Summit Industrial Income REIT Announces Significant Portfolio Growth

TORONTO, Dec. 11, 2018 /CNW/ – Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX: SMU.UN) announced today that it has waived conditions and will acquire the previously-announced portfolio of light industrial properties in the Greater Toronto Area (“GTA”), Ottawa and Montreal totaling 2.1 million square feet of gross leasable area, and another portfolio of properties in Alberta totaling 998,095 square feet for a total purchase price of approximately $328.6 million. The acquisitions will be financed by the previously-announced $140 million equity offering, two anticipated twelve-month bridge loan facilities for a total of $152 million, assumed mortgages of approximately $38 million at an interest rate of 3.16% and weighted average term to maturity of under two years, and cash from the REIT’s operating facility. It is expected the bridge loan facilities will be replaced with permanent fixed rate mortgages in the first quarter of 2019.

The REIT has completed its due diligence, waived conditions and will acquire the previously-announced portfolio of eleven light industrial properties aggregating just under 2.1 million square feet of gross leasable area in the GTA, Montreal, and Ottawa.

GTA and Ottawa Portfolio:
Six of the eleven properties include three in the GTA totaling 557,414 square feet and three in Ottawa, Ontario totaling 284,709 square feet. The GTA properties are Class A and Class B single tenant warehouse and logistics properties with attractive high ceiling heights and ample truck and car parking. Occupancy for the GTA portfolio is 100%. The Ottawa properties are Class B multi-tenant buildings offering primarily flex space to service, commercial and showroom tenants with exceptional exposure and access to Highway 417. Occupancy is currently 87.4% in the Ottawa properties. Rents for all the six properties are below market in regions with very tight vacancies, providing the opportunity for increased cash flow over time. The portfolio has been well-maintained with recent roof, parking area and HVAC upgrades. Summit will pay $91.5 million for 100% of the portfolio, below replacement cost, generating a going-in capitalization rate of approximately 5.73%. Closing of the acquisition is expected before the end of December 2018.

Montreal Portfolio:
The remaining five of the eleven properties consist of a portfolio of Class A and Class B single and multi-tenant properties located in Montreal, Quebec totaling 1.2 million square feet. The properties are well located across the island of Montreal with excellent highway and rail transportation links and situated close to existing Summit properties providing operational efficiencies. The properties have been well-maintained and offer attractive clear ceiling heights up to 28.5 feet, efficient shipping and receiving areas. The properties are 100% occupied by tenants with a weighted average lease term of five years and rents below market, providing the opportunity for future income growth. Summit will pay $140.0 million for 100% of the Montreal portfolio, below replacement cost, generating a going-in capitalization rate of approximately 5.33%. Closing of the acquisition is expected before the end of December 2018.

“We continue to accretively build our presence in the Greater Toronto and Greater Montreal Areas, Canada’s two largest and strongest industrial property markets,” commented Paul Dykeman, Chief Executive Officer.

Alberta Portfolio:
Summit also announced today that it had waived conditions and will acquire a portfolio of four light industrial properties in Alberta aggregating 998,095 million square feet for a total purchase price of approximately $97.1 million, below replacement cost and generating an accretive going-in capitalization rate of approximately 5.4%. The properties are 100% occupied by tenants with a weighted average lease term of 6.7 years including average annual contractual rent increases of 1.8%.

Three of the properties are prime Class A buildings located in southeast Calgary, Alberta totaling approximately 850,000 square feet on 31.3 acres of land. The buildings were constructed between 2005 and 2007 and offer 28-foot clear ceiling heights with excellent shipping access and door ratios. Current rents at under $5.00 per square foot are well below market, offering the opportunity for increased cash flow over time.

The fourth building, located in northwest Edmonton, Alberta, is a 148,470 square foot multi-tenant building on 10.4 acres of land built in 2004. Offering 28-foot clear ceiling height, the property includes spacious truck courts, outside storage and ample vehicle parking. Current rents are at or below market.

“This very accretive Alberta acquisition offers significant upside potential through the current annual contractual rent increases and, going forward, bringing rents up to market over time,” commented Paul Dykeman, Chief Executive Officer. “This is a well-maintained, modern and institutional grade portfolio that will enhance our presence in the Alberta market as the Province’s economy strengthens.”

“With the completion of these acquisitions, our total industrial portfolio will grow to approximately 13.3 million square feet of GLA with approximately 76.0% of the total portfolio located in our two target GTA and Montreal markets,” Mr. Dykeman concluded.

Summary of Acquisitions

About 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. 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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