MINOT, ND (NASDAQ: IRETS) (NASDAQ: IRETP) announced today the
recent completion of two separate acquisition transactions.
Edgewood Vista Senior Housing Portfolio
On March 6, 2008, IRET completed its acquisition of five senior
housing facilities with a total of 237 units/beds for an aggregate
purchase price (excluding closing costs) of $32.1 million. IRET
acquired the facilities from affiliates of Edgewood Vista Senior
Living, Inc. ("Edgewood Vista"), a developer and operator of senior
living communities with which IRET has had an existing long-term
business relationship. On February 29, 2008, IRET acquired 100% of
the member interests in limited liability companies owning three
senior housing facilities with a total of 92 units/beds for an
aggregate purchase price (excluding closing costs) of $12.6
million, also from affiliates of Edgewood Vista.
IRET also announced that it expects to close within the next
several weeks on the acquisition of an additional senior housing
property, a two-building senior housing complex constructed in
1995, consisting of two single-story facilities containing
approximately 93,708 square feet and 9,693 square feet,
respectively, with a combined total of 184 units/beds, for a
purchase price of $14.8 million.
The eight facilities that IRET has acquired are located in
Minnesota, Montana, Nebraska, North Dakota and South Dakota, as
follows:
East Grand Forks, Minnesota: a single-story senior housing
facility consisting of approximately 18,488 square feet with 36
units/beds, constructed in 1997 and 2001;
Belgrade, Montana: a single-story senior housing facility
consisting of approximately 5,192 square feet with 13 units/beds,
constructed in 1999;
Billings, Montana: a single-story 28 units/beds senior housing
facility consisting of approximately 11,800 square feet,
constructed in 1997;
Columbus, Nebraska: a single-story senior housing facility
consisting of approximately 5,194 square feet with 13 units/beds,
constructed in 1998;
Grand Island, Nebraska: a single-story senior housing facility
consisting of approximately 5,185 square feet with 13 units/beds,
constructed in 1998;
Norfolk, Nebraska: a single-story senior housing facility
consisting of approximately 5,135 square feet with 13 units/beds
constructed in 2000;
Fargo, North Dakota: a three-story senior housing facility
consisting of approximately 156,001 square feet with 185 units/beds
and underground heated parking, seven individual single-story patio
homes of approximately 1,600 square feet each, and a separate
management office building, all constructed in 2007; and
Sioux Falls, South Dakota: a single-story senior housing
facility consisting of approximately 11,800 square feet with 28
units/beds, constructed in 1997 and substantially renovated in
2001.
IRET has leased the eight acquired facilities, and expects to
lease the remaining facility it is currently working to close, to
subsidiary companies of Sunwest Management, Inc. ("Sunwest").
Sunwest, one of the largest private senior housing operators and
developers in the United States, currently owns and operates
approximately 250 senior housing properties located in 39 states,
and is acquiring the assets of Edgewood Vista.
As part of the acquisition transactions summarized above, IRET
also bought out certain options held by its tenant, Edgewood Vista,
to purchase eleven existing senior housing facilities owned by IRET
and leased by Edgewood Vista. IRET paid approximately $14.8 million
to Edgewood Vista to extinguish purchase options on these eleven
senior housing facilities, which have a total of 741 units/beds and
are located in Bismarck, North Dakota; Spearfish, South Dakota;
Brainerd, Minnesota; Hermantown, Minnesota (two facilities); Omaha,
Nebraska; Fremont, Nebraska; Hastings, Nebraska; Kalispell,
Montana; Missoula, Montana, and Virginia, Minnesota. IRET has
leased these locations to subsidiaries of Sunwest on terms and
rates substantially in excess of the terms and rates in effect
under the previous leases with Edgewood Vista.
The Sunwest leases are on a triple-net basis with twenty-one
year initial terms, with capped CPI increases at intervals during
the term. Sunwest will have options to purchase any or all of the
twenty facilities leased from IRET, with such options opening at
various times throughout the 21-year lease term. The purchase
options provide for the purchase of the locations at IRET's cost of
acquisition (including closing and financing costs) increased by a
set percentage each year after lease commencement, or the appraised
value, whichever is greater.
IRET Senior Vice President Thomas A. Wentz, Jr. said, "IRET is
extremely pleased to have provided the real estate solution needed
for Sunwest to complete its acquisition of IRET's existing tenant,
Edgewood Vista. This transaction has resulted in IRET not only
continuing to own and lease its existing senior housing facilities
on substantially improved terms that reflect the tremendous price
appreciation of these assets, but also being able to acquire the
balance of the facilities owned by Edgewood Vista, and lease these
facilities to Sunwest as well."
