Artis REIT has announced its first transactions under its new management team: a joint venture to build a 561,000-square-foot industrial development in the Phoenix area and the sale of three non-core assets – shopping centre, office and industrial properties.
The REIT is transitioning to a new management team led by interim CEO and board chair Samir Manji. Also the head of real estate investor Sandpiper Group, Manji and Sandpiper led a group of dissident shareholders in ousting several members of Artis’ board and management late last year due to what they considered under-performance of the trust.
The Arizona project, valued at about $74 million, is in partnership with Nuveen Real Estate. The partners plan to build three state-of-the-art class-A industrial building at Park Lucero East in the Greater Phoenix Area.
Artis and Nuveen partnership
Artis (AX-UN-T) will develop the project as a 10 per cent general partner. Construction is expected to commence in Q1 2021.
“We are pleased to partner with Nuveen on this highly desired industrial opportunity,” said Philip Martens, Artis’ executive vice-president, U.S. region, in the announcement. “This partnership provides a remarkable opportunity for Artis and Nuveen to combine our extensive development expertise.”
Nuveen, an international real estate investor and manager, is a wholly owned subsidiary of Teachers Insurance and Annuity Association of America with $167 billion in assets under management. The firm is based in Chicago, with offices in 25 U.S., European and Asia Pacific cities.
“We are creating a best-in-class industrial complex in a location that has been proven to generate strong demand and attract high-quality tenants,” Martens said in the release. “Nuveen has an outstanding reputation and track record and will be an excellent partner for this project.”
The 37-acre parcel of land, which Artis has under unconditional contract to purchase, is located along the South Loop 202 Freeway with freeway and Germann Road frontage. It’s adjacent to Park Lucero, a fully leased, multi-phase industrial complex owned by Artis.
The purchase of the land is expected to close this month.
The dispositions are a continuation of the REIT’s two-year-old plan to divest up to $1.55 billion in non-core assets.
The most recent transactions involved the Strathcona Shoppers Centre and an industrial asset at 1110 Pettigrew Ave., both in Regina, and the ASM America Headquarters Building in Phoenix.
Strathcona Shoppers Centre is a 21,910-square-foot single-tenant retail property which sold for $7.6 million, representing a 6.3 cap rate. The sale price is above its most recent IFRS assessment of $7.1 million.
1110 Pettigrew Avenue is a 118,957-square-foot single-tenant industrial property which sold for $15.3 million – a 7.1 per cent cap rate and an increase over the REIT’s most recently reported IFRS fair value of $14.3 million.
ASM America Headquarters Building is a 130,282-square-foot single-tenant industrial property. The sale price of $34.3 million represents a 5.6 per cent cap rate and an increase over its IFRS fair value of $27.5 million.
According to published reports at the time, Artis paid US$19.75 million when it bought the property on a sale-leaseback arrangement in 2013.
All three sales closed in December.
“We are making good progress with our disposition program,” said Manji in the announcement. “Two additional properties for sale are now under unconditional contract and we have had a steady stream of interest in our remaining properties for sale from qualified buyers. We look forward to providing updates as further progress is made.”
Together with previously announced sales in Q4 2020, Artis sold seven properties and one parcel of development land for about $228.5 million. Since November 2018, Artis has completed approximately $1 billion of asset sales.
About Artis REIT
Artis is a diversified Canadian real estate investment trust investing primarily in industrial and office properties in select markets in Canada and the United States.
Since 2004, Artis has built a portfolio of commercial properties which, as of Sept. 30, 2020, comprised approximately 23.8 million square feet of leasable area.
Artis is focused on growing its industrial portfolio through strategic development projects in its target markets.