcode #3456666. The replay will be available until May 22, 2013. The webcast will be archived 24 hours after the end of the conference call and will be accessible for 90 days.
Artis is a diversified Canadian real estate investment trust investing in office, industrial and retail properties. Since 2004, Artis has executed an aggressive but disciplined growth strategy, building a portfolio of commercial properties in Canada and the United States, with a major focus on Western Canada. Artis' commercial property comprises nearly 23.9 million square feet of leasable area in 224 properties. Leasable area by asset class is approximately 18.3% retail, 32.6% office and 49.1% industrial. The portfolio is located 7.7% in British Columbia, 25.7% in Alberta, 5.4% in Saskatchewan, 15.8% in Manitoba, 16.1% in Ontario and 29.3% in the U.S.
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