Minnesota Medical Portfolio
On March 3, 2008, IRET closed on its acquisition of a portfolio
of six medical office properties located in the greater
Minneapolis, Minnesota metropolitan area. In regard to three of the
six buildings, the Company acquired leasehold interests only. IRET
paid $6.9 million in cash for the portfolio, assumed existing
financing totaling approximately $17.8 million, placed new
financing of $21.9 million, and caused the issuance of
approximately 567,000 limited partnership units of its operating
partnership, IRET Properties, valued at $9.45 per unit or
approximately $5.4 million in total, for a total aggregate
consideration for the portfolio of $52 million, excluding
acquisition costs, and excluding costs totaling approximately $1.7
million associated with the early prepayment of the debt
encumbering four of the six locations. IRET placed new long-term
debt at the time of closing, bearing interest at 6.10% for a fixed
term of 10 years. The portfolio was purchased from a group of local
private investors who developed the properties.
As of the closing date of the acquisition, the newly-acquired
medical portfolio is approximately 99.5% leased to multiple
tenants.
The properties acquired by IRET in this transaction are as
follows:
6405 France Medical: IRET acquired the sellers' interest in a
lease of air rights covering three floors of this five-story
medical office building located in Edina, Minnesota. The three
floors total approximately 55,478 rentable square feet ("rsf"). The
remaining two floors are owned by the air rights lessor, Fairview
Health Services. The 6405 France Medical building is connected to
the Fairview Southdale Hospital. The three floors acquired by IRET
currently are 100% leased to multiple tenants.
6363 France Medical: a five-story, approximately 70,934 rsf
medical office building in Edina, Minnesota, located adjacent to
Fairview Southdale Hospital, and connected to the hospital by an
underground tunnel. The property is subject to a ground lease
terminating in October 2041. 6363 France is currently approximately
98.2% leased to multiple tenants.
Riverside Medical: a five-story, approximately 57,212 rsf
medical office building located in Minneapolis, Minnesota. The
Riverside Medical building is located on the campus of Riverside
Hospital and is connected to the main hospital buildings by an
underground tunnel. The property is subject to a ground lease
terminating in October 2041. The ground lease provides for three
options to extend the term, the first such extension for 15 years,
and the other two for 10 years each. The building is currently 100%
leased to multiple tenants.
Ridgeview Medical: a three-story, approximately 53,466 rsf
medical office building located on the Fairview Ridges Hospital
campus in Burnsville, Minnesota. The building is connected to the
main hospital. This property is currently 100% leased to multiple
tenants.
Ridgeview South: a three-story, approximately 36,199 rsf medical
office building located on the Fairview Ridges Hospital campus in
Burnsville, Minnesota. The building is connected to the hospital.
Ridgeview South is currently 100% leased to multiple tenants.
1440 Duckwood Medical: a one-story, approximately 17,640 rsf
off-campus medical office building located in Eagan, Minnesota. The
building is currently 100% leased to two tenants.
"We are very pleased to make this significant addition to our
existing portfolio of medical properties in the greater Minneapolis
area, which is a core market for us," commented Thomas A. Wentz,
Jr., IRET Senior Vice President, Asset Management and Finance. "In
particular, we believe that our existing ownership of the Southdale
Medical Building in Edina, Minnesota, which we are currently
expanding and which is located near the 6405 France and 6363 France
buildings that are part of this recent transaction, will permit us
to achieve attractive operating and leasing efficiencies. The other
four buildings are also well located near areas with strong
demographics and in close proximity to major hospitals and
transportation corridors."
The acquisition of the Edgewood Vista Senior Housing Portfolio
(excluding the additional senior housing facility that has yet to
close, but which IRET expects to close within the next several
weeks), and the Minnesota Medical Portfolio, increases IRET's
medical office portfolio from 35 medical properties (including
senior housing) containing approximately 1.7 million square feet of
leasable space, to 49 medical properties comprising approximately
2.2 million rentable square feet, an increase of approximately
510,000 square feet of leasable space, or approximately 29.2%.
About Investors Real Estate Trust
IRET is a self-administered, self-managed equity real estate
investment trust investing in income-producing properties located
primarily in the upper Midwest. IRET owns a diversified portfolio
of properties consisting of multi-family residential properties and
commercial office, medical, industrial and retail properties.
IRET's distributions have increased every year for 37 consecutive
years. IRET common and preferred shares are publicly traded on the
NASDAQ Global Select Market (symbols: IRETS and IRETP). IRET's
press releases are available on the Company's website at
www.iret.com or by contacting Investor Relations at
701.837.4738.
Safe Harbor
Certain statements in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results to differ materially from projected results. Such risks,
uncertainties and other factors include, but are not limited to:
the failure to consummate expected acquisition transactions either
at all or on the expected terms, fluctuations in interest rates,
the effect of government regulation, the availability of capital,
changes in general and local economic and real estate market
conditions, competition, our ability to attract and retain skilled
personnel, and those risks and uncertainties detailed from time to
time in our filings with the Securities and Exchange Commission,
including our 2007 Form 10-K. We assume no obligation to update or
supplement forward-looking statements that become untrue because of
subsequent events.
CONTACT INFO: Michelle R. Saari Investor Relations PO Box 1988
12 Main Street S Minot, North Dakota 58701 phone: 701.837.4738 fax:
701.838.7785 email: msaari@iret.com
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