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Artis sells Minnesota industrial portfolio for $335M

IMAGE: Artis REIT logo
Courtesy: Artis Real Estate Investment Trust

Artis Real Estate Investment Trust has closed the sale of 17 industrial properties in the Twin Cities area of Minnesota for a total of $335 million Cdn.

The properties, together known as the Minnesota Industrial Portfolio I, cover 2.5 million square feet.

After mortgage financing and other closing costs, the profit from the transaction stood at $199.4 million.

The REIT also agreed to sell six industrial portfolios – the Minnesota Industrial Portfolio II – and an office property in New Hartford, N.Y. Those properties span 0.7 million square feet of leasable area. The sale price for the Minnesota Industrial Portfolio II is $100.8 million and represents a price per square foot of about $145. The transaction is expected to close in Q4 2022.

The 123,210-square-foot Hartford Corporate Plaza transaction will close on Nov. 15 for $18.4 million, representing a price per square foot of approximately $149.

"The sale of the two Minnesota industrial portfolios and Hartford Corporate Plaza mark another significant milestone in the implementation of our business transformation plan," said Samir Manji, Artis’ CEO and president in a statement.

"Unlocking value for our unitholders through the monetization of these assets will enhance our overall financial flexibility and will reduce leverage and improve our overall liquidity. In the current economic environment, strengthening our balance sheet and liquidity will allow us to consider a range of capital allocation options, including buying back units and investing in other opportunities that we believe can generate above average risk-adjusted returns.”

Artis (AX-UN-T), founded in 2003, is based in Winnipeg.

Artis’ strategy

In March 2021, Artis announced a new strategy focused on growing net asset value per unit and distributions for investors through debt repayment, return of capital and value investing in real estate. Part of that strategy involved  monetizing part of its portfolio to strengthen its balance sheet and to provide it with liquidity.

Since then, including the Minnesota Industrial Portfolio I, Artis has sold 48 industrial, 10 office and six retail assets for a total of 64 properties. The REIT's real estate portfolio now comprises 135 properties totalling approximately 15.6 million square feet of leasable area in select markets in Canada and the U.S.

In June, RENX reported on the REIT's decision to sell its 28-property, 2.5-million-square-foot Greater Toronto Area industrial portfolio for $750 million, totalling $297 per square foot.

“In that announcement, we conveyed that one of the near-term objectives was to fortify our balance sheet so as to No. 1 reduce our leverage and No. 2 at the same time provide financial flexibility to the REIT so as to enable us to pursue on a go-forward basis, opportunistically . . . investment opportunities that surface and that we identify,” Manji told RENX at the time.

Last September, RENX reported on Artis’ sale of its remaining Calgary office portfolio – comprising six buildings and nearly 700,000 square feet.

At its peak in mid to late 2016, just prior to its shift in its strategy, Artis owned in excess of 2.5 million square feet of office property in Calgary across approximately 20 properties.

“Artis pursued a significant portfolio shift away from Calgary office to prioritize capital allocation to higher-growth strategies, particularly emphasizing the U.S.A. industrial development program,” Corey Colville, head of strategy, real estate, at Artis told RENX at the time.

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