TORONTO,
May 30, 2012 /CNW/ - H&R Real
Estate Investment Trust ("H&R") (TSX: HR.UN; HR.DB; HR.DB.B;
HR.DB.C; HR.DB.D; HR.DB.E) announced today the terms on two series
of first mortgage bonds secured by The Bow, Calgary, Alberta. The bonds will be
issued by Centre Street Trust, a wholly owned entity of
H&R. Closing is expected to occur on June 14, 2012.
The offering was upsized from $400 million to $500 million and is comprised of:
(a) $250 million, 9 year term
(maturing June 14, 2021), semi-annual
interest only bonds with an interest rate of 3.690% (the "Series A
Bonds") and (b) $250 million, 10 year
term (maturing June 14, 2022),
semi-annual 30 year amortizing bonds with an interest rate of
3.693% (the "Series B Bonds" together with the Series A Bonds, the
"Initial Bonds"). The Initial Bonds achieved a provisional rating
of A by DBRS.
On closing, the Bow will also secure a revolver
in favour of certain lenders in the amount of up to $300 million (the "Secured Revolver"). The
security for the Initial Bonds and the Secured Revolver will rank
pari passu and are subject to an intercreditor agreement with the
trustee on behalf of the holders of the bonds.
Further bonds secured by The Bow may be issued
from time to time in a total aggregate amount including the Secured
Revolver not to exceed $800 million
and shall not exceed $365 million at
the end of the initial 25 year term of the Encana Lease.
H&R intends to utilize the proceeds from the
Offering to repay indebtedness and for future acquisitions,
including financing a portion of the recently announced acquisition
of a one-third interest in Scotia Plaza in downtown Toronto, one of Canada's preeminent office properties
scheduled to close on June 20,
2012.
H&R's proforma debt to fair value after the
issuance of the Initial Bonds and purchase of Scotia Plaza is
expected to be 55.3%. In terms of liquidity, H&R will
have cash on hand of approximately $105
million and approximately $553
million available from its operating facilities.
Assuming the conversion of the 2013 and 2014 convertible debentures
into units (see below), the proforma debt to fair value will
decrease to 53.9%.
RBC Dominion Securities (as lead agent and sole
bookrunner), together with CIBC World Markets and TD Securities,
are acting as agents for the Offering of the Initial Bonds.
H&R also announced its intention to redeem
all of its outstanding 6.65% convertible unsecured subordinated
debentures maturing June 30, 2013
(the "2013 Convertible Debentures") on July
3, 2012 (the "Redemption Date") pursuant to and subject to
the terms of the trust indenture dated June
6, 2008 ("Trust Indenture"). As at the date hereof, the
aggregate principal amount of $114,795,000 was outstanding on the 2013
Convertible Debentures. The 2013 Convertible Debentures are
listed for trading on the Toronto Stock Exchange ("TSX") under the
trading symbol HR.DB.
Each outstanding 2013 Convertible Debenture in
the principal amount of $1,000 will
be redeemed as at the Redemption Date upon payment by H&R of a
redemption amount of $1,000.55, being
equal to the aggregate principal amount and all accrued and unpaid
interest thereon up to but excluding the Redemption Date, less any
applicable withholding taxes. The regular interest payment due
June 30, 2012 will be paid to holders
of the 2013 Convertible Debentures on such date pursuant to the
terms of the Trust Indenture.
Finally, H&R announced its intention to
redeem all of its outstanding 6.75% Series B convertible unsecured
subordinated debentures maturing December
31, 2014 (the "2014 Convertible Debentures") on the earliest
date permitted under the first supplemental trust indenture dated
July 30, 2009 (the "Supplemental
Indenture"), being July 31, 2012 (the
"Series B Redemption Date") pursuant to and subject to the terms of
the Supplemental Indenture. As at the date hereof, the aggregate
principal amount of $21,639,500 was
outstanding on the 2014 Convertible Debentures. The 2014
Convertible Debentures are listed for trading on the TSX under the
trading symbol HR.DB.B.
