WESTFIELD REAL ESTATE INVESTMENT TRUST

Transcription

1 Unaudited Financial Statements of WESTFIELD REAL ESTATE INVESTMENT TRUST

2 BALANCE SHEET (As at, unaudited and December 31,, audited) Assets December 31, Income-producing properties (note 4) $ 100,749,687 $ 6,413,063 Other assets (note 5) 24,166,568 1,228,513 Deferred financing costs, net of accumulated 1,595,429 47,837 amortization of $40,228 Deposits on income-producing properties 2,712, ,500 Prepaid expenses 329,943 42,348 Rents receivable - 10,388 Other receivables 506,272 - Cash and cash equivalents 19,046,905 3,269,890 Liabilities and Unitholders' Equity $ 149,107,284 $ 11,279,539 Liabilities: Long-term debt (note 6) $ 94,146,851 $ 6,043,348 Intangible liabilities (note 7) 4,843,826 54,909 Security deposits and prepaid rent 427,879 72,404 Accounts payable and other liabilities (note 8) 1,887, , ,305,609 6,346,994 Unitholders' equity: Capital contributions (note 9) 46,803,449 4,886,162 Contributed surplus (note 9) 19,200 43,600 Equity component of convertible debentures (note 6) 2,877, ,000 Deficit (1,898,034) (142,217) 47,801,675 4,932,545 Subsequent events (notes 12) $ 149,107,284 $ 11,279,539 See accompanying notes to financial statements. On behalf of the Board: (Signed) Armin Martens Director (Signed) Edward Warkentin Director

3 STATEMENT OF OPERATIONS AND DEFICIT (unaudited) Three month period ended Nine-month period ended Period from incorporation to Revenue $ 1,728,232 $ 236,641 $ 3,096,632 $ 308,415 Property operating expenses 354,812 42, ,921 61,328 1,373, ,346 2,400, ,087 Interest on long-term debt 634, ,726 1,014, ,248 Operating income 739,066 89,620 1,386, ,839 Expenses: Corporate 219,335 6, ,923 17,672 Amortization 664,887 98,881 1,377, , , ,007 1,706, ,336 - Loss before future income tax recovery (145,156) (15,387) (319,887) (21,497) Future income tax recovery - (3,863) - (3,863) Loss for the period (145,156) (11,524) (319,887) (17,634) Deficit, beginning of period (682,205) (6,110) (142,217) - (827,361) (17,634) (462,104) (17,634) Distributions or dividends paid and payable to unit- or share-holders 1,070,673-1,435,930 - Deficit, end of period $ (1,898,034) $ (17,634) $ (1,898,034) $ (17,634) Basic and diluted loss per unit $ (0.002) $ (0.002) $ (0.010) $ (0.004) - Weighted average number of units outstanding See accompanying notes to financial statements. Basic 61,835,749 7,284,120 32,829,270 4,295,924 Diluted 62,571,786 7,402,302 33,095,972 4,319,016

4 STATEMENT OF CASH FLOWS (unaudited) Cash provided by (used in): Three month period ended Nine-month period ended Period from incorporation to Operating activities: Loss for the period $ (145,156) $ (11,524) $ (319,887) $ (17,634) Adjustments for: Amortization: Income-producing properties 308,267 60, ,858 74,373 Office equipment Above-market rent leases 21,760 1,618 27,216 1,618 Acquired in-place leases 311,565 35, ,871 35,025 Customer relationships 6, , Tenant inducements Deferred financing costs 38,669 2,769 42,305 3,647 Below-market rent leases (79,907) (2,072) (312,556) (2,072) - (3,863) - (22,964) Accretion on debt component of convertible debentures 72,718 6,815 76,050 6,815 Unit- or stock-based compensation expense ,000 Change in the following: Rents receivable 41,753 9,174 10,388 (18,994) Other receivables (501,272) - (506,272) - Prepaid expenses (166,497) (590) (287,595) (590) Accounts payable and accrued liabilities 1,627,730 31,907 1,710,720 92,537 Security deposits and prepaid rent 348, ,476 72,403 1,885, ,346 2,130, ,783 Investing activities: Acquisition of income-producing properties, net of related debt (42,585,298) - (45,540,462) (2,098,753) Purchase of office equipment - (1,699) - (4,213) Deferred financing costs (1,600,374) (1,121) (1,635,657) (54,220) Deposits on income-producing properties (2,402,188) - (2,444,980) (50,000) (46,587,860) (2,820) (49,621,100) (2,207,186) Financing activities: Issuance of shares and units, net of issue costs 40,547,529-41,892,887 1,784,298 Issuance of convertible debentures 22,975,000-22,975, ,000 Distributions paid and payable (1,070,673) - (1,435,930) - Repayment of mortgage payable (82,857) (25,295) (164,750) (25,295) 62,368,999 (25,295) 63,267,207 2,311,003 Increase in cash for period 17,666, ,231 15,777, ,600 Cash and cash equivalents on hand, beginning of perio 1,380, ,369 3,269, ,000 Cash and cash equivalents on hand, end of period $ 19,046,905 $ 438,600 $ 19,046,905 $ 438,600 Supplementary cash flow information: Interest paid $ 634,354 $ 130,150 $ 1,014,591 $ 162,671 Interest received 171,332 1, ,635 2,157 See accompanying notes to financial statements.

