TORONTO, Dec. 21, 2020 /CNW/ – Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX: SMU.UN) announced today that it has waived conditions and will acquire a 100% interest in a 342,830 square foot single tenant warehousing and logistics facility in Ajax, Ontario, a key industrial market in the Greater Toronto Area (GTA), for $68.0 million. The purchase price is well below replacement cost and will be satisfied with cash from proceeds of the REIT’s recent unsecured debenture offering. The purchase price reflects an attractive going-in capitalization rate of approximately 4.3%. The property also includes excess land available for future expansion or fleet parking. When including the excess land, the going-in capitalization rate is approximately 3.9%. Closing is anticipated by the end of January 2021.
The property is extremely well-located with a prominent corner location near major highway and railway transportation links. It includes a distribution warehouse of 299,313 square feet and an office building of 43,517 square feet. The property is well maintained with a clear warehouse ceiling height of 26 feet, ample shipping and receiving doors and vehicle parking and storage.
The tenant, a major global automotive company, utilizes the property as its Canadian head office and national parts distribution centre. The tenant recently signed a five-year extension to its original fifteen-year lease with annual rent escalations to 2025. Management believes current in-place rents are below market.
The 34-acre property has a modest 23% site coverage and includes seven acres of excess land that management has identified as expansion potential or additional fleet parking for future revenue generation.
“We are very pleased to be acquiring this quality property with an excellent GTA location and a strong investment grade tenant,” commented Paul Dykeman, Chief Executive Officer. “Looking ahead, with current rents below market, and expansion potential utilizing the excess land, we anticipate this accretive purchase will generate solid returns for years to come.”
Summit Industrial Income REIT is an unincorporated open-end trust focused on growing and managing a portfolio of light industrial properties across Canada. Summit’s units are listed on the TSX and trade under the symbol SMU.UN. For more information, please visit our web site at www.summitIIreit.com.
Caution Regarding Forward Looking Information
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends”, “goal” and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning the goal to build Summit’s property portfolio. The forward-looking statements and information are based on certain key expectations and assumptions made by Summit, including general economic conditions. Although Summit believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Summit can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed, and given the impact of the COVID-19 pandemic and government measures to contain it, there is inherently more uncertainty associated with the REIT’s assumptions as compared to prior periods. These risks and uncertainties include, but are not limited to, tenant risks, current economic environment, environmental matters, general insured and uninsured risks and Summit being unable to obtain any required financing and approvals. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward looking information for anything other than its intended purpose. Summit undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE Summit Industrial Income REIT
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