TORONTO, May 17, 2018 /CNW/ – Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX: SMU.UN) announced today that it has waived conditions and will acquire 100% of a 187,245 square foot single tenant cold storage facility located in Mississauga, Ontario (the “Transaction”). The property is leased to a national logistics company under a long-term lease with fourteen years remaining.
The property includes two potential expansion opportunities. First, the existing building can be easily expanded by approximately 35,000 square feet based on tenant demand. Second, a new, free-standing estimated 90,000 square foot building can be developed on the approximate 5 acres of vacant land included on the property.
Summit will pay $37.0 million (the “Purchase Price”) for the entire property, paid for with units of a wholly-owned subsidiary of the REIT that are exchangeable into trust units of the REIT, and the balance in cash from the REIT’s operating facility. The leased building is being acquired with a going-in capitalization rate of approximately 5.4%. Summit is acquiring the property from Orlando Corporation (the “Vendor”), one of Canada’s largest owners of commercial and industrial properties. Closing of the acquisition is expected on or before June 18, 2018.
In satisfaction of the Purchase Price, on closing of the Transaction, a wholly-owned subsidiary of the REIT expects to issue 3,292,091 exchangeable units (approximately $27.9 million) to the Vendor, together with related special voting units of the REIT. The exchangeable units will be exchangeable into trust units of the REIT on a one-for-one basis at the option of the holder. The special voting units have the same voting rights as the REIT’s trust units and will entitle the holder of the exchangeable units to such number of votes at meetings of the REIT’s unitholders as is equal to the number of trust units of the REIT such exchangeable units are exchangeable for. The exchangeable units will represent an approximate 4.5 % interest in the REIT on an “as exchanged” basis. The number of exchangeable units to be issued to the Vendor was determined using a price of $8.46 per unit for the REIT’s trust units.
“This is our first property acquisition with vacant land on which we can utilize our proven development expertise and our balance sheet to generate value through an expansion to the existing building and the construction of a new property,” commented Paul Dykeman, Chief Executive Officer. “We are also pleased that the Vendor is taking back units, and we welcome such an experienced industry owner and developer as a significant investor in Summit.”
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. Forward-looking information may relate to future results, performance, achievements, events, prospects or opportunities for the REIT or the real estate industry, outlook and anticipated events or results. Some of the specific forward-looking statements contained herein include statements with respect to the following: the expected closing date of the Transaction; and the intention of a wholly-owned subsidiary of the REIT to issue exchangeable units to the Vendor on closing.
Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the REIT’s control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the risks discussed in the REIT’s materials filed with Canadian securities regulatory authorities from time to time on www.sedar.com. Readers are cautioned to consider these, and other factors, uncertainties and potential events carefully as there can be no assurance actual results will be consistent with such forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.
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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