5 1. Organization: Westfield Real Estate Investment Trust (the REIT ) is a closed-end real estate investment trust established under the laws of the province of Manitoba pursuant to a Declaration of Trust dated November 8,. The REIT entered into a plan of arrangement (the Arrangement) on December 20, whereby Westfield Properties Ltd. was continued as the REIT and all of Westfield Properties Ltd. s common shares were exchanged for a similar number of REIT units. Westfield Properties Ltd. was incorporated under the Canada Business Corporation Act on December 18, The Company s common shares were listed for trading on the TSX Venture Exchange on February 14, as a Capital Pool Corporation. The company completed its qualifying transaction on June 1, and was approved as a Tier 2 real estate issuer on the TSX Venture exchange. 2. Significant accounting policies: (a) Basis of presentation: The REIT is considered to be a continuation of Westfield Properties Ltd. following the continuity of interest method of accounting. As a result, these financial statements reflect a continuation of Westfield Properties Ltd with the results of Westfield Properties Ltd. from December 18, 2003 to December 20, and the REIT from that date forward. (b) Income-producing properties: Income-producing properties include tangible and intangible assets. Tangible assets include land, buildings, parking lot and improvements. Intangible assets include the value of tenant rents in in-place lease agreements, the value of the differential between original and market rents for in-place leases and the value of customer relationships. Income-producing properties are carried at cost less accumulated amortization. If events or circumstances indicate that the carrying value of the income-producing property may be impaired, a recoverability analysis is performed based upon estimated undiscounted cash flows to be generated from the income-producing property. If the analysis indicates that the carrying value is not recoverable from future cash flows, the income-producing property is written-down to estimated fair value and an impairment loss is recognized.

6 The REIT has adopted the EIC Abstract 140, Accounting for Operating Leases Acquired in Either an Asset Acquisition or a Business Combination. This standard requires that where an enterprise acquires real estate in either an asset acquisition or a business combination, a portion of the purchase price should be allocated to in-place operating lease intangible assets, based on their fair value, acquired in connection with the real estate property. This standard also requires a portion of the purchase price to be allocated to customer relationship intangible assets, based on the fair value relating to the probability or possibility that the existing tenants will renew their leases. The adoption of this standard has given rise to intangible assets and liabilities, which are amortized using the straight-line method over the terms of the tenant lease agreements and non-cancelable renewal periods, where applicable. In the event a tenant vacates its leased space prior to the contractual termination of the lease and rental payments are not being made, any unamortized balance of the intangible asset or liability will be writtenoff. Amortization on income-producing assets, other assets and intangible liabilities is provided on the following basis and rates: Asset Basis Rate/years Building Straight-line 40 Improvements Straight-line Remaining term of lease agreement and renewal periods where applicable Leasehold interest Straight-line 40 Parking lot Straight-line 20 Office equipment Straight-line 5 In-place operating leases Straight-line Remaining term of lease agreement and renewal periods where applicable Above-market rent leases Straight-line Remaining term of lease agreement and non-cancelable renewal periods Below-market rent leases Straight-line Remaining term of lease agreement and fixed-rate non-cancelable renewal periods Tenant inducements Straight-line Remaining term of lease agreement And renewal periods where applicable Customer relationships Straight-line Remaining term of lease agreement and renewal periods where applicable

