The portfolio spans four states, Florida, Arizona, California and Texas, but 16 of the properties, representing 60% of the square footage, are located in Florida. The Florida properties sustained moderate damage from Hurricane Wilma but are all operational and much of the cost to repair the properties will be passed through to tenants, according to a statement from Windrose.
As of Oct. 1, the portfolio was 93.7% occupied. Windrose says it expects to push occupancy by 200 to 300 basis points over the next four months. Occupancy could fall again in 2007 and 2008, when leases expire for about one-third of the square footage in the portfolio.
Windrose expects to finance the portfolio acquisition by assuming $159 million in existing mortgages on the properties; taking out a $30-million unsecured bridge loan, and; additional borrowings under its existing line of credit. The LOC has a rate of Libor plus 1.50% to 2.50% depending on the leverage ratio.
The Plantation properties include Southpointe Medical Center and the nearby Atrium Office Park, which are both located near the Westside Regional Medical Center. The 40,000-sf Southpointe property was acquired for $14.7 million, including a $10-million loan assumption. The property is 100% leased. The 98,500-sf four-building Atrium Office Park was acquired for $15.6 million, including a $10.7-million loan assumption. The property is 89% occupied.
The portfolio acquisition is expected to be complete before the end of the year. If that happens, Windrose will have made $338 million in acquisitions, or $238 million that it set out to accomplish in 2005, taking its net real estate investments to just under $700 million. Given these expected acquisitions, Windrose estimates that its FFO for 2006 will be between $1.37 and $1.44 per share, not including any 2006 acquisitions. Third quarter 2005 FFO was $3.3 million, or $0.24 per diluted share, compared to $2.5 million, or $0.25 per diluted share, for the third quarter 2004.
In June 2005, Windrose issued 2.1 million shares of 7.5% Series A Cumulative Convertible Preferred Shares, raising net proceeds of approximately $51 million. The proceeds were partially used to repay indebtedness incurred in connection with the acquisition of three properties in June 2005. Those three properties and the portfolio now being acquired have a common, undisclosed seller.
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