Nearctic Industrial REIT is growing its portfolio for the first time since it was founded three years ago, as the trust's management company adjusts to a new ownership model which has also been completed in recent weeks.

A part of Nearctic Management Ltd., the REIT is focused on acquiring, owning and managing modern industrial properties in key urban markets. It targets high-quality, shallow-bay industrial assets that benefit from strong tenant demand and limited new supply.

Edmonton-based Nearctic Industrial REIT, through NI REIT Acquisition Limited, has entered into a $15.25-million purchase agreement for a modern, multi-tenant asset comprised of approximately 100,000 square feet of industrial buildings and improvements in its hometown. 

It’s anticipated that the deal will close on June 30 and no more details will be released until then.

Nearctic Industrial REIT already owns two other Edmonton properties:

• Vantage Business Park, comprised of two buildings with 16 units, totalling 68,728 square feet on a 3.63-acre property at 14520 116 Ave. NW;
• and Commerce West Business Park, a 14-unit, 110,222-square-foot building located on eight acres at 15304 111 Ave. NW.

Vantage Business Park has achieved a 25 per cent premium over market rents while Commerce West Business Park has achieved a 34 per cent premium, president James Jung wrote in an email interview with RENX. The properties are 99 per cent leased.

“This strong performance underscores the high demand for well-located, modern shallow-bay industrial properties,” Jung wrote. “It validates our investment thesis that tenants are willing to pay a premium for updated, functional space that enhances operational efficiency, improves accessibility and supports employee retention.

“In a market still dominated by aging inventory and often overlooked by institutional capital, Nearctic’s focused strategy positions the REIT to continue capturing this pricing advantage.”

Grimsby, Ont. property

Nearctic Industrial REIT also owns a fully leased four-unit, 122,173-square-foot property located on 5.4 acres at 270 Hunter Rd. in Grimsby, Ont.

“We have been very disciplined in our approach,” Jung wrote. “Rather than acquiring for the sake of growth, we have focused on completing the value creation within the existing portfolio — particularly the repositioning and lease-up of 270 Hunter Rd.”

“Although not entirely within the REIT, as part of Nearctic’s ongoing strategic plan to grow the REIT, the greater Nearctic Property Group disposed of 17 properties, with a gross asset value of $135 million, from its legacy retail, apartment, office and industrial portfolio,” chief executive officer Sean McCullough wrote. 

“A significant portion of the net capital was recycled into the NI REIT. Part of the capital realized in the dispositions funded the redevelopment, modernization and conversion of 270 Hunter into a stabilized, multi-tenant industrial asset that aligns with the REIT’s investment thesis. 

“In addition, proceeds were allocated to develop the REIT’s overall capital sourcing strategy.”

Nearctic Property Group also owns four sites in the hamlet of Nisku, near Edmonton International Airport, that range in size from 1.52 to 2.74 acres and are separate from Nearctic Industrial REIT.

“The sites are in various stages of being sold, and Nearctic Property Group expects all four sites to be sold by year-end,” Jung wrote. “This is part of Nearctic Property Group’s broader capital recycling and portfolio strategy.   

Nearctic Management Ltd. ownership changes

Nearctic Management Ltd. has also undergone a change. The company was formerly 100 per cent owned by Nearctic founder David Kent. Late last month he sold 25 per cent stakes to each of Jung, McCullough and vice-president of asset management Craig Shein. Terms of the deal weren’t disclosed.

“The decision was made to broaden management ownership, deepen alignment among the senior leadership team, and support the next stage of growth for Nearctic Industrial REIT,” Jung wrote.

“Each of the four partners brings complementary experience across real estate development, asset management, operations, capital markets, investment management, governance, strategy and investor relations. We believe this creates a stronger and more scalable management platform for the REIT.”

Nearctic Industrial REIT was initially supported by Kent and a small group of existing and new investors. It has since broadened its distribution and investor base, particularly through exempt market dealer relationships.

“The REIT has attracted high net worth investors, family office investors, advisor-directed capital and investors looking for private real estate income exposure through a professionally managed REIT structure,” wrote Jung. 

“We have also seen growing interest from investors who value the industrial real estate sector, monthly distributions, portfolio transparency and the potential for long-term capital appreciation.”

Nearctic Industrial REIT will continue to seek new acquisitions, according to Jung.