7 (c) Deferred financing costs: Deferred financing costs represent costs incurred relating to the issuance of the convertible debentures and the financing by way of mortgage or vendor take-back loans related to the REIT s income-producing properties. Amortization is provided on a straight-line basis, over the term of the related debt. (d) Revenue recognition: Revenue from income-producing properties includes rents earned from tenants under lease agreements, percentage rent, realty tax and operating costs recoveries and other incidental income and is recognized as revenue over the term of the underlying leases. All rent steps in lease agreements are accounted for on a straight-line basis over the term of the respective leases. Percentage rent is not recognized until a tenant is obligated to pay such rent. (e) Earnings per unit: Basic earnings (loss) per unit is computed by dividing net earnings (loss) by the weighted average units outstanding during the reporting period. Diluted earnings (loss) per unit is calculated based on the weighted average number of units outstanding during the period, plus the effect of dilutive unit equivalents such as options. The diluted per unit amounts are calculated using the treasury stock method, as if all the unit equivalents where average market price exceeds issue price had been exercised at the beginning of the reporting period, or the period of issue, as the case may be, and that the funds obtained thereby were used to purchase units of the REIT at the average trading price of the units during the period. (f) Unit-based compensation: The REIT accounts for unit options issued under its unit option plan using the fair value method. Under this method, compensation expense is measured at fair value at the grant date using the Black-Scholes option pricing model and recognized over the vesting period. (g) Income taxes: The REIT is a closed-end real estate investment trust created by a Declaration of Trust. The REIT will be taxed as a mutual fund trust for income tax purposes. Pursuant to the terms of the Declaration of Trust, the REIT intends to make distributions not less than the amount necessary to ensure that the REIT will not be liable to pay income taxes.

8 (h) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. 3. Acquisitions: The REIT acquired the twelve below properties in the nine-month period ended. These acquisitions have been accounted for by the purchase method, with the results of operations included in these financial statements from the date of acquisition. Property Location Acquisition Date Type Royal Square 15 Worobetz Place Saskatoon, SK February 1, Retail/ Commercial Capital City Centre 1825 & 1875 E. Victoria Avenue Regina, SK February 2, Retail Johnston Terminal 25 Forks Market Road Winnipeg, MB August 1, Retail/Office Sears Centre Street Grande Prairie, AB August 15, Retail Southview Centre th Avenue S.E. Medicine Hat, AB August 31, Retail Airways Business Park nd Avenue N.E Calgary, AB September 16, Retail/Office Edgemont Mall 34 Edgedale Drive N.W. Calgary, AB Retail Landmark Shoppers 4150 Albert Street Regina, SK Retail Strathcona Shoppers 2202 Broad Street Regina, SK Retail Canarama Mall #7 Assiniboine Drive Saskatoon, SK Retail Grain Exchange 167 Lombard Winnipeg, MB Office Hamilton Building 395 Main Street Winnipeg, MB Office

9 The net assets acquired including acquisition costs of $1,654,979 were as follows: Nine month period ended Period from incorporation to Land $ 16,726,115 $ 1,200,000 Buildings 60,432,328 3,817,875 Leasehold interest 8,009,468 - Parking lots 1,470, ,000 Improvements 8,290,771 1,425,340 In-place leases 23,039,653 1,210,994 Above-market rent leases 571,908 60,268 Customer relationships 96,715 18,362 Below-market rent leases (5,101,473) (58,535) New or assumed mortgages/related debt net of acquired above-market mortgages (68,516,368) (5,675,551) Total purchase price paid in cash $ 45,019,117 $ 2,098,753 In the period from incorporation to, the REIT acquired one retail property, known as the Home Outfitters Centre located at 3333 Sunridge Way in Calgary, Alberta. 4. Income-producing properties: Cost Accumulated amortization Net Book Value Net Book Value December 31, Land $ 17,926,115 $ - $ 17,926,115 $ 1,200,000 Buildings 64,250, ,055 63,973,148 3,762,198 Leasehold interest 8,009,468-8,009,468 - Improvements 9,705, ,663 9,287,248 1,353,782 Parking lots 1,570,000 16,292 1,553,708 97,083 $ 101,461,697 $ 712,010 $ 100,749,687 $ 6,413,063

