RICHMOND, BC, March 27, 2013 /CNW/ – FAM Real Estate Investment Trust
(TSX: F.UN, F.WT) (“FAM REIT” or the “REIT”) announced today that it
has agreed to acquire a 170,000 square foot urban office building
municipally known as 4211 Yonge Street, Toronto, Ontario (“4211
Yonge”). The acquisition is expected to close on or about May 2, 2013.
The purchase price is $43 million (exclusive of closing costs), subject
to certain adjustments, representing an attractive going-in
capitalization rate of approximately 6.7%.

4211 Yonge is currently 92% leased with a 5.4 year weighted average
remaining lease term. The property is well-located in a prime
transit-oriented office node just south of Highway 401, along the
Yonge-University-Spadina TTC subway line. The property also includes a
320 stall indoor parking lot representing 1.9 stalls per 1,000 square
feet, providing a healthy mix of parking and transit options for
tenants.

Management believes that in place net rental rates at 4211 Yonge are
approximately 25% below estimated current market net rents, providing
an opportunity to increase cash flow. Existing zoning allows for
additional retail uses at 4211 Yonge, providing attractive optionality
to this asset given the large number of recently completed affluent
residential condominium units within walking distance that currently
lack the benefit of ground-level retail amenities.

Shant Poladian, Chief Executive Officer of FAM REIT, commented, “The
acquisition of 4211 Yonge completes our two-stage capital redeployment
initiative which commenced with the previously announced agreement to
sell our 50% non-managing interest in 220 Portage Ave. We estimate
these transactions will immediately generate 3% accretion to our
annualized Adjusted Funds From Operations (“AFFO”) per diluted unit on
a leverage neutral basis. It is also important to note these
transactions did not require the issuance of any new equity, with FAM
REIT’s improved risk-reward profile fully accruing to the benefit of
our existing unitholders.”

Financing for the acquisition consists of the following:

			(i) a new $25 million first mortgage from a Canadian Schedule I bank, with a 10-year term, 25-year loan amortization, and bearing a fixed interest rate equal to 200 basis points above the 10-year Government of Canada bond yield, or approximately 3.9% (based on the current benchmark government bond yield);
			(ii) approximately $13.5 million of net cash proceeds from the disposition of FAM REIT’s 50% interest in the property municipally known as 220 Portage Avenue, Winnipeg, Manitoba (“220 Portage”) pursuant to the exercise of the Put Option, as defined below; and
			(iii) the remaining balance from FAM REIT’s existing liquidity.

Put Option Exercise for 220 Portage Ave

FAM REIT also announced today that it has exercised its previously
disclosed irrevocable right and option (the “Put Option”) to compel
Artis Real Estate Investment Trust (“Artis”) to buy the REIT’s interest
in the property municipally known as 220 Portage. FAM REIT currently
owns a 50% non-managing interest in 220 Portage. The aggregate
purchase price under the Put Option will be $20.5 million, subject to
certain adjustments. The disposition is expected to close on or about
April 30, 2013.

FAM REIT will recognize a gain on its interest in 220 Portage, which
will be included in its financial results for the quarter ended March
31, 2013. After taking into account repayment of the existing first
mortgage, estimated debt extinguishment costs and closing adjustments,
FAM REIT expects the net cash proceeds will be approximately $13.5
million.

Shant Poladian further commented, “The sale of our interest in 220
Portage and purchase of 4211 Yonge meaningfully increase our
diversification. In particular, the annualized Net Operating Income
(“NOI”) of our portfolio in primary markets (GTA and Calgary) increases
significantly to 39% from 24%, while our Winnipeg concentration
declines to 40% from 53%. These actions further strengthen the quality
and reliability of our cash distribution.”

About FAM Real Estate Investment Trust

The REIT is a diversified commercial real estate investment trust
focused on owning and acquiring strategically well-located industrial,
office and retail real estate located primarily across Canada’s large
population centres.

Cautionary Statements

This press release contains forward-looking information within the
meaning of applicable securities legislation, which reflects the REIT’s
current expectations regarding future events. 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 the REIT’s
control, that could cause actual results and events to differ
materially from those that are disclosed in or implied by such
forward-looking information. Such risks and uncertainties include, but
are not limited to, the failure by Artis to complete the acquisition of
the REIT’s 50% interest in 220 Portage or the failure by the REIT to
complete the acquisition of 4211 Yonge St. These forward-looking
statements are made as of the date of this press release and, except as
expressly required by applicable law, the REIT assumes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.

“AFFO” and “NOI” are not measures recognized under IFRS and do not have
any standardized meanings prescribed by IFRS. AFFO is a supplemental
non-IFRS financial measure that is used in the real estate industry to
assess the sustainability of future cash distributions paid by REITs.
Management considers NOI to be an appropriate supplemental performance
measure as it reflects the operating performance of the real estate
portfolio. AFFO and NOI, as computed by the REIT, may differ from
similar computations as reported by other similar organizations and,
accordingly, may not be comparable to AFFO and NOI reported by such
organizations. For additional information regarding each of the
foregoing non-IFRS measures, including the definitions thereof, refer
to the REIT’s management’s discussion and analysis of results of
operations and financial condition for the period from date of
formation on August 27, 2012 to December 31, 2012, a copy of which is
filed on www.sedar.com.

SOURCE FAM Real Estate Investment Trust