Each outstanding 2014 Convertible Debenture in
the principal amount of $1,000 will
be redeemed as at the Series B Redemption Date upon payment by
H&R of a redemption amount of $1,005.73, being equal to the aggregate principal
amount and all accrued and unpaid interest thereon up to but
excluding the Series B Redemption Date, less any applicable
withholding taxes. The regular interest payment due June 30, 2012 will be paid to holders of the 2014
Convertible Debentures on such date pursuant to the terms of the
Supplemental Indenture.
Notice of the redemptions will be delivered to
the Canadian Depository for Securities Limited ("CDS") and the
trustee, CIBC Mellon Trust Company today, in the case of the 2013
Convertible Debentures, and in due course in accordance with the
Supplemental Indenture, in the case of the 2014 Convertible
Debentures. Non-registered holders (banks, brokerage firms or other
financial institutions) who maintain their interests in the 2013 or
2014 Convertible Debentures through CDS should contact their CDS
customer service representative with any questions about the
redemptions. Beneficial holders with any questions about the
redemptions should contact their respective brokerage firm or
financial advisor.
About H&R
H&R is an open-ended real estate investment trust, which owns a
North American portfolio of 40 office, 118 industrial, 133 retail
properties comprising over 43 million square feet, and 3
development projects with a fair value of approximately
$9.3 billion. The foundation of
H&R's success since inception in 1996 has been a disciplined
strategy that leads to consistent and profitable growth. H&R
leases its properties long term to creditworthy tenants and strives
to match those leases with primarily long-term, fixed-rate
financing.
Forward-looking Statements
Certain information in this news release contains forward-looking
information within the meaning of applicable securities laws (also
known as forward-looking statements) including, among others,
statements relating to the objectives of H&R, strategies to
achieve those objectives, H&R's beliefs, plans, estimates, and
intentions, and similar statements concerning anticipated future
events, results, circumstances, performance or expectations that
are not historical facts including, in particular, H&R's
expectation regarding future developments in connection with and
financial impact of The Bow, the expected closing of the Offering
and timing thereof, the use of proceeds from the Offering and the
expected completion of the Scotia Plaza acquisition and timing
thereof. Forward-looking statements generally can be
identified by words such as "outlook", "objective", "may", "will",
"expect", "intend", "estimate", "anticipate", "believe", "should",
"plans", "project", "budget" or "continue" or similar expressions
suggesting future outcomes or events. Such forward-looking
statements reflect H&R's current beliefs and are based on
information currently available to management. These statements are
not guarantees of future performance and are based on H&R's
estimates and assumptions that are subject to risk and
uncertainties, including those discussed in H&R's materials
filed with the Canadian securities regulatory authorities from time
to time, which could cause the actual results and performance of
H&R to differ materially from the forward-looking statements
contained in this news release. Those risks and uncertainties
include, among other things, risks related to: prices and market
value of securities of H&R; availability of cash for
distributions; development and financing relating to The Bow
development; restrictions pursuant to the terms of indebtedness;
liquidity; credit risk and tenant concentration; interest rate and
other debt related risk; tax risk; ability to access capital
markets; dilution; lease rollover risk; construction risks;
currency risk; unitholder liability; co-ownership interest in
properties; competition for real property investments;
environmental matters; reliance on one corporation for management
of substantially all H&R's properties; and changes in
legislation and indebtedness of H&R. Material factors or
assumptions that were applied in drawing a conclusion or making an
estimate set out in the forward-looking statements include that the
general economy is stable; local real estate conditions are stable;
interest rates are relatively stable; and equity and debt markets
continue to provide access to capital. H&R cautions that this
list of factors is not exhaustive. Although the forward-looking
statements contained in this news release are based upon what
H&R believes are reasonable assumptions, there can be no
assurance that actual results will be consistent with these
forward-looking statements. All forward-looking statements in this
news release are qualified by these cautionary statements. These
forward-looking statements are made as of today, and H&R,
except as required by applicable law, assumes no obligation to
update or revise them to reflect new information or the occurrence
of future events or circumstances.
Additional information regarding H&R REIT is available at
www.hr-reit.com and on www.sedar.com.
SOURCE H&R Real Estate Investment Trust