10 5. Other assets: Cost Accumulated amortization Net Book Value Net Book Value December 31, Acquired in-place leases $ 24,250,646 $ 789,165 $ 23,461,481 $ 1,149,701 Above-market rent leases 632,176 30, ,129 57,437 Customer relationships 115,077 25,280 89,797 17,499 Office equipment 4, ,244 3,876 Tenant inducements 10, ,917 - $ 25,012,312 $ 845,744 $ 24,166,568 $ 1,228, Long-term debt: December 31, Mortgages and loans secured by properties $ 73,976,193 $ 5,624,575 Convertible debentures (carrying value) 13,070, ,773 Interim financing debenture 7,100,000 - $ 94,146,851 $ 6,043,348 Substantially all of the REIT s assets have been pledged as security under mortgages and other security agreements. The mortgages bear interest at rates ranging from 4.75% to 6.96% with maturity dates ranging from 2006 to October 1, Principal payment requirements on the mortgage payable are as follows: (exclusive of above-market mortgage adjustment) Year ended December 31, (remainder of year) $ 353,884 Year ended December 31, ,039,724 Year ended December 31, ,397,612 Year ended December 31, ,629,913 Year ended December 31, ,418,692 Year ended December 31, 2010, and thereafter $ 50,952,544 73,792,369

11 Title to the property known as Royal Square is held in escrow pending satisfaction of the outstanding vendor loan. Under the terms of the Purchase Agreement, payment of the vendor loan and the subsequent release of title from escrow may occur any time up to, but must be concluded by, November 1st, (see Note 12 Subsequent Events). Two acquisitions in the current period were concluded on an agreement for sale basis. Title to the property known as Sears Centre is held in escrow pending satisfaction of the outstanding vendor loan. Under the terms of the Sears Centre Purchase Agreement, payment of the vendor loan and the subsequent release of title may occur any time up to, but must be concluded by, December 15, Title to the property known as the Hamilton Building is held in escrow pending finalization of the share purchase agreement. In conjunction with the conclusion of the Johnston Terminal Headsublease transaction on August 1, and the exercise of the prepayment of rent privilege on August 3,, the REIT issued a 5- year Interim Financing Debenture bearing a variable rate interest of prime + 1/8% in the amount of $7,100,000 and a 1-year 7.25% Convertible Debenture, convertible at $0.40, to the Lessor. The convertible debenture is a compound financial instrument and the proceeds of the issue were allocated between a liability and equity component in the amount of $828,540 and $46,460, respectively. The equity component reflects the equity value of the conversion option embedded in the convertible debenture. In conjunction with its initial offering during fiscal, the REIT issued 8% debentures in the amount of $552,000. They were convertible into units of the REIT by the holder at $0.35 to May 27,, at $0.40 to May 27, 2006, at $0.45 to May 27, 2007, at $0.50 to May 27, 2008 and at $0.55 to May 27, The convertible debentures are compound financial instruments and the proceeds of the offering, at the time of issue, were allocated between a liability and equity component in the amount of $407,000 and $145,000, respectively. Of the $552,000 debentures outstanding at December 31,, $150,000 was converted at $0.40 in the three month period ended September 30,, and the remainder was converted prior to June 30,. In conjunction with the private placement offering that closed August 4,, the REIT issued convertible redeemable 5-year 7.5% debentures totaling $15,000,000. They are convertible into units of the REIT by the holder at $0.84 after August 5, 2008, and redeemable at the option of the REIT at any time after the second anniversary of the issue of the debentures provided that the market price of the units exceeds 150% of the conversion price, and will be redeemable at the option of the REIT at any time after the fourth anniversary of the issue provided that the market price of the units exceeds 125% of the conversion price. Debentures that do not convert are to be repaid in cash. The convertible debentures are compound financial instruments and the proceeds of the offering, at the time of issue, were allocated between a liability and equity component in the amount of $12,169,400 and $2,830,600, respectively. The equity component reflects the equity value of the conversion option embedded in the convertible debentures.

