Allied Properties Real Estate Investment Trust has entered into an agreement to purchase 645 Wellington Street in Montreal for CAD10.5m.

Located on the north side of Wellington Street, just east of Cite Multimedia, the brick-and-beam building is comprised of 140,060 square feet of gross leasable area.

It is 88 per cent leased to tenants largely consistent in character and quality with Allied's tenant base.

"In addition to a good current return, this property affords us the opportunity to enhance value over the next 24 months," says Michael Emory (pictured), president and chief executive. "It will also enable us to provide a compelling alternative for tenants that we can't accommodate at Cite Multimedia."

The acquisition is expected to close in May 2010, subject to customary conditions.

The purchase price represents an 8.6 per cent capitalisation rate applied to the annual net operating income from the property.

The property will be free and clear of mortgage financing on closing.

Allied intends to place conventional first-mortgage financing on the property following closing.