TORONTO, ONTARIO -- (Marketwired) -- 01/07/15 -- Editor's note: There is one video associated with this press release.
DREAM GLOBAL REIT (TSX: DRG.UN) has closed the last tranche of its previously reported transaction with its South Korean joint venture partner, Public Official Benefits Association ("POBA"). In total, POBA has now acquired a 50% joint venture interest in seven of Dream Global REIT's properties for gross proceeds of approximately $315 million (EUR 221 million) at a cap rate of 5.3%. In addition, Dream Global REIT and POBA are in discussions to expand their partnership through the sale of a 50% interest in an additional asset owned by the Trust.
On December 30, 2014, the Trust entered into an agreement to acquire Millerntorplatz 1, a $134.1 million (EUR 95.7 million) office property in Hamburg, Germany. The acquisition, which is scheduled to close by the end of January 2015, will be the Trust's largest asset in Hamburg. This multi-tenant property, built in 1997, is leased to a variety of tenants including Deutsche Rentenversicherung, Germany's largest state pension fund, and the City of Hamburg. The asset comprises approximately 375,000 square feet of gross leasable area and has a weighted average remaining lease term of 5.3 years. It is situated in a vibrant city centre location in Hamburg, adjacent to a key transit hub.
The Trust will acquire the property at a going-in cap rate of 6.0% and has signed a term sheet for mortgage financing at approximately 60% loan-to-value. The proposed mortgage is for a 10-year term at an interest rate of approximately 1.7% based on current market rates. The property is 88% occupied and offers additional revenue potential through the lease-up of vacancy as well as retail intensification and repositioning.
"The sale of the 50% interest in the assets to POBA was completed at a 5.3% cap rate, and the proceeds were reinvested in assets of similar or better quality, like Millerntorplatz 1, at an average 5.9% cap rate. In addition, the new acquisitions were financed at interest rates 90 bps lower than the mortgages they replaced, with longer terms to maturity. Including the management fees that will be earned by the Trust, we anticipate an additional $0.03 per year of AFFO per unit from this transaction," said Alex Sannikov, Vice President, Portfolio Management.
Jane Gavan, CEO of Dream Global REIT, invites you to view a virtual tour of our properties in Germany, including our recent acquisitions, Officium and Cologne Tower, which were acquired with the proceeds of the joint venture with POBA.
To view our property tour video, please visit www.dreamglobalreit.ca.
Dream Global REIT is an unincorporated, open-ended real estate investment trust that provides investors with the opportunity to invest in commercial real estate exclusively outside of Canada. Dream Global REIT's portfolio currently consists of approximately 14.9 million square feet of gross leasable area of office, industrial and mixed use properties across Germany. For more information, please visit www.dreamglobalreit.ca.
Forward-looking information
This press release may contain forward-looking information within the meaning of applicable securities legislation. Forward looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Global REIT's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, global and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate functions. Our objectives and forward-looking statements are based on certain assumptions, including that the Canadian and German economies remain stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dream Global REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in Dream Global REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Global REIT's website at www.dreamglobalreit.ca.
Contacts:
P. Jane Gavan
President and Chief Executive Officer
(416) 365-6572
jgavan@dream.ca
Rene D. Gulliver
Chief Financial Officer
(416) 365-5447
rgulliver@dream.ca
Alexander Sannikov
Vice President, Portfolio Management
(416) 365-4106
asannikov@dream.ca