12 Using a term until maturity, the liability portion of the debentures at the date of issuance represents the present value of the mandatory cash payments of interest plus the present value of the principal amount due under the terms of the debentures discounted at 13%, being the rate of interest that would be applicable to a debt-only instrument of comparable term and risk. The equity component, which represents the value ascribed to the shares issued, is calculated as the difference between the amount issued and the liability component. Interest expense is determined by applying the discount rate against the outstanding liability component of the debentures. The difference between actual interest payments and interest expense is treated as an addition to the debt component of the debentures. 7. Intangible liabilities: Cost Accumulated amortization Net Book Value Net Book Value December 31, Below-market rent leases $ 5,160,008 $ 316,182 $ 4,843,826 $ 54,909 $ 5,160,008 $ 316,182 $ 4,843,826 $ 54, Accounts payable and other liabilities: December 31, Accounts payable and accrued liabilities $ 1,385,290 $ 150,792 Income taxes payable - 25,541 Distribution payable 501,763 - $ 1,887,053 $ 176,333

13 9. Capital contributions: (a) Authorized: The REIT may issue an unlimited number of units pursuant to the Declaration of Trust. Each unit represents an equal fractional undivided beneficial interest in any distributions from the REIT and in the net assets in the event of termination or wind-up of the REIT. All units are of the same class with equal rights and privileges. (b) Issued: Number of units Amount Balance at December 31, 16,211,980 $ 4,886,162 Private placements, net of issue costs of $3,086,212 66,920,286 40,824,953 Conversion of Debentures, 1,523, ,649 net of issue costs of $41,456 Warrants exercised 448, ,331 Broker warrants exercised 419, ,554 Options exercised 540, ,800 Balance at 86,064,034 $ 46,803,449 The initial 1,000,000 common shares issued by the REIT are held in escrow. The first 100,000 of these were released in fiscal, 150,000 were released in December and an additional 150,000 were released in June. The balance will be released in future periods in accordance with the escrow agreement. The REIT declared distributions to unitholders of record on July 31 and August 31 for $ per unit and to unitholders of record on September 30 for $ per unit. July and August distributions of $568,909 were paid in the period and $501,763 remained payable as at. (c) Unit options: The REIT has a unit option plan which is administered by the Board of Trustees of the REIT with unit options granted to trustees, management, employees and consultants as a form of

14 compensation. The total number of units reserved under option for issuance may not exceed 10% of the units outstanding. Unit options in the amount of 1,500,000 options were granted on December 20, by the REIT at an exercise price of $0.40 per unit expiring December 20, These options are exercisable upon granting. A summary of the REIT s unit options are as follows: Units Weighted average exercise price Options granted and exercisable at December 31, 1,500,000 $.40 Exercised in the period 540,000 $.40 Options granted and exercisable, 960,000 $.40 Options outstanding at consist of the following: Weighted average Options outstanding Exercise Number remaining weighted average Number price outstanding contractual life exercise price exercisable $ , years $ ,000 The compensation expense related to stock options granted under the stock option plan during aggregated $40,000. In the current three month period ended, $20,800 has been transferred on exercise into equity, leaving a balance of $19,200 in contributed surplus. No options have been granted during the nine month period ended. The compensation expense was determined based on the fair value of the options at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Expected option life 5 years Risk-free interest rate 3.5% Dividend yield Expected volatility 20%

15 The cost of stock-based payments that are fully vested and non-forfeitable at the grant date is measured and recognized at that date. For awards that vest at the end of the vesting period, compensation cost is recognized on a straight-line basis over the vesting period. For awards that vest on a graded basis, compensation cost is recognized on a pro rata basis over the vesting period. (d) Warrants: The agent was issued broker warrants in connection with a private placement in May entitling the agent to acquire 422,729 common shares at $0.35 per share. The broker warrants expire November 27,. Share issue costs of $3,600 were recorded to reflect the value of these warrants. All of the broker warrants were exercised by, and the contributed surplus was transferred to equity. The value of the compensation was determined using the Black-Scholes option pricing model with the following weighted average assumptions. Expected option life 1.5 years Risk-free interest rate 3.5% Dividend yield Expected volatility 20% In connection with a private placement in May, the company issued 5,284,120 warrants with the fair value of the consideration received allocated to the common shares issued. Supplemental certificates were issued on December 20, allowing the warrant holders to purchase units of the REIT on the same terms and conditions as the original warrants. Each warrant entitled the holder to acquire one common share at a price of $0.40 per share. In May, 448,328 of the warrants were exercised and 448,328 units issued. The balance of the warrants expired May 27,. (e) Weighted average units: The weighted average number of units outstanding for the three month period ended September 30, is 61,835,749 (62,571,786 on a diluted basis). The weighted average number of units outstanding for the comparative three month period of is 7,284,120 (7,402,302 on a diluted basis). The weighted average number of units outstanding for the nine month period ended September 30, is 32,829,270 (33,095,972 on a diluted basis). The weighted average number of units

