TORONTO, Sept. 20, 2017 /CNW/ – Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX: SMU.UN) announced today that it has waived conditions and will acquire a previously-announced 255,000 square foot 22′ clear light industrial property well located in Etobicoke, Ontario. The property is located in the heart of this Greater Toronto Area (“GTA”) industrial submarket close to Pearson International Airport and with convenient access to major highways. The property is 83% leased to two tenants each with over nine years of remaining lease term and annual contractual rent escalation of approximately 1.4%. The remaining vacant space requires some redevelopment in order to be leasable. The property also includes three acres of surplus land that is being leased for outside storage to the tenants.
The REIT will pay $23.9 million for the property which reflects a value, excluding the surplus land, of $80 per square foot, well below replacement cost. The acquisition will be financed initially from the REIT’s credit lines and, after closing, by a new $15.7 million five-year mortgage with an expected interest rate of 3.35%. The capitalization rate on closing will be approximately 5.5%. Once the vacant space is redeveloped and leased, management expects the capitalization rate will increase to approximately 6.5%. Closing is expected on or before the end of September, 2017.
The REIT also announced today that it has placed a new $29.0 million seven-year mortgage bearing an expected interest rate of 3.76% on its recently acquired logistics property located at 5500 Trans-Canada Highway in Montreal.
“This acquisition is another example of our ability to acquire properties at prices well below replacement cost with a value add component that will enhance our return on investment over time,” commented Paul Dykeman, Chief Executive Officer. “In addition, we believe the GTA offers Canada’s most compelling fundamentals to create long-term value for our Unitholders, and we will continue to focus the majority of our growth in this vibrant region.”
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. 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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