16 outstanding for the comparative nine month period of is 4,295,924 (4,319,016 on a diluted basis). 10. Related party transactions: During the quarter ended, the REIT acquired two income-producing properties from related parties for an aggregate purchase price of $24.8 million. The two properties, known as the Johnston Terminal and the Hamilton Building, were owned by corporations under the control of certain trustees of the REIT. During the quarter ended, the REIT incurred legal fees in the amount of $136,844 ($220,702 year-to-date) with a law firm associated with a Trustee of the REIT in connection with the private placement and the property acquisitions in Saskatchewan. The REIT entered into an Asset Management Agreement in February with Marwest Management Canada Ltd. ( Marwest ). Marwest is owned and controlled by certain trustees and officers of the REIT. Marwest is entitled to an annual advisory fee payable quarterly equal to 0.25 percent of the adjusted cost base of the REIT s assets. The agreement also contemplates an acquisition fee equal to 0.35 percent of the cost of the property acquired, a disposition fee equal to 0.35 percent of the total sale price of the property sold, a disposition fee equal to 2.5 percent of the total sale price of property by the REIT which is initiated by its trustees independent of the related company and a financing coordination fee of 0.25 percent of the principal amount borrowed by the REIT. In August the Asset Management Agreement was amended such that the acquisition fee is increased from 0.35% to 0.5% while the financing coordination and disposition fees are eliminated. In the quarter ended, the REIT incurred $24,286 of administration fees under this agreement ($44,518 year-to-date) and $512,050 acquisition and financing fees ($552,675 yearto-date). In the quarter ended, the REIT incurred $3,000 of administration fees ($4,000 year-to date) and no acquisition and financing fees. Effective February 1,, the REIT entered into a Property Management Agreement with Marwest. Marwest will act as the general property manager for the REIT s properties and be entitled to management fees, leasing renewal commissions and tenant improvement fees at commercially reasonable rates. In the current quarter, the REIT incurred $11,418 of property management fees. No property management fees were paid to Marwest in prior periods. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

17 11. Financial instruments: (a) Fair values: The carrying values of cash and cash equivalents, rents receivable, deposit on incomeproducing properties, security deposits and prepaid rent, and accounts payable and other liabilities approximate their fair value due to the relatively short periods to maturity of these items. The fair value of the REIT s mortgages payable approximates its carrying value as the terms and conditions of the borrowing arrangements are comparable to current market terms and conditions. It is not practicable to determine the fair value of the convertible debentures due to the limited amount of comparable market information available. (b) Credit risk: The REIT s financial assets that are exposed to credit risk consist primarily of rent receivables and assets relating to tenants as they may experience financial difficulty and be unable to fulfill their lease commitments. Concentration of credit risk is limited due to the thorough credit assessments conducted in respect to all new leasing and when the acquisition occurred. The REIT mitigates the risk of credit loss by ensuring that all its tenants are credit worthy through their credit assessment and due diligence process. 12. Subsequent events: The REIT declared its normal monthly distribution of $ per Unit for October and November. On October 31,, the REIT closed the acquisition of McKnight Village Shopping Centre. The purchase price of $22.8 million was satisfied by a combination of first mortgage financing ($15.0 million mortgage at 5.25%) and cash. On October 31,, the REIT closed the acquisition of the Kensington Office properties. The purchase price of $18.55 million was satisfied with new mortgage financing of $12.5 million at 4.83% interest, a 10-year vendor take-back mortgage in the amount of $200,000 bearing no interest, and 5- year vendor take back mortgage in the amount of $500,000 at 4.6% interest and the balance in cash.

18 On October 31,, the vendor loan on the property known as Royal Square was paid out from the proceeds of new 5-year mortgage financing bearing interest at 5.06% and the title to the property, which had been held in escrow, passed to the REIT. On November 9,, the REIT completed a private placement of $35,862,000. The REIT issued 33,333,334 Units at $0.75 for gross proceeds of $25,000,000 and issued $10,862,000 5-year 7.5% Convertible Redeemable Debentures. On November 15,, the REIT concluded the acquisition of the Willowglen Office Park in Calgary. The purchase price of $30.5 million was satisfied with new mortgage financing of $21.0 million at 5.42% interest, with the